There are some things in life that seem to be "nailed-on," "home-bankers" or that sort of thing.  Birds will sing at sunrise, fish will be wet, bears do go toilet in the words and Liverpool FC always shoot themselves in the foot.
Why it has happened is open for a very, very long discussion. The best place to start would be after they won their last league title, 22 years ago, in 1990.

1989-90
Liverpool celebrate the title after a team with John Barnes, Ian Rush, Peter Beardsley and Alan Hansen romp to victory with ease.  You may remember the 9-0 demolition of Crystal Palace at Anfield, and then playing Norwich at Anfield in the next league game and only drawing 0-0.  They also beat Swansea City 8-0 in the League Cup that season.  All was well at Anfield in 1990, after 1989 had started so painfully after the Hillsborough disaster.

1990-91
Dalglish resigns after a 4-4 draw with Everton in February 1991.  This is swiftly followed by the retirement of Alan Hansen.  Ronnie Moran took over management duties for a while and did a good job, then was then pushed aside for the appointment of Graeme Souness.  The club’s form then fell away and Arsenal won the league by seven points.
Hi-res-1291468_crop_exact Peter Beardsley - pushed out of Liverpool

Peter Beardsley was dropped for David Speedie halfway through the season and Beardsley was to leave the club that summer.

1991-92
Graeme Souness was manager for this season until he needed heart surgery in April of 1992.  He came back to watch the FA Cup Final in a blanket.
McMahon, Beardsley, Staunton, Venison and Gillespie all left the club that season.  In came Rob Jones, Steve McManaman, Mark Walters, Mark Wright and Dean Saunders.  The latter was the top league scorer in the end, with just 10 goals.  The Reds finished in sixth place after winning only four of their last 16 league games.
John Barnes suffered a career-threatening Achilles tendon injury in September and never fully recovered that season, or ever again.
Liverpool went out of the League Cup to Peterborough United.
It was also Liverpool’s return to European Competition since the Heysel disaster. It ended in Genoa dispatching Liverpool with consummate ease.

Hi-res-1917230_crop_exact 1992 FA Cup final, a recovering Souness

1992-93
The first season of the Premier League, an exciting new dawn.  We finished sixth again though.
Graeme Souness paid £2.3 million for Paul Stewart from Spurs.  Who?  Exactly.  A horrid transfer, meanwhile, Man United paid just £1 million for a certain Eric Cantona.
Ray Houghton and Dean Saunders also left the club this season.
Liverpool won three of their first 12 league games.  Also, between 19 December and 6 March, played 11 games and only won one, an away win at the mighty Arsenal.
Kenny Dalglish and Liverpool met once more. This time, he was manager at Blackburn and they spanked us 4-1.
The lowest home attendance was 12, 533 who turned up to watch Chesterfield in the League Cup.

1993-94
Another low attendance of 12,541 turned up at Anfield to watch us play Fulham in the League Cup, but these people saw the stunning debut of Robbie Fowler, who scored four goals.
Hi-res-1632029_crop_exact Nigel Clough - it didn't work out

Liverpool spent almost £5 million on Julian Dicks, Neil Ruddock and Nigel Clough.  *winces*
Meanwhile, Man United spent £3.75 million on Roy Keane.  Job done.
Liverpool finished eighth this season, it was free-fall time after having just been the dominant force in English football for two decades.
This was the last season for Grobbelaar and Whelan.

1994-95
The all-conquering team of 1990 had now fallen away to the point where only Steve Nicol, John Barnes, Ian Rush and Jan Molby were left, and even Nicol left mid-way through the season.  The attempts to replace all those who had left until now was, frankly, awful.
Graeme Souness was shown the door and in his place, Roy Evans was appointed from within the club to take over as manager.
He immediately wasted £9 million on the average quartet of Phil Babb, John Scales, Michael Stensgaard and Mark Kennedy.  Julian Dicks was sold at a £1 million loss just a season after coming in—an utterly abject season.
Hi-res-1618822_crop_exact Mark Kennedy - it didn't work out

Despite all the upset, there was a shining light and it was scouse.  This is part of the reason that scouse pride is so strong in Liverpool, when the hard times come-a-calling, it’s always a local lad who saves the day.  Robbie Fowler, Steve McManaman and a cockney/scouse youngster called Jamie Redknapp were the knights in shining armour and led the team to fourth place with Fowler netting 25 league goals.

