The first is former Defense Secretary Robert S. McNamara's, In Retrospect: The Tragedy and Lessons of Vietnam . It was published in 1995, nearly 30 years after he left the Defense Department in 1968, but received much attention when McNamara died, at 93, in early July. As is well known, McNamara was a part of a World War II "systems analysis" team at Defense, led by Tex Thornton, a "whiz kid" who rose to the top of Ford Motor and a civilian technocrat who brought a powerful systems orientation to the Pentagon in the early 60s. While this approach certainly had relevant application to an attempt to rationalize the Pentagon's corpulent competition between the Army, Navy and Air Force, it became famous in the Vietnam War when numbers like body counts, targets hit, enemy forces captured, weapons seized, tons of bombs dropped, and hamlets protected were used to argue that the war was being prosecuted successfully. The origins of the war were not in systems theories (rather, to take one strand, a belief that monolithic Russian-Chinese Communism would overrun Southeast Asia). But those theories played an important part in convincing McNamara and President Johnson that the war could be won and, therefore, in deepening our involvement, resulting in tragedy both for the U.S. and for Vietnam

Thirty years later, McNamara declared in his book (positions repeated later in the award winning documentary, "Fog of War") that, although his aspirations were idealistic, "we were wrong. We were terribly wrong." Among his "lessons" about the causes of the Vietnam mistake: "our profound ignorance of the history, culture and politics of the people...[the failure] to recognize the limitations of modern high technology military equipment." After McNamara's death, the historian Michael Beschloss wrote: "McNamara knew little about Southeast Asia, and made no conspicuous effort to learn more. His penchant for numbers left him ill-equipped to understand that some human motivations cannot be quantified or predicted. As a result, he drastically underestimated the Viet Cong's determination."

The second book, Gillian Tett's Fool's Gold , is a detailed account of how a small group of bankers at J.P. Morgan in the mid-90s (many with degrees in math and computer science) developed product models--credit derivatives--and perfected methods of breaking those derivative products into small pieces, bundling the pieces and selling them--securitization. Tett is a well-regarded reporter at The Financial Times, covering global markets. And, while there have already been many important books written on the financial crash (one of the first being Charles S. Morris' The Trillion Dollar Meltdown ), this is a very fine-grained account of what actually happened inside major institutions.

As she explains in detail, the purpose behind credit derivatives was for Bank A to sell some its loan risk to Bank B. Then, when the underlying loans and the credit derivatives were bundled together and sold off to many other investors, the creators, relying on mathematical models, felt that they had eliminated financial risk. A cult followed, as other financial institutions like Bear Stearn, Lehman Brothers, Merrill Lynch and AIG used the Morgan technique and added the combustible element of subprime loans to the derivative and securitization approach.