Last month, President Bush told potential donors at a fundraiser in Houston that the turmoil in the financial markets happened because “Wall Street got drunk.”

Bush’s treasury secretary, Hank Paulson, it turns out, thinks his boss was spot on with his analysis of the turmoil in the financial markets. Speaking on MSNBC’s Meet the Press, Paulson had this to say:

Absolutely there’s a lot of truth to what the president said. And in terms of Wall Street, there was too much leverage in the system and more leverage than was appropriate and more than people recognized, because the leverage came into the system in the form of highly complex, structured products, which were difficult to understand. So there was excess leverage, excess complexity.

Bill Bonner is a little more skeptical. He says there should never have been any doubt that Wall Street was knowingly misleading investors – without interference from the current administration.

And if Wall Street got drunk during the banking sector boom, says Bill, there were bound to be some accidents on the way home. More from Bill…

The sovereign state of Connecticut has filed suit against the rating agencies – making the usual charge, that they knew or should’ve known that those freak investments Connecticut bought from Wall Street weren’t as solid as they thought they were.

That’s what happens at the end of a bubble. The crybabies and whiners come out.

Meanwhile, Merrill Lynch (NYSE:MER) is dumping its CDOs (collateralized debt obligations)… After telling clients – and itself – that they were worth $1, it’s selling them for 22 cents.

And pity the poor Singapore government. It thought it scored a coup when it bought Merrill stock for $48 a share. Now, Merrill is forced to raise capital again. But this time it’s selling $8.5 billion worth of shares at only $22.50.

No doubt, attorneys are looking at Merrill too, trying to find an incriminating email – proving that Merrill knew or should have known that its own shares and CDOs were trash.

What is amazing to us is how there could have been any doubt about it. We said so often in these Daily Reckonings. The state of Connecticut…or nation of Singapore…could have found out for free. If they didn’t, it’s their own damned fault.

Or, as George W. Bush put it, the financial industry had “gotten drunk.” Everyone knew it had been one helluva party. Then, as the financiers fumbled for their keys, and got in their cars, could there have been any doubt that there would be accidents on the way home?

But now that the crack-ups are in the headlines, the lawyers, police and insurance companies are coming out. Like all major accidents, these will end in disgrace, chapter 11, and jail.