From the Telegraph,
[A] three-page letter, signed by London School of Economics professor Tim Besley, an external member of the Bank of England's monetary policy committee, and political historian Peter Hennessy, was sent after the Queen asked on a visit to the LSE why nobody had predicted the credit crunch, according to the Observer newspaper. ...
When she visited the LSE in November last year she asked Professor Luis Garicano, of the economics' management department, about the origins of the credit crisis, saying: "Why did nobody notice it?"
Prof Garicano told the Queen: "At every stage, someone was relying on somebody else and everyone thought they were doing the right thing." The Queen described it as "awful".
Prof Garicano said afterwards: "The Queen asked me: 'If these things were so large, how come everyone missed them?"'[emphasis added]
It sounds as if Her Majesty quite sensibly has been asking why there weren't more smart people betting against the firms that were so far out on the limb; it sounds as if She was asking how bubbles can form in a knowledge-rich efficient economy.