"That is, they showed big profits and everyone got big bonuses on the way up, and there are going to be big write-offs on the way down."

And this is the primary point of interest (for me). A small number of people in the financial industry make so much money that they don't have an interest in the long term performance of the company (or the effects on the economy or broader population). They just want to make as much money as possible, as quickly as possible, at any cost to their employers (their personal well-being is largely unaffected by any large economic problems that develop from their own recklessness).

Take Mr. Prince for example: His emoluments were 8 figures for years during which he was a terrible leader (of other terrible people who made 8 figures). His reward for being a jackass was a hundred million dollar severence. No matter what damage him and his cronies caused, they are rich beyond fantasy. Imagine building a well-diversified portfolio of equities, bonds, and commodities on his severence. In the most severe economic downturn in history, he would still have the means to throw as many yaht parties as he wants.

These people are dangerous parasites who kill or maim their hosts, which happen to be vital parts of the global financial infrastructure, leaving the damage such that governments have no choice but to socialize the losses.

I don't like to sound from the class-warfare camp, but this is the source of the gross and continually growing inequality in countries that share the American economic paradigm (pretty much everyone except a few "rogue" nations).

1.Chanos on private equity:

"I don't know what crack pipes these guys were smoking, but some of the valuations were absolute madness."

2.Chanos on satellite and cable communications companies :

"They face a big threat from the Internet in coming years.