[quote=Rich Toscano]I like sdduuuude’s answer, but I have to put Greenspam first and the ratings agencies second.

The agencies were the lynchpin to the whole mortgage crisis, so they bear huge responsibility there. However, Greenspam was asleep at the wheel for not one but two world-beating asset bubbles. No, scratch that — he wasn’t just asleep at the wheel, he was a cheerleader for both bubbles. And the mop-up from the first bubble basically created the environment that allowed the second and much worse bubble.

His “reign” was truly catastrophic and I just hope he clings to life for long enough to witness the final outcome of his legacy (the nigh-inevitable US govt funding crisis) and, if there is any justice, the resulting complete destruction of his reputation as a central banker.

Rich[/quote]

Thanks. I consider it this way in placing the agencies at the top of the list:

If you had higher rates and more expensive capital, but the ratings agencies were still over-rating junk, you could still, potentially have a bad debt crisis.

If you had low rates and cheap capital, but the debt was rated properly, the market could have a chance of moderating itself.

Your point about the first bubble, though is compelling because that help drive the housing bubble and didn’t involve the ratings agencies at all.