Thursday, the 633 page Financial Crisis Inquiry Commission report was released. It’s one of those things in my clockless way I imagine plowing into and coming up with all sorts of nuggets.  I’ve even ordered such volumes,  and scanned the table of contents.  They they sit for years in a promising shelf in the library, then are pushed off to a corner and finally sent to the recyclers.  So, as with many things in our lives, we have to depend on the experts here — which is of course what got us into trouble in the first place.  But, what else have we?  Amp up the critical questioning capacity and hear what they have to say.

Gretchen Morgenson titles hers: A Bank Crisis Whodunit, With Laughs and Tears

…the report still makes for compelling reading because so little has changed as a result of the debacle, in both banking and in its regulation. Providing chapter and verse, for example, on the bumbling and siloed management at the nation’s largest banks is enlightening, in that many of these institutions are even bigger than they were before. With too-big-to-fail institutions now larger than ever, we are almost certain to go through another episode like 2008 in the not-too-distant future.

For those who might find the report’s 633 pages a bit daunting for a weekend read, we offer a Cliffs Notes version.

Sewell Chan comes in with: Never Again?

The final judgment of the official inquiry into the 2008 financial crisis — that it was an avoidable disaster, brought about by regulatory neglect and Wall Street recklessness — was an admonition to the government never to let it happen again.

Most experts aren’t holding their breath.

Bubbles and manias, followed by crashes and hangovers, seem endemic to capitalism.

Joe Nocera says: Inquiry is Missing Bottom Line

…it didn’t take long to realize that this was hardly the financial equivalent of theWikiLeaks cables. The F.C.I.C. report has its strengths — and its weaknesses. It adds color to the fraudulent actions, regulatory missteps and Wall Street mendacity that we’ve long known about. What it doesn’t do, though, is propose a satisfying theory that explains why so many people did so many wrong, and wrong-headed, things in the years leading up to the financial crisis.

Each of these has some summary points, many of them re-inforcing the narrative of generalized incompetence, laziness, greed and an inability to see above the crowd.  Fine.  Perhaps the Department of Justice will find specific culprits.

I will say this about Nocera’s point, that the bottom line is that the citizenry, succumbing to the “Extraordinary Popular Delusions and the Madness of Crowds” is greatly to blame.  Yes, there are mass delusions.  There are also mass delusions.  What I mean is that some delusions bubble up from rumor, ancient beliefs, built in psychological pre-dispositions.  Other popular delusions gush from the top down, either planned or spontaneous but directed and fed by those who are thought “to know.”  Some delusions are peer-to-peer; some are top-down.

The delusion, which yes, many Americans shared, that housing prices would go up forever, was not simply peer-to-peer; neighbor-to neighbor, though it was that to some extent. It was held by some members of my own family.  ”You can’t lose by investing in real estate.”  ”Oh yes you can,” I said.  ”Look at the the population, and housing price, collapse in the rural Mid-West.”  But to an enormous degree, this popular delusions was aided, abetted, and encouraged by those experts who truly knew better.  When a simple, and commonly shared belief is reinforced by the experts, the keepers of the flame, it is no wonder that it the beliefs do not die away but grow and take on an incredible force.

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