CDO + CDS and the 2008 financial crisis

Banks recipe for a disaster:

1. Let's invent crappy loans, then mix match them together in CDO (collateralized debt obligations) to dilute the risks and let's create 3 categories of them, the good, the bad and the ugly ones
2. Let's speculate on these CDO and pay the good first, then the bad and maybe the ugly ones as long as the loans reimbursement are coming in.
3. As it is going to be impossible to sell the ugly ones, let's sell them to one of our affiliates in the Cayman Islands, who then can propagate them to the rest of the financial world
4. Let's get some AAA ratings on these toxic assets from the major rating agencies like Standard and Poor's and Moody's 
5. But we can do even better, we can create CDS (Credit Default Swap) to speculate against our own CDO at the same time we inundate Customers with them!

Then in 2008 this gigantic Ponzi scheme exploded, it almost brought down the World economy!

The financial crisis that first broke out in the US around the summer of 2007 and crested around the autumn of 2008 had destroyed $34.4 trillion of wealth globally by March 2009, when the equity markets hit their lowest points. On October 31, 2007, the total market value of publicly-traded companies around the world reached a high of $63 trillion.  A year and four months later, by early March 2009, the value had dropped more than half to $28.6 trillion.  The lost wealth, $34.4 trillion, is more than the 2008 annual gross domestic product (GDP) of the US, the European Union and Japan combined.

No major banks CEO were criminally charged with causing the financial crisis. In 2013, Attorney General Eric H. Holder Jr. said that some financial institutions had become “so large” that it made it “difficult for us to prosecute them.”

https://www.imdb.com/title/tt1645089/

Where to start?

How to define what are the most important problems we, humans, are facing today? Based on the available science the main risks for our civilization are:

1. Life on Earth is collapsing as humans are destroying most of the ecosystems around them leading to a potential massive 6th extinction. It has already started! 
2. Earth climate is changing as we release massive amount of CO2, methane, etc. in the atmosphere to feed our energy driven society. It has already started! 
3. Human brain inadequacy to deal with risks that are not directly accessible through our senses and/or because of our cognitive dissonance which leads us to put personal opinions ahead of facts and science to justify our tribal or personal behaviors! 
4. Wars, as greed, domination, racism and exclusion dominate the organization of our societies while technological development and energy give us the power to destroy at extremely large scale! 
5. Pandemics as we have build an extremely connected global society powered by a giant real-time supply chain across the globe while using most of our drugs to optimize our livestock which represents along with us 96% of the mammal biomass! 
6. Revolts as wealth redistribution is becoming more and more insanely unfair with half of the world's net wealth belonging to the top 1% 
7. Economical collapse as the financial "Ponzi scheme" driving the worldwide economy based on GDP growth and debt is exponentially unstable! 

The order is based on the facts that number 1 and 2 are life threatening for the entire human civilization and potentially for life on Earth, while 4, 5, 6 and 7 are not. Number 3 is critical as it prevents us to deal with number 1 and 2. The rest of them could be reordered, they are also major risks of course, but not at the same scale than number 1 and 2.

So, maybe, we should start with 1 and 2!