Surprises thus far in the financial crisis

Brandishing comparisons to the great depression and, less frequently but perhaps more persuasively, the panic of 1873, pundits have been blathering at the mouth but not saying much useful about the economic crisis.

It appears we're headed for a global recession/depression. Aggregate US wealth has contracted by $10-$20 trillion in the past year, with analogous drops in other countries (particularly in the past couple weeks). Several major differences between the economy now and the economy of 1929 (or earlier) argue AGAINST the notion of using the Great Depression as a lens to understand what's in store for the economy.

Three things surprise me about this crisis so far:

• It is truly global. The mortgage problems are largely a U.S. situation, yet the problems in the US have spread ("when the U.S. economy catches a cold" the world economy gets pneumonia). Given the decline of US economic hegemony and some conditions local to the US (falling dollar, housing crisis) it's rather surprising that the world economy has been hit so hard. True, European banks seem to have bought some of the problem mortgage-based securities, but still the global nature of the problem is a surprise.
• Deflation not inflation. For those of us who believe in only spending money you have, it seems that the $10 trillion national debt and the urge to create money out of thin air (as Ron Paul and others say), would have an inflationary effect, but this does not SEEM to be the case yet. Crude oil prices are dropping, for example, although some have noted that the drop in crude oil prices started when Congress closed the Enron loophole in July. Perhaps the vaporization of $10-$20 trillion in U.S. wealth has a deflationary effect. Did I just say that?
  
• The "big boys" may be big but there not that smart. One reason Goldman is doing so well is that they hedged on the mortgage problem before it spun out of control. Nevertheless, the Investment banks, the commercial banks, the Fed, and the Treasury all seem to have consistently misunderstood the nature and extent of the problem. Even Warren Buffet and Paul Krugman don't seem to be acquitting themselves well in this regard. How could the smart investment banking crew have failed to understand the simple notion that bad mortgages that have been securitized do not become good mortgages. The free market is based on assumptions of rationality. Wall Street is renowned for having smart people, but greed apparently over-rode pure rationality and, in the absence of market transparency (where investors could rightfully judge the worth of these mortgage-based securities), the free market is simply not free.