Yves here. Due to having closely chronicled the 2007-2008 crisis, and then learning even more afterward by continuing to dig into what happened, yours truly has a strong point of view about what happened. In his post below, Richard Murphy correctly points out that private debt excesses and not public debt, are what triggers financial crises. He points to a strong parallel to the runup to the crisis, that of widespread overvaluation of real estate. Recall that William White and Claudio Borio of the Bank of International Settlements were sounding warnings starting in 2003 about frothy residential real estate prices in many markets, particularly in the Anglosphere.

However, the reason no one anticipated the near collapse of the global financial system in September 2008 was that that was not a real estate bubble implosion but a derivatives crisis. As we explained long-form in ECONNED, the use of a statistical arbitrage