The Busts Keep Getting Bigger: Why? by Paul Krugman and Robin Wells | The New York Review of Books http://www.nybooks.com/articles/archives/2011/jul/14/busts-keep-getting-bigger-why/
The proximate answer, clearly, is the abdication of regulatory oversight. From junk bonds to derivatives to sub-prime mortgages, regulators either turned a blind eye or were impeded by business interests and politicians—Democrat as well as Republican. Undoubtedly the most outrageous act—and the most economically damaging to the country—was Greenspan’s refusal to use regulatory powers at his disposal to rein in the exploding sub-prime market, despite being warned repeatedly that a catastrophe was brewing. Like Reagan and Friedman, Greenspan firmly believed in greedism; in his view, the financial markets could do no wrong.
Fun article. It does mention what I think is probably the biggest underlying problem…thinking that unrestrained greed is virtuous.