The quoted passage makes one of the great mistakes in analyzing an industry like this: assuming that people are stupid and that is why they make bad decisions. If you want actual insight assume that people in positions to make consequential decisions are smart and well-informed (they probably have far more information than you or I) and then ask why they still make bad decisions.

There are often other incentives at work, structural issues, etc., and sometimes the answer is that their decisions weren't actually as bad as you assumed.