How and Why did the Credit Crunch Happen?

Various financiers will go into great detail as to why the credit crunch happened: sub-prime markets causing lack of confidence, dodgy mortgage deals, dodgy debt packages, but that nit-picks at what is a very simple reason: Ego.

The whole crisis has been caused by the egos if those at the top in government, finance and industry.

The government massaged their ego for letting the economy run on nothing but credit for several years, to a totally unsustainable level, so they could say that the economy hadn’t failed while they were in power.
Their ego wouldn't let a revaluation happen on their watch. Instead, they promoted ever higher levels of debt, never queried whether it would be sustainable.

Even now, they try to push the same stubborn donkey up the hill, by pouring billions into the banks, in an attempt to get them lending again. Its not going to happen, because the banks won't lend money to pay for what they know are overvalued goods.

Not only that, the egos of those at the top woin't allow them to admit they were wrong.

Those in finance continued with bad (and sometimes illegal) practices, so they could take obscene amounts in bonuses. Their egos wouldn't let them take lower or no bonuses, because that would look bad campared to their friends in other finance houses. The greed pushed others into fraudulance most notably the Madoff scheme, but even those at the bottom of the pile were at it, selling mortgages to people that couldn't pay for them.

Industry, with company directors agreeing to huge bonuses even when the company’s fortunes are in decline. Happy to bleed a company dry, then move on to the next victim or their parasitical practices. Performance-related-pay is one thing, but to be rewarded for failure should be seen as anti-social as drink driving.

Even the ordinary working man was affected. Rather than save, he went out and bought the latest car or the latest flat screen TV, maybe extended his house. All massaging his ego, all to make him look good, all on easy credit.

All of the above are the people that need to learn humility and restraint. Letting nature take its course and letting the banks and companies fold would be better, the man on the street might them be chastened enough to start saving for the next crisis. Everyone needs to suffer the pain of a recession, otherwise it’s straight back to the excesses of the past. Its already a given that the government will be humbled come the next election.

You can see the fear in the eyes of those that are part of the establishment. They've tried to pump billions into banks in order to return to the status quo. It hasn't worked. They are now about to start printing excess money, in effect devaluing everything we own.

What next for this once great nation? These are unprecedented times and I fear we will see unprecedented actions.

Unless our government leaves it's ego behind and is humble and honest, explains the situation, plans a comprehensive strategy and takes the population with it, allowing us all to work together in the best interests of the country, the future is uncertain.