Just listened to an excellent Diane Rehm discussion about the global economic crisis described here: http://wamu.org/programs/dr/09/01/29.php#23955 where they discussed the causes of this global recession and solutions.
The causes are complex and multi-faceted and its easy to get in a counter-productive blame game, but I think its important to figure out the causes because it will help sort out solutions (a point made by one of the guests, Zanny Minton Beddoes, economics editor, "The Economist;" formerly, economist at the International Monetary Fund).
In fact Beddoes is who I related to the most, she put a lot of the blame squarely on the imbalance of the world markets. Too many emerging markets (primarily China) were saving exhorbitantly at rates of 50% (that 50% savings rate comes from this Fresh Air interview with James Fallows I heard a few weeks back: http://www.npr.org/templates/story/story.php?storyId=99039196). This money was dumped into our market (being the largest market in the world) and was the primary reason credit has been so cheap and so easy to get for so many people the past few years. For a really good explanation of this, listen to this "This American Life" podcast broadcast a bit ago: http://www.thisamericanlife.org/Radio_Episode.aspx?episode=355 That describes how the global supply of money doubled in seven (?) years. Not fake money, real money because, globally our capacity has improved dramatically as countries like India and China have developed, and technology has improved.
I know some people like to blame Greenspan for all of our problems, and he definitely shares some of the blame, but the bubble was really part of this global tsunami of events that largely was out of any one person's hands to control.
Some of the problems, I feel have come through some pretty significant imbalances in the world between rich countries like the US who were largely consuming assets manufactured by poor countries who produced it.
Also, the imbalance within the US has been part of the problem as well.
This article summarizes pretty nicely the imbalances in the US economy:
"Until recently, many observers, most of them on the left, have puzzled over why rising inequality hasn't sparked an outright political revolt. Well, here's why. Real income matters less than quality of life. And for the last two decades, a delicate Consumption Compromise has tamped down economic discontent among working-class voters by driving down the cost of living—we've been living in the era of cheap food, cheap gas, cheap credit, and, of course, cheap Chinese-made goods."
So, even as wages for middle and lower case Americans have stagnated (even as GDP and stock prices were increasing), most people were still able to buy everything they needed and wanted even if some of that was through their visa cards.
But the income inequalities were real, much of the US wealth was being concentrated in the top 1% of earners, much of the world wealth was being dumped into US markets.
And because US wealth was so poorly distributed, many middle/low income earners really counted on cheap credit to get by (and to buy their SUV's of course). As gas prices, health care prices, and education costs most prominently rose beyond inflationary rates, cheap credit became all the more important for these families just to stay afloat in many cases.
The entire world stability hinged on American consumption demands, which of course was not sustainable.
Again, I don't see this as the whole story. Regulation broke down, American consumers were irresponsible, a lot of corrupt people around were hoping to make a quick buck.
But in my view, these two inequalities I feel explain much of what went wrong in our economy.