Interesting possible causes Fizz.
In the 2007 collapse no one single facet or cause could be ascribed to the economic failure - the then GFC.
Probably the only main, principal or material contributing reason was that the 2001 Tech-Wreck, was NOT allowed to play out, for Greenspan's FED, encouraged and then ignored the frothy housing market's wealth effect, so as to distance him & his Fed. from the Tech-Wreck.
The housing market was allowed to run unabated. "inflation" could not exist in housing (capital) markets. No heed was given to inflation. Milk prices on US broadstreet remained the same. So ignore the fact that house prices had just doubled in 6 years!
If there is one single reason for a SEVERE collapse post Harvey Weinstein¹(¿) is that Fed. & the ECB have taken up retail like banking roles, in that both now maintain vast portfolio's of absolutely crappy assets. Portfolios of assets that Basel dictated retail/commercial banks would not be allowed to own!
Both have acquired NINJA 'risk grade loans' at a national & international level, so not only the junk that caused 2007 was bought up, but also post 2007 assets. Assets like Greek bank loans. All the PIG prop assets are owned by central banks. That is the type of situation, that could well set the central banks up, and the world economy, tagged behind those central banks.
For not only are the Fed. and the ECB so set up, Japan's Central Bank & China's have equally become CENTRAL bankers in the new sense of the concept 'CENTRAL bankers'; in that their a) market participation b) CENTRAL role as in CENTRAL economic planning role overstep their free market roles, needed in an open international market economy.
There is a post Keynes, Marxist underpinning. If not so by actual intent, but i.t.o. effect. In what the central banks have become.
The US's Fed's assets now equal in value(?) the assets of the four major US retail banks! But the US retail banks assets are now grade A risk, whereas the Fed's assets are not that good. Not that good at all! So in Europe. So in Japan. So in China.
It was never meant to be like this. The Central bank, was there to safeguard the other banks in a competitive, and harsh real world.
In this next global fail, the retail banks will be called upon to safeguard the central banks, in all likelihood. They will be forced to acquire some of those crappy assets that government hold. Who will force them to do so?
The market will, as the central banks will be forced to offload their junk (their hands tied by their own cancerous growth) for as God knows how, like Topsy, they've jus grow'd & grow'd.
Grow'd way too big for their own 'britches'
So, much like the tech wreck was allowed to foment into the Housing Market collapse & the GFC, so the GFC has been allowed to foment into our next global collapse. A vast segment of rotten backing has endured, hidden in the balance sheets of over indebted central banks.
What went wrong?
Hmm?
Stuff like Lehman should have been left to fail. If central bankers are to believe in FREE MARKETS (which they don't) then they must allow its machinations. Bankrupt of major banks is, ironically, the free market at work.
If the economic hormesis of the market is to work, we must endure the odd sickness. The odd sneeze & cold will strengthen that economy, and international market against the otherwise inevitable pandemic flu.
¹For wont of a denotable pricey point or prick. Everyone knows the market is rotten to the core, just nobody wants to call it for what it is. Too big to fail?
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