A consensus has yet to emerge on the reason why the Crisis occurred, but it seems to me that blaming it solely on the greed or fallibility of the actors involved is definitely not appropriate. We can now identify a widely-shared mind-set regarding prices in financial markets that bred the Crisis.
Today, I would like to illustrate the shortcomings of this mind-set from two angles. One is the fact that financial markets can and sometimes do overshoot. The other is that there is only so much information that could be extracted from prices in financial markets.