I've seen this Rolling Stone article, by Matt Taibbi being discussed on quite a few forums today, and am posting it here to get some Austrian Insight. :-)
http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511
Seems like a lack of regulation to me, the question is of what kind of regulation. If the firm were held totally accountable for its actions and if, without papa government standing by supposedly regulating some of this stuff then there would have been free market inspection and regulation of trade. Also, the government through credit expansion and its tampering with the home loans market helped to create a lot of those toxic financial assets. Everyone forgets how all the politicians were crying out about how everyone should be able to afford to own their own homes.
This is why economics is necessarily a priori. I could go to any number of different, and reputable, sources who would give me different reasons why the crash and recession occurred. Its practically impossible to pick out, in the mess of the economy, causal relationships, or even things that any theory would say would effect things. It's such a complicated matter.
Incredibly, the author managed to write a massive article on one of key members of the Federal Reserve without mentioning the Federal Reserve once in the entire article. I did a text search to be sure.
And the Fed earned more in 2010 than GS.
Clayton -
How would you respond to this question? re: a priori
"Are you actually saying that you refuse to engage in discussion of economics if it is based on history or empirical evidence? That is the literal meaning of the words you are using."
We can attempt to ascribe causes to things which happened in the past but it's an incredibly tricky affair, and dangerous too. Economics, as little as the economists themselves want to admit it, is really quite limited in scope and what it can actually say. I remember recently someone posted another's complaint about Austrian theory not being "specific enough", as it could not predict exact business cycle times. This is nonsense because what if the honest answer is IT CANNOT BE KNOWN? What if it cannot be calculated?
So to address you're question I should start off by saying that is an awkward question, I don't know if you mean the other theories are based off of empirical evidence or if the matter itself is based off of empirical evidence. If the former is true I would attempt to assess the argument based upon that which is a priori. If the latter is true then no, I would engage in the discussion, but very tentatively and I would probably avoid absolute judgments upon the matter, I would instead probably say things along the lines of "X would help to cause Y which could help to explain why Z was so mild". For some events there appears to be less mystery and factors surrounding them, and so it would be easier to make more assertive claims, while with others there are even more factors.
Also, don't be afraid to ask a straight up question, there's no need to hide behind quotations