Here's an interesting section from early on in James Lieber's cover story in this week's Village Voice, about how and why the world economy tanked:
Credit derivatives—those securities that few have ever seen—are one reason why this crisis is so different from 1929.
Derivatives weren't initially evil. They began as insurance policies on large loans. A bank that wished to lend money to a big, but shaky, venture, like what Ford or GM have become, could hedge its bet by buying a credit derivative to cover losses if the debtor defaulted. Derivatives weren't cheap, but in the era of globalization and declining American competitiveness, they were prudent. Interestingly, the company that put the basic hardware and software together for pricing and clearing derivatives was Bloomberg. It was quite expensive for a financial institution—say, a bank—to get a Bloomberg machine and receive the specialized training required to certify analysts who would figure out the terms of the insurance. These Bloomberg terminals, originally called Market Masters, were first installed at Merrill Lynch in the late 1980s.
Subsequently, thousands of units have been placed in trading and financial institutions; they became the cornerstone of Michael Bloomberg's wealth, marrying his skills as a securities trader and an electrical engineer.
It's an open question when or if he or his company knew how they would be misused over time to devastate the world's economy.
Bloomberg–he's the guy who's trying to convince us to elect him for a third term, because he's the only mayor who can handle things during a financial crisis like this one, right? Is that because, since he helped create the crisis, it's only right that he should clean it up?
Oh, and for all of you out there who are saying right now, "You can't blame Bloomberg for the recession! He just invented the machines. He didn't tell people to abuse them!"—Yeah, good reasoning. I bet Oppenheimer said the same thing.