Wow. I really enjoyed the book "How Markets Fail - The Logic of Economic Calamities," by John Cassidy. It currently has 4 stars from 30 Amazon reviewers. I recommend this to anybody interested in learning more about what caused the recent financial crisis.
The book is written as an understandable, albeit broad sweeping, description of the many factors that came to bear the recent "credit crisis." From the personal philosophical views of past Fed Chairmen, to the relevant beliefs of all the great economists (starting with Adam Smith), to the utopian economic modeling practices, and the historical changes in the finance industry and the regulatory landscape. All leading up to the astonishingly complex multivariate circumstances that precipitated the recent economic crisis
Much blame is placed on the shoulders of Alan Greenspan and his laisez-faire libertarian approach during his time as Fed Chairman. Also placed in the spotlight is the prevelance of utopian economics (in varying forms) in economic theory, modeling, and management. The author does a good job of discrediting this approach in favor of real-world models.
He mentions the work of Hyman Minsky, a post-Keynsian economist who preached of the inherent instability of capitalist economies, and the role government must play to keep them working properly. I was so intrigued, I've ordered his highly praised book "Stabilizing an Unstable Economy".
As you can see, I'm fascinated by this topic. I also plan to buy this upcoming book on the subject: "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown." It was released early to some notable people who have given it rave reviews - see the Amazon page for those.
Here are links to reviews of How Markets Fail: BusinessWeek, NY Times, Financial Times, and the publisher MacMillan.