I'm sorry - do you think that people on Wall Street were stupid when they were creating CDS and pumping huge speculation bubble around subprime mortgages?
I think that we have enough evidence that smart people make mistakes - actually much bigger and more expensive mistakes then anyone could have expected.
The two cases are different. The guys manufacturing credit default swaps had someone to sell them to. But (unlike in the 90s) there is no one buying lame startups for billions of dollars.
