Had bank bosses acted on what their computer models were telling them, the financial crash that caused markets to lurch into freefall a year ago could have been averted.

That is the view of James Martin, one of the most influential people in the world of computer technology, who said models were warning of the dangers of a spike in loose mortgage lending as early as 2006.

Speaking during an exclusive interview at his Bermuda home on Agar's Island, Dr. Martin said computers had also played a role in the creation of investment instruments so complex that even most of those managing them did not understand them.

Internal controls needed to be strengthened to keep pace with the new technology, he added, and he believes computerised financial regulation could help to ensure that a similar crash doesn't happen again.

Dr. Martin founded the 21st Century School and the James Martin Institute for Science and Civilisation, both based at Oxford University. He is the author of "The Meaning of the 21st Century", which focuses on the "mega-problems" facing mankind, including climate change, population growth, water shortages and the threats from nuclear terrorism and pandemics.

He was ranked fourth by Computerworld magazine in its list of the 25 people who have most influenced the world of computing and has excelled as a scientist, prolific author and a businessman.

At the root of the financial crash was an explosion in sub-prime mortgages, which were widely given out by aggressive lenders in the US to borrowers who were ill-equipped to pay them back. The practice was fuelled by institutions who poured money into investment products backed by pools of mortgages.

"By 2007, the computer models were telling the bankers they would go out of business," Dr. Martin said. "But the behaviour continued to get worse and part of that was greed.

"Most of the bankers, even the CEOs, could not understand the models. Computers are getting extremely complex and people who are good at putting together deals on a golf course may not understand what their computers are telling them.

"If people had paid attention to their computer models, the crash would never have happened."

He believes that the inevitable tightening of financial regulation in the pipeline will put great strain on regulators, who will need sufficient personnel of the right calibre to enforce the new rules. Some regulation could be computerised, Dr. Martin added, making it more efficient and not prone to human weaknesses, such as the missing of the numerous "red flags" in the Bernard Madoff fraud that regulators failed to spot over the years.

Dr. Martin summarises his views on the crisis in an excerpt from another book he is writing on the topic of the 21st century, as yet untitled.

He writes: "Before the crash the American economy seemed like a smoothly flowing river, but with water began to move faster and faster until it reached rapids and plunged out of control, taking other economies with it. An interesting aspect of this set of events is that various computer models indicated that the financial world was accelerating towards a crash of devastating proportions.

"An indication of the rapids ahead was demonstrated by computer models as early as January 2006. By early 2008 they made it clear what was going to happen, not in detail, but with sufficient clarity to avoid its worst effects. It was known how many sub-prime mortgages existed, and roughly how many loans were likely to go bad. The models showed that the situation with sub-prime mortgages would bring the need for bank bail-outs to prevent banks failing. Some investors and hedge fund managers understood the warnings and moved their money into relatively secure types of investments, such as daily trading of currencies.

"The CEOs of most banks and other financial institutions took no notice of the warnings. As the water accelerated they competed intensely with other banks the faster the water travelled, the more profit they could make.

"Specified action was needed; otherwise the whole structured credit market would turn illiquid. This would lead to many banks being comatose, like a patient with intravenous feeding. The threat of bank failures would lead to further credit tightening as banks stopped lending to one another. Computer models showed it should have been simple to impose controls to prevent the contagion becoming a pandemic, but most bank presidents took no protective action.

"The computer models showed the likelihood that stocks would crash in value, equity-based hedge funds with high leverage would be a disaster. Certain types of hedge funds that specialised exclusively in daily currency trading, in 'macro' investment, would survive well. Most bank CEOs continued to compete with one another, trying to obtain an impossibly high return, oblivious of the magnitude of the chaos they were sailing into. It was rather like boats at sea not using their instrumentation when it showed that they were heading into a hurricane."

Not everyone failed to read the writing on the wall, Dr. Martin adds.

"Goldman Sachs read the warning signs brilliantly. They used leverage to increase their profits as the river accelerated, but then shorted everything as it plunged towards the falls. They made money as everything crashed. In the first quarter of 2009, when most bankers werein the deepest despair, Goldman Sachs made the largest quarterly profit in their history."

>Some 12 years ago, Dr. Martin bought Agar's Island, where he built a spectacular home, where he does much of his thinking and writing. He is thought to have written more textbooks than any living person and has 104 books in total to his name. His 105th book, complete and awaiting publication, covers the subject of the nuclear terrorism threat.

He believes Bermuda has great cause for concern as the world adjusts to new economic realities.

"Bermuda is very vulnerable," Dr. Martin said. "It has to do everything it can to welcome new capital and new investment. I believe Bermuda should also welcome wealthy foreigners who want to buy homes on the Island. Those people can do a lot of good to the economy."

Dr. Martin has made a name for himself as a futurologist, particularly through his book The Wired Society, published in 1977 and nominated for a Pulitzer Prize, which portrayed remarkably accurately the computer and Internet-based world we have today.

He is hopeful that the shock of the economic crisis will spark some positive changes.

"It's been very painful, particularly for a lot of Americans who've lost their homes and jobs," Dr. Martin said. "Five years from now, we will see the process of buying a house is more sensible and fewer people will be living beyond their means.

"And there will be enormous opportunities for the economy to grow in a world where many jobs are better done by machines than people."

New technology will bring huge opportunities in medicine, not only in the treatment of diseases such as cancer, but also in regenerative medicine, with the use of stem cells, perhaps extending life expectancy for future generations in wealthy countries to 100 or 120 years.

Efforts to reduce carbon emissions will also lead to major money-making opportunities. For example, Dr. Martin believes the Chinese are well placed to become world leaders in the production of electric cars and that the world will look to the next generation of efficient nuclear and solar power technology to meet growing energy needs without carbon emissions and that the airline industry will use some form of highly developed biofuel.