The truth is economy normally goes on a cycle like everything else in the Universe. That is why it is called the market is self balancing. It is like driving a car. You have to continuously correct using your steering wheel if you want to stay on the road. That is your stable environment. However, if you have ice patches, or construction on the road, then you have to make additional corrections. Certain unregulated action did cause some issues.

But the primary reason we got in to this mess is that we borrowed money from overseas to import stuuf rather than produce stuff. As a result a lot of people were in make work salaries that really did not produce anything. So, as jobs went overseas, we lost jobs and the purchasing power.

In the meantime, housing prices went up because people were confident that things are great which made people to borrow heavily to buy houses to flip - that was their only source of income. That was a small part of events. Most people just moved in with their parents or withdrew their savings to make their ends meet including paying for extremely high medical bills.

Bottom line is we imported a total of about $5678 Billion worth stuff from the global market more than we exported. While banks were lending out at 40 times what deposit they had, they also borrowed money from overseas to lend more. Any engineer who studies economics will tell you that you get money circulation of about 8 times of your industry production (not consumption) which means those imports which grew exponentially created a loss of $40 Trillion dollars of economy in that last years. At that rate no country can survive.

We still have not done anything to cover that loss and hence we will continue to pay for our mistakes that no one is watching.

Best thing to do is create a linkage model over a time domain with feedback and see where the model leads. You will be surprised. The wall street mess is a symptom rather than primary cause. And dont forget the oil price hike on speculation too. Too many variables as a perfect storm.