Actually Jon the class I mentioned was a graduate economics course. The primary economic models over the last 50 years been based on two critical assumptions first propounded by Keynes:
The markets are at their core rational and
the major players in the market would always act out of informed self-interest
Unfortunately as Alan Greenspan said, he never dreamed the big players greed would overwhelm their informed self-interest, but it did. Once that happened the markets were no longer acting in a rational manner or viewed another way, the collapse was a rational, albeit disastrous, reaction to an irrational system.
It is possible to anticipate irrational behavior in a system and there were many who were predicting the eventual crash but they were uniformly ignored because their rational arguments carried little or no weight in a system that had become almost totally irrational.
If we knew what it was we were doing, it wouldn't be called research, would it?
