The story of the financial crisis, from one of the people who predicted it

Maybe someone who knows more than me about this can tell me: why, on panels of industry experts deconstructing the crisis, do we constantly hear the assertion that nobody saw this coming? And what really confuses me, is why do the experts participating in such panels/media interviews/round tables not challenge that assertion?

Unfortunately, this doesn't provide any useful actions to the individual; by his own admission, he would've invested as if expecting a depression in 1987.

This article just spurred a thought about our health care crisis.<p>How are they connected? Debt enabled consumers to pay more for products, so the price of the product increased. They could pay more, because the monthly payments were low -- even for very large mortgages.<p>The same thing happens in the stock market. One of the original reasons the stock market collapsed before the great depression was that traders were over leveraged. You could leverage up 10x back then.<p>This level of leverage is possible today in the commodities market and I predict a similar collapse of the commodities market due to this. We saw a little of this as oil speculators deleveraged their holdings.<p>Back to health care. Health insurance enables large expenditures of health care costs for a low monthly payment. Because consumers can buy large amounts of health care for not a lot of money, they spend more, doctors spend more, hospitals spend more.<p>Insurance companies <i>cut out the tumor of debt</i> by canceling the insurance plans for those who over extend themselves and cost the insurance company more than their monthly payments can afford.<p>I'm not sure where I'm going with this. I suppose a) health care bubble fueled by low monthly payments. b) collapse of health care bubble will reduce innovation in health care industry. c) insurance companies will over extend themselves and increase risk for shareholders and the insured...<p>I don't know, just something that popped into my mind that seems to be a common pattern here...

The analogy begins :<p>You have just come from your annual medical checkup, where your doctor assures you that you are in robust health.<p>Walking jauntily down the street, you bump into a practitioner of alternative medicine. He takes one look at you and declares “You have a serious tumour! It must be removed or you will die”.<p>You ignore him as you always have, and continue your merry way down the street. One day later, a stabbing pain suddenly cripples you, and you collapse to the pavement.

I prefer the original headline: "It’s Hard Being a Bear (Part Four): Good Economic Theory"