Anyone involved in finance should understand mania in the markets. It is not a shock that financial markets do irrational things. They do so very frequently. Anyone who has not read, Manias, Panics, and Crashes: A History of Financial Crises, should do so. Leverage often is a catalyst that turns bad investments into panics that damage the economy. A previous post on this topic: Misuse of Statistics - Mania in Financial Markets.
Enron was the pit canary, but its death went unheeded
As for the lessons we’ve forgotten, how about this one: financial statements aren’t supposed to be fairytales.
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when all was booming, Wall Streeters said they deserved their pay because the market said they were worth it. But now things are falling apart, they say the market doesn’t work, and we need to stop short-selling, and taxpayers need to pony up. If there is a tiny bit of good in all this, it’s that Wall Street, although it was complicit in the Enron mess, managed to walk away relatively unscathed. This time, Wall Street has brought itself down.
I think the odds that Wall Street has brought itself down is very low. Even that the ludicrous excesses of Wall Street are at risk is very unlikely. Perhaps for a few years their might be some restraints put on excesses. But most likely politicians will respond to huge payments by arranging favors for those that want to bring excesses back. If this can be prevented that would be great, but I doubt it will.
Related: Investing books - Tilting at Ludicrous CEO Pay - Losses Covered Up to Protect Bonuses
Creating a World Without Poverty by Muhammah Yunus (founder of the Grameen Bank and 2006 Nobel Peace Prize recipient). Giving people the opportunity to advance economically is something I see as very important. It is hard to imagine in the USA when those that are seen as poor have air conditioning, indoor plumbing, cars, TVs, electricity… but billions of people would love to approach such material wealth.
When you really have to struggle to put food on your plate or get clean water economic concerns are critically important. Economic progress may well decide whether your children live or not. Muhammah Yunus’ new book is a good read to hopefully encourage more people to realize there really are much more important things than your fourth pair or shoes (to say nothing of you 20th pair) or expensive wine or a newer car or…
Microfinance is a great system where those that have been lucky to receive material wealth can help provide opportunity to others. Loans of $200-$500 can make a huge difference in an entrepreneurs life. Just giving them the chance to use their intellect and hard work to create a life where they can get raise themselves slightly can change their lives, their children’s lives and together with others perhaps their community.
Trickle Up, Kiva and Grameen Bank are three great ways to help give entrepreneurs a chance to improve their lives. As I have mentioned before if you are a Kiva lender add a comment with your Kiva page and I will add a link to: Curious Cat Kiva Supporters. I will say I am happy with the success of this blog in general, the thing that disappoints me is how few links we have on that page.
Related: Microfinancing Entrepreneurs - Interview with Mohammad Yunus - Trying to Keep up with the Jones - Providing a Helping Hand via Kiva - Curious Cat Science and Engineering blog posts on appropriate technology
In response to: What do you think? Should you discuss finances with your children?
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We both waffle back and forth on these two perspectives and right now we’ve settled somewhere in between. Our children know we have debt, but don’t know the amount. They know I make pretty decent money, but don’t know how much. Our older boys pretty much know the details of our monthly expenses, such as the cable bill, phone bill, utility bills, etc. We’ve shared this with them to help them appreciate things a little more.
I definitely think talking about finances with children is important. I don’t have kids, but I was one 
I don’t think you need to get into exactly what the figures are to have valuable conversations. Far too many people become adults with far too poor an understanding of personal finance. Given how important managing money is today I think it is like hunter-gathers not teaching a kid how to hunt.
Books: Money Sense for Kids - Growing Money: A Complete Investing Guide for Kids - The Motley Fool Investment Guide for Teens - Raising Financially Fit Kids - A Smart Girl’s Guide to Money: How to Make It, Save It, And Spend It
A few blog posts on teaching children about money: Personal Finance for Children and Pre-Teens - 5 Tips for Savvy Parents - Teach your teen the basics of money management
Related: Questions You Should Ask About Your Investments - Why Americans Are Going Broke - How Not to Convert Home Equity