Knowing the limits of my own knowledge, I was careful to say "appears".
But honestly, that only makes him even more dishonest. After all, he was saying that there was no real difference between banks involved in the subprime crisis and any homeowner "going long" with a bet on rising home prices. Except that there's a world of difference between placing a bet on a specific piece of tangible property in an open, regulated market, and placing bets of derivations from that market so far removed that they have no clear connection to reality. And he, of all people, should know it.
This refusal to see how cynically the inputs for financial models were being manipulated supports my view that many of the quants who played a key role in this mess had no idea who or what they were working with, that they were oblivious to the fraud and corruption engulfing the firms that employed them, and that they failed to register what would happen when things like fraudulent AAA ratings on securities found their way into a system. Among a broader class of market observers this blindness was attributed to a quasi-religious belief in efficient market theory, rejected the possibility of fraud out of hand.
The basic problem can be summarized as mistaking the map for the territory. In this case, the map was the Black-Scholes Equation. Or rather, the source of the maps was this formula. People who learned to model various risks to determine prices without properly understanding the equation's limits (there were many of both) ended up with catastrophically misguided decisions to their credit.
For a bit more background on all this, see here: http://www.guardian.co.uk/science/2012/feb/12/black-scholes-...
If there's one thing that 'Inside Job' makes clear, it's that the policy framework that governs markets is absolutely critical to their stability and value. In America, this framework was subverted by the rise of an ideological (again, quasi-religious) form of market theory that say deregulation as both a practical and moral virtue. This was deep tissue corruption, and as it found its way into the laws that governed market players (or failed to govern, as the case may be), it opened the door to a cascade of fraud - people deliberately describing X as Y.
Like a ever-growing fog (toxic cloud, really) this continued until none of the major players had any idea what positions their counterparties were in. Knowing how fraudulent their own positions were, they had every reason to fear the worst from others in the same game. And then, on one horrible day in September, the music finally stopped.
To put it in very crude terms, a system built around bullshit eventually choked on the stuff. I'm not surprised that a person who shared more responsibility than most for the resulting catastrophe would respond by entering a state of deep denial. But it's sad, nonetheless.