Listen to the Limbaugh/Hannity/Axis every day? Then you probably think it was the government forcing banks to loan to irresponsible people. Read Daily Kos on a regular basis? Then, it's all about unregulated greed with Wall Street running wild. If you're the Tea Party.....well, it's probably a weird mix of both, but really, you're just pissed about government money heading in six different directions and none of them yours.
I will admit that I've struggle to make sense of it all, but there's one thing that never seemed to jibe with reality.. Sure there were irresponsible loans and irresponsible borrowers and I'm sure Fannie Mae had its part to play, but how does Dudley Downbeat down the street taking a second mortgage to buy a boat result in global economic armageddon?
Based on one emailer to Andrew Sullivan, Dudley Downbeat had his role in the play but he was a walk-on showing up briefly while other larger players convinced the audience the show must go on.
Wall Street firms were regularly leveraged 30:1...the scale of the bubble to be increased by orders of magnitude - the equivalent of having 50 homes in a fire-prone neighborhood, but with 100 insurance policies on each and a lively market of bets on which will burn down first. If this were just a sub-prime housing crash, it would have hurt (think dot-com crash), but it wouldn't have brought the global financial system to its knees. That required Wall Street and AIG, with the ratings agencies helping along the way (by convincing institutional investors that all was safe).The burning house analogy is the best one I've heard yet.
The analysis of what happened isn't finished (few have yet written about the hidden bank run that annihilated things like mutual funds) and will probably go on for the next decade. But it's clear there's plenty of blame to spread around, but it ain't going to spread like peanut butter. Some deserve some chunks.