After a year of epic financial crisis, 2009 will if all goes well be a time for digging ourselves out of the mess and figuring out how to prevent a repeat. Before we can do that, we have to have some idea of what went wrong. People are still arguing about what caused the Depression of the 1930s, so don't expect a definitive diagnosis anytime soon. But here's my current list of blame, or at least the first dozen items on it, in descending order of culpability.
Hardly anyone expected things to go wrong because things hadn't gone truly, pants-wettingly, oh-my-god wrong on the financial front in the U.S. since the 1930s. Yes, there had been deep stock-market slumps in the 1970s and early 2000s, real estate busts in the 1980s and early 1990s, and occasional short-lived financial scares like the Asian crisis of 1997. But the U.S. hadn't been through a serious panic in the memories of most everyone on Wall Street and in government. We began to behave as if one couldn't happen; we were told it couldn't. Blithe behavior begat trouble. The upside is that everybody is now so shell-shocked that we probably don't have to worry about a repeat anytime soon.