Queen Elizabeth told 'financial wizards' caused meltdown

LONDON: The reason why no one saw the global financial meltdown approaching was due to "a failure of the collective imagination of many bright people", eminent economists told Queen Elizabeth II when she questioned why no one predicted it coming.

During a visit to the London School of Economics in November, Queen Elizabeth had asked about the credit crunch, saying, "Why did nobody notice it ?"

In a letter to the Queen, the economists explained the "psychology of denial" that gripped the financial and political world in the run-up to the crisis.

The experts, in their three-page letter, said "financial wizards" completely failed to "foresee the timing, extent and severity" of the recession, The Observer newspaper reported.

The letter was signed by political historian Peter Hennessy and Tim Besley, a London School of Economics (LSE) professor and an external member of the Bank of England's monetary policy committee.

The letter blames the financial experts who convinced themselves and the world's politicians that they had found clever ways to spread risks across the markets.

"It is difficult to reall a greater example of wishful thinking combined with hubris. The crisis was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole," the letter said.