3 - Fraud on the part of some home buyers

4- Fraud on the part of some mortgage writers

5 - Failure of the Fed to understand basic economics and housing inflation which should have led them take steps to raise interest rates and other actions.

6 - Gross mismamagement and greed by some major financial institutions in believing that housing prices could never go down. Also a belief that they were protected from major bond payers defaulting becasue of the derivative market credit default swap instruments they were purchasing.

7- A belief that manufacturing is no longer significant and we could all get rich by swaping houses and selling each other financial funds. It might work for Switzerland but not for a large country such as the USA.