Everybody knows that we got into this recession because banks began lending money to people who had terrible credit ratings, right? People who didn’t have to prove they even had a job. I mean, how long are you going to stay in business when you keep handing out dough to people you never hear from again?

But is that all there is to it? And was it really just the fault of congress because they told Freddie Mac and Fannie May (the organizations that purchased loans) that they had to start purchasing these highly risky things? Or was it all those greedy Wall Streeters?

In this must-read article, “How it All Came Crashing Down,” BYU econ professors explain how we got into this mess—and what we can learn from it.

But that’s not the end of the story. Ira Glass and the folks at This American Life uncover deeper causes of the problem in their must-listen show “The Watchmen” (no, not the movie). I mean, come on, we were told these high-risk loans were as dangerous as milkshakes. Shouldn’t SOMEBODY have seen it?

President Obama keeps saying that the root of the problem was that there wasn’t enough government oversight. Sounds good, doesn’t it?  We’ll get disinterested Uncle Sam to protect us from all these investment bullies. But if we dig a bit deeper, it appears that Uncle Sam was one of the major players at the root of the mess.

Ouch.

Read. Listen. They are two fabulous pieces.

I got my masters degree in accounting and information systems. While going to school I started an investment club and learned about a man named Warren Buffett.

Warren Buffett is humble, full of folksy humor, and trades places with Bill Gates as the richest man in the world, depending on the year you’re counting. His annual letters to his shareholders are a delight to read. This year’s is full of wisdom about the current financial crisis. Moreover, within a few minutes of reading you will be able to get some key insights that can help as you evaluate the plans being hatched in Washington and how to prevent this particular type of crisis from happening again. 

If you’re not that into finance, I recommend reading:

1. The introduction starting on page 2 and ending on page 3
2. The ”Finance and Financial Products” section starting on page 10 and running through page 12

Once you’ve read those, if you want to laugh and see Buffet’s humor, skip to page 21 where Buffett talks about the annual meeting of shareholders. Tell me you wouldn’t want to attend.

The Berkshire Hathaway homepage

This year’s letter to shareholders (you will click on 2008 because he’s discussing the results of that year)