Everyone in the world was making too much money and paying too little for the goods they bought. Standards of living shot up world-wide but it was all based on borrowed money; not just personal debt, but balance of payments shortfalls, currency exchange rate drops, Ponzi style financing, commercial paper, the sale of US government bonds, the inflated value of the US dollar, leveraged securities, and of course, a grotesquely inflated real estate market.

Capitalism has a genius for generating conditions which generate short term profits for individuals at the expense of long term financial stability. This makes it very difficult for normal market counterpressures and stabilizing forces to bring things back into line as you would expect them to do in Adam Smith type classic markets. So they spiral out of control until the bubble pops. Hell, they've even been called bubbles for hundreds of years. Everybody knows this, it's always been true, and its happened before innumerable times.

The only thing different about this particular bubble is the long time separating it from the previous one in 1929. If you can answer why that happens to be the case, you'll know who is primarily to blame.