In what could be a movie plot, the story starts with a meeting of Wall Street traders eating Chinese food on a cold February night in 2005. They met to figure out how they can turn the massive U.S. mortgage securities market into a cash cow for Wall Street, just like the $12 trillion corporate credit market. They had no idea at that time how the plot would develop into today's subprime meltdown that could actually set us on a bullet train heading toward the ultimate Wall Street disaster flick - the next Great Depression.

This could make for great movie entertainment if the story weren't true. Bloomberg first exposed the depths of this story in December 2007, but so far the rest of the U.S. financial press has pretty much ignored it. I wonder why. The only other newspaper that picked this up was the New Zealand Herald, but I did see discussions of the story on various other hedge fund blogs.

Bloomberg's primary source for the story was Greg Lippmann, one of the key players in the story, who was then a 36-year-old trader at Deutsche Bank. He was part of what Bloomberg calls the "Group of 5" that included Goldman Sachs (NYSE: GS) Trader Rajiv Kamilla (34-years-old) and Todd Kushman (32-years-old) of Bear Stearns (NYSE: BSC). Representatives unnamed in the story came from Citigroup (NYSE: C) and JP Morgan Chase (NYSE: JPM). Through a series of meetings that grew larger and larger, including ultimately almost all Wall Street banks, subprime mortgage securities were born. The International Swaps and Derivatives Association, which sets trading terms for dealers on these complicated financial vehicles, finally got involved to help draft what ultimately became the subprime mortgage securities contract. The inability to appropriately price these securities based on their high risk has already resulted in over $100 billion in write-downs by Wall Street banks and brokerage houses, as subprime foreclosures continue to mount.

Lippmann denies in the Bloomberg article that the subprime mortgage securities he helped create and CDOs banks then packaged and sold to investors (and held on to themselves) caused the subprime crisis. But Rod Dubitsky, director of asset-bank research at Credit Suisse, disagrees. He told Bloomberg that these derivatives are "like wearing a seatbelt that allows you to drive faster. . . No question, it changed the game dramatically."

What game was that? Money for mortgages that otherwise could never have gotten funding. Wall Street needed mortgage securities to sell and since most of the people who already owned homes in 2003 had already refinanced to the lowest rates possible thanks to the Federal Reserve's 1% rate policy, they had to tap a different, more risky market to build those mortgage securities - the subprime market. People who could not qualify for prime mortgages jumped at the chance to own a home they otherwise could never have afforded.

Mortgage brokers and banks forgot all the safeguards put in place for prime mortgages, and the U.S. real estate bubble inflated as credit got easier and easier to get. Investors sold to other investors driving up prices further. Mortgage fraud became commonplace as liar loans became the joke of Wall Street. It seems as if they didn't care as they were planning to make their money on the securities they designed that they thought would shield them from the risks they were taking.

Moody's, Standard & Poors and Fitch ratings services approved these complicated securities based on historical data used to grade more traditional mortgages. They didn't realize until it was too late that they hadn't adjusted properly for the high-risk mortgage loans underlying these securities. Only after foreclosures mounted did the rating agencies act. Why did it take them so long?

In just two years, this appetite for more and more mortgages, fueled by Wall Street banks' desire to create new mortgage securities they could sell, helped grow the subprime mortgage market into a $600 billion dollar market in 2006. In 2001, that market accounted for just $160 billion. Today you'll be hard-pressed to find investors for subprime securities.

Not only were the ratings agencies asleep at the switch, the Fed was too, as it ignored abuses in the lending market that made this rapid growth possible. While Alan Greenspan got numerous warnings about the abuses, he chose not to act.

The Fed finally woke up in August 2007 when the credit markets froze and the Fed pumped $38 billion dollars into the markets. Numerous other steps have been taken by the Fed since then including more infusions of cash into the system and interest rates cuts.

But the credit squeeze continues to haunt the credit markets today, making it hard for corporations and commercial real estate developers to get cash. What looked like a specialized, highly complex derivatives market problem has now impacted credit availability worldwide as banks take larger and larger writedowns. They just don't have the money to lend.

All this reminds me of the roaring 20s when credit was freely available for stock speculation. It was this easy credit mentality that inflated the stock bubble of the 1920s and ultimately led to the stock crash of 1929 and the Great Depression.

Today, the easy credit practices of mortgage lending, which the subprime mortgage securities made possible, inflated the housing bubble that just burst. The havoc this has wrought on the global credit markets may lead us into the next Great Depression. I hope I'm wrong, but similarities are there. Fellow blogger Peter Cohen wrote earlier this week about how this may be the bank's worst earnings period since the Great Depression, Yesterday, I wrote about the impact on commercial real estate lending. There have been numerous stories about the difficulties corporations are facing refinancing short-term lines of credit. All these credit woes will lead to job losses as corporations and commercial real estate developers must cut back since they can't get the cash they need.

We're no longer facing just a subprime crisis. It's now a broad global credit crisis that seems to show no signs of abating. Bad news mounts on almost a daily basis. Can the Fed or the Congress truly take any action to slow this bullet train to disaster? Only time will tell. We can all pray that the years Fed Chairman Ben Bernanke spent researching the Great Depression will help him devise strategies to avoid the next one, but it's time to prepare for what will be a long, difficult financial crisis even if we can avoid the big "D."

Lita Epstein has authored more than 20 books including "Reading Financial Reports for Dummies" and the "Complete Idiot's Guide to the Federal Reserve."