1995-96
So, the times looked good, we were back in with a chance of challenging once more with a young, vibrant attacking team, albeit one still shaky at the back.
Robbie Fowler nailed another 28 league goals in. He was breath-taking. So where did it get Liverpool? Third place is the answer. Good, but not good enough.
Liverpool spent a combined £13 million on Stan Collymore and Jason McAteer.  Out went Molby, Rush, Walters and Paul Stewart on free transfers, and we sold Nigel Clough to Man City for a £1 million loss on what we paid for him.  Yet another terrific bout of transfer activity.
Liverpool turned up for the 1996 FA Cup Final against Man United but £1 million Eric Cantona scruffed the winning goal in a timid affair.

Hi-res-1253193_crop_exact Stan Collymore and Jason McAteer - Expensive

1996-97
Fowler’s goal return dropped to 18 this season, with a four-game suspension for being naughty, but still it wasn’t a stellar season by his standards.
Only £3.2 million was wasted this season, with Patrick Berger coming in.  I’m being harsh on Berger; in his day, he was a lovely player.  Probably the best buy we made in five years.
John Scales was sold this year as well, yet another preposterous signing.
Liverpool finished fourth, unable to capitalise on the good work of the previous season.
Meanwhile, Man United bought Ole Gunnar Solskjaer for £1.5 million and Teddy Sheringham for £3.5 million. They continue to make our recruitment policy look like a bad joke.

1997-98
Again, when the fates scowl on Liverpool, it’s the local boys who come to try and save the day.  This time, Roy Evans is given the helping hand in the shape of midget prodigy Michael Owen and the emergence of Jamie Carragher.  However, Robbie Fowler breaks his leg and is out for half the season or more.
Hi-res-1268811_crop_exact Oyvind Leonhardsen - it didn't work out

Evans also spends cash in the traditional Liverpool way, this time blindly throwing millions at Oyvind Leonhardsen from Wimbledon, the German veteran Riedle and Paul Ince, by now on the other side of the hill to what he was at United.
This time a third-place finish, it was by now getting a bit repetitive and people were losing patience.

1998-99
A new dawn, this time for real, and Gerard Houllier is announced as a joint manager with Evans.  This crazy venture ends in November as Evans shakes his head and walks away from the mess.  In the meatime, we strengthen our ranks with the signings of Rigobert Song, Sean Dundee, Jean Michel Ferri and Brad Friedel. *shakes head* You think it can’t get any worse…don’t you?
In the meantime, the City of Liverpool squeezes another diamond from the academy, this time it’s Steven Gerrard.  A young Danny Murphy, bought from Crewe last season, is also progressing nicely.
Bestowed with the natural youth talent of Owen, Fowler, Gerrard, McManaman, Carragher, Murphy and cockney rebel Redknapp, the team should by now be doing something very special.  Instead, it splutters to a seventh place finish.
Hi-res-1023410_crop_exact Rigobert Song - it didn't work out


1999-2000
This season is a bit of watershed for a few reasons.  First, the outgoings.  We lose Steve McManaman on a free transfer to Real Madrid.  Stunning.
We also sell David James for £1.8 million and we buy Sander Westerveld for £4 million and tread a goalkeeping hinterland for a few years because of it.  Also leaving the club are recent additions Ferri, Dundee, Ince and Leonhardsen.  In, out, shake it all about.
On the plus side, we spend £33 million this season, including the additions of future club legends like Hamann, Hyypia, Henchoz and Heskey.  We also bring in Westerveld, Smicer, Camara and "mad" Eric Meijer.
A fourth-place finish is achieved, though it could have been so much better had we picked up more than the three points that we accumulated over the final six games of the season.

2000-01
Another season of promise, another season of poor transfers.  In comes Bernard Diomede for £3 million, Christian Ziege for £5.5 million, Igor Biscan for £5.5 million, Daniel Sjolund for £1 million, Nick Barmby for £6 million and Gregory Vignal for £500,000.  That’s £21 million wasted. It’s like a tradition; we MUST waste money.  At the same time, we bring in Litmanen and McAllister on free transfers.  Unbelievable.
Hi-res-952072_crop_exact Sander Westerveld - it didn't work out as well as Gerrard did

Out go the recent failures Camara, Meijer, Song, Friedel, Babb, another huge loss financially and nothing new.
Again, we finish third, a season of nearly and maybe in the league, but a season of huge success in the cups.  Despite finishing 11 points behind Man United in the league, we win the UEFA cup, the FA cup and the League cup.  Now is the time to really kick on and spend well, we could really push United for the title if we just get this right.

