Well, I can’t even come close to answering that. But there are a couple of people, in the know, who are doing a pretty good job of it. One of those people is Paddy Hirsch. In his presentation, he uses the analogy of filling champagne bottles. I originally saw this on Nati Shalom’s (of GigaSpaces fame) post, Financial crisis explained. If you have some time (about 6 minutes), definitely take a look.
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WTF? it explains crap.
Did you watch the last 2 60-minutes specials on the financial crisis – they gave great explanations. Layering complex securities on top of bad mortgages was one problem – but the side-betting called credit default swaps was the tumbling force. This type of gambling was outlawed after the 1907 crash but deregulated in 2000.
Yes, there are more factors that led us into this current crisis. But the CDOs playing a ponzi scheme with (domestic and international) investor money was the root of this evil.