My Present Summary of the Situation
I posted the following comment in the Hit 'n Run discussion thread over at Reason regarding Michael Flynn's article on The Roots of the Crisis.
Drudge linked to this so that might explain some of the comments so far.I think Mr. Flynn's analysis is largely correct, if perhaps not detailed in certain areas. More could be said about the inevitable malinvestment problems a fiat currency/Fed system creates, but he implies that in the article. Even if the collectivism of ACORN and the Community Reinvestment Act didn't significantly contribute to the approval of bad loans, it did provide a moral backing for people who defended such loan practices. That cannot be forgotten, for being shouted down as racist, bigoted, callous, exploitative, and so on is the principle method for advancing socialism at the expense of freedom.
A lot still needs to be said about the total failure of the ratings agencies to keep an eye on things. There is ample room for new competition in that market.
But the reality is that the state collaborated with pressure groups to put in place incentives that mislead the honest into making titanic mistakes and spurred the avaricious to ignore common sense.