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Author and former banker Charles Morris had a prediction about this crisis and wrote the first book about the crisis: "Trillion Dollar Meltdown". The book was already published in March 2008. We should be omitting Investigative from Mr Gasparino's description of journalistic efforts

I think that #4's comment is right on target. PBS' Frontline had a special called "The Warning" a few weeks ago which was excellent but received very little notice or comment in the Mainstream media which does seem to have decided that no one could have predicted the 'downturn'. (it can be viewed at Frontline's website.)

Mr. Gasparino fails to acknowledge the seismic shift in how Wall St. Business models were brainstormed as a result of May Day of 1974. Like the flood of cheap money encouraging reckless risk managment in the last few years, negotiated commissions encouraged the concept of "flash" investment schemes to support the new era of cheaper cost of doing transactions. The notion of "flipping" investment positions encouraged only the financial supermarkets to survive and attract capital. When Loeb Rhodes was raided by likes of "Fast Money" guys like Sandy Weill, The age of invetments yeilded to the age of "trading" ...And the insight of Johnny-Come-Latelies.

Charles, (please forward)

Your view seems much more informed than most. Thanks. You need to look at some of the "physical world problems" too. It's a big missing piece, still.

We have a natural long term manageability dilemma, for example, with using added complexity and reorganizing everything we do ever faster, as our means of maintaining continual growth. We also have a difficulty with quite unreal assumptions, like that no matter what we use up we'll find substitutes that are cheaper and more plentiful.

There was an odd coincidence too, for example, that what we can now see as having been the physical limit for producing conventional cheap oil, aka "peak oil", occurred in 2005... That was at the same time as the world commodity price spiral leading to the collapse took off. It's not that people have looked at it and thought it would not have had any effect. It's that even if that is what upset the financial schemes that collapsed, financial people wouldn't know how to ask the question. So, it seems financial people haven't looked at it.

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Second Hugh from Brooklyn. As a former partner (1967-73) in Lehman, I find Gasparino unconvincing in the sense of what's new? Probably, if we take the long long view, the real culprit is the computer, which arrived on Wall Street around 1970, and made it profitable to trade ridiculously tin fractions of money and to design derivatives, MBSs etc. At that time, Goldman's Gus Levy led the way in moving investment banking from advice to trading.

Brooksley Born, Michael Hudson, Nouriel Roubini, John Kenneth Galbraith, Elizabeth Warren, James K. Galbraith. Each of these people and many others recognized -- far in advance -- the collapse on Wall Street. Certainly in the broad strokes, and several in the particulars.

Charles Gasparino is rehashing the standard mainstream line (very common on NPR but also found in the Times, Post, CNN and pretty much everywhere else) that "nobody foresaw this." NONSENSE.

The Greenspan idea of derivatives was that financial institutions would be able to hedge their risks by securitizing and selling off their various risks in the form of derivatives. The problem was the lack of oversight as the bonus system which allowed and encouraged this to be leveraged to a maximal degree.

Two things:

1. Progressives were criticizing Alan Greenspan, Robert Rubin, and others 15 years ago (and more).

2. Lloyd Blankfein and the other Wall Street have learned precisely that risking everything recklessly pays off. They've made billions at our expense. Nothing has changed (except that it has likely WORSENED under Obama, Geithner and Bernanke).

The only solution I can see is to do away with absolutely limited liability. Conservatives are fond of criticising liberals as being free with other peoples' money, but the limited liability corporation, corporate personhood, and the diffusion of responsibility they create and shareholder weakness allows, means that financial services firms' employees take risks with other peoples' money that they would never take with their own. Their high yearly compensations don't help: even if one of them were to lose all her savings due to a mistake of the firm, she would typically have enough from her last year's salary and bonus for her family to live a middle-class life for many years (and possible forever) as Treasury Bill rentiers.

Limiting the metaphorically incestuous compositions of corporate boards, and perhaps requiring that random shareholders be seated there as well, could help.