2001-02
So in come Milan Baros, Jerzy Dudek and Chris Kirkland for a combined £14 million.  Riise also comes in for another £4 million, and we get Nicolas Anelka on a loan deal for part of the season.  We also sell Robbie Fowler for £12 million and we sell recent flops Ziege and Westerveld, like clockwork.  Between 22 January and the end of the season, we win 13 out of 15 games.
Considering that we finish in second place, it goes to show how bad the first half of the season was.  Gerard Houllier is admitted to hospital after falling ill during a game and later needs heart surgery which keeps him out for five months. During which time, Phil Thompson takes over.  Another massive setback.  Upon coming back, Houllier never seems the same again.

2002-03
Hi-res-51437525_crop_exact Chris Kirkland - it didn't work out

We bring in five players, and when I tell you that they are Diouf, Diao, Cheyrou, Diarra and Luzi, you won’t be in the least bit surprised to hear we spent £18.4 million in amassing this brilliant quintet of players.  Yet again, we are our own worst enemy.
We finish fifth and we also sell Barmby at less than half what we paid for him and let Litmanen go on a free.  Great times.
We didn’t lose a game until November, and at that point we then only collected one point from a possible 18.  There’s always next year though.

2003-04
We sign Anthony Le Tallec, Florent Sinama Pongolle, Harry Kewell, Steve Finnan and Carl Medjani for a combined £11.5 million.
*sigh* Fourth, no run in the cups, despair.
Out go Berger, Heskey, Diomede, Heggem, Sjolund, Arphexad and Xavier.  Meanwhile, Man United sign Ronaldo for £12 million.

Hi-res-2857189_crop_exact E H Diouf - it really, really didn't work out

2004-05
Enter the Benitez.
In come Alonso and Garcia for £16 million.  Also dragged behind them are Josemi,  Morientes and Carson for £9.3 million. Also, a certain Djibril Cisse, who had already agreed to a deal with the departing Houllier, who was signed for £14 million.  *ouch*
We also lose Michael Owen for a miserly £8 million.
We finish fifth in the league, but win the Champions League. Unbelievable stuff.

2005-06
Can Benitez spend wisely?  It’s a mixed bag; in comes Kromkamp, Agger, Crouch, Sissoko, Zenden and Gonzalez.
It’s not good enough, but it’s a start. The defence needed shaking up and the loss of Owen is still crucial.  We only manage a third place finish, but we win the FA cup and the UEFA Super Cup and get to the last 16 of the Champions League.

Hi-res-57605002_crop_exact Kewell and Morientes - more pain

2006-07
In come another mixed bag with Bellamy, Kuyt, Aurelio and Arbeloa being the highlights and costing us £17.5 million, but that is offset by the captures of Pennant and Paletta who cost us £8.7 million.
We always seem to be one signing away from making the push, and this is no different.
Sixteen players are sold or released this season.
The best signing of the season is Javier Mascherano in on a loan.
We finish third and reach another Champions League final. It’s a positive season, but it’s still not quite right. We need that extra quality.

2007-08
Here it is, Fernando Torres for £20 million.  Unfortunately, it’s also melded with the signings of Babel for £11 million, and we make the Mascherano deal permanent but have to pay £17 million for the privalege.  We also bring in Lucas for £6 million and Skrtel for £6.5 million.
After all that, we still only finish fourth and reach the semifinals of the Champions League.  It’s very disappointing and there are murmurings of discontent. We seem to be letting another golden opportunity pass us by again.
Hi-res-80185279_crop_exact Jermaine Pennant - it didn't work out


2008-09
In come eight players and only one of them I can really say was a success: Albert Riera (and even that’s a contentious argument).  We spent £39 million on players that summer, but the signing of Riera was only £8 million.  The others were Dossena, Keane, N Gog and Cavalieri, with Flora and Gulasci into the youth team.
It is for this botched spending that people do not agree that the Rafa experiment was worth trying again after Hodgson or Dalglish left.  Some of his horror signings were very damaging.
Despite all this, we still finished second in the league.  If only the extra £30 million was spent wisely.  But hey, why break the traditions of Liverpool FC?

2009-10
Oh dear.

Conclusion
Right, I think we’re all well versed on what happens for the next few years.  Turbulent times on and off the field, millions spent on horrible players by Hodgson and Dalglish and a league cup to show for it.
Failure is as much of a tradition as success at Liverpool FC, and it’s all borne of mistakes in the transfer market.  We’ve always been able to compete, we just got lazy and didn’t do our homework.
I hope Rodgers can buck this trend, and the signings of Allen and Borini look promising, but there’s a long, long way to go and a familiar expectation of doom and gloom around this club.