Michael: Not sure what markets and players you watch.

1. Crashes happen, bear markets happen; a crash like this one has never happened before, nor was it ever possible. Compare it to 1929 or whatever you want, the world is vastly different now.

2. Crashes do happen, so expecting one is like expecting it to rain one day.

3. “it was definitely expected by anyone with any sense and knowledge about the housing and financial markets at all.… I don’t think that there are many people with the scope of knowledge of the underlying structures, mortgages, housing market, unilateral private contracts backing sub prime risk and other risky positions taken by companies (+/- rogue traders) to think that your statement can be applied to more then 100 people the world over.

There were more people beating their chests and tooting their horns in the media (lets call them bulls :) then there were bears, that’s for sure. And how many people up until 2 months ago were publishing “is this the end of the crisis” articles?

“If you haven’t been expecting it for at least two years, you don’t follow the markets enough to make any significant investment decisions on your own…”

Well obviously there are a lot of people in those shoes, including the author of a certain “The Age of Turbulence”…

That could be said about so many people and applied to so many ideas that rolled out in the last 8 years (and more, of course). Unregulated CDS markets? Sub prime mortgages that allow people with little money to bet on the housing market? One could say that hindsight is 20/20, but fundamentals and principals don’t go away, no matter the reason or person who is saying “no, its different this time”…

Now Peyton Manning, yeah, he’s going to win me the league :)

a) You should have been massively short the market (were you? maybe you were, I don’t know). I don’t just mean sitting on the sidelines. I mean massively short.

b) Many, many more people would have been short and even more people would have taken their money out of the market and sat on the sidelines.

c) This would have been priced into the market somewhat before the Lehman collapse.

I agree with you that some sense of “this isn’t right” should have been apparent ahead of time, but to essentially say that anyone with any brains could foresee the degree of this collapse is overstating the case. Almost every investment bank, every mutual fund, every individual investor, and every hedge fund have lost significant percentages of their equity as a result of this. If your statement is true, nobody in that group knows enough to be managing money.

This is just shocking…

…its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,”

Analysts used models that didn’t allow negative inputs?! That isn’t analysis, that is just plain stupidity.

The question on my mind is, how do we find our way out of this? Given their recent performance, can we have any faith in the intelligence and ability of the frauds who are still probably running Wall Street?

In regards to Wall Street government regulation is not the answer. A thousand lawyers can get around anything a few hundred politicians with their own agenda can come up with and agree on. What we need are systemic changes to corporate laws and regulations that are structured for self-regulation and the long term performance of the corporation FOR THE STAKEHOLDER and not the year to year performance for the benefit of management and employees. Carl Icahn has his arms around this and you go here for more: http://www.icahnreport.com

The other problem is that Corporate America owns Congress. We need to get the corporations and foreign countries out of the halls of Congress. Lobbying should only be the privilege of natural persons that are American Citizens. Go here for more information: http://ezeques.newsvine.com/_news/2008/09/23/1900175-fixing-wall-street

It makes me wonder how many other unregulated backdoor markets are out there. Even worse is that to my knowledge Congress still has not addressed or even acknowledged this issue.