In my humble opinion in the core of the global credit crisis is the issue of lying and trust. It is not a question of liberalization vs. regulation, it is not a question of capitalism vs. centrally controlled economy.
Here is what happened as I see it. Money searchers -entities representing groups of people such as insurance companies, retirement funds, public bodies- were willing to pay money to other people -bankers- who can get them some more money.
So these money finders went out looking for people who were willing to give money for something they wanted to have too much -wanna be home owners-. To squeeze money from as many money givers as possible the money finders lied to the money givers, making them make commitments on payments that they could not fulfill in 2, 3 years time. The money finders did not care, since they made their money when they sold these payment commitments to money searchers. They did not even sell money to money seekers, they sold promises to give money. They sold promises from people whom they fooled to get more money.
The money seekers trusted the money finders, who in turn fooled people to make promises. Now money seekers had other friends who trusted them, and they were willing to buy these promises to pay money for even more money. Money seekers trusted on money seekers who trusted on money finders who fooled people to make promises they could not meet. With every layer the values of the promises grew exponentially, whereas the credibility of these false promises decayed.
In the end everyone was lying to everyone, and everyone was happy.
Until the moment came when the simple truth, the fact that most of the money givers were not able to give their money, opened up a crack in this wall built on lies. And as with most of the things built on lies, the wall began to crack. No matter how much cement you have to fill the cracks, the wall will collapse.
The same thing could have happened in a centrally controlled economy, as a matter of fact it did in the communist countries. The result would have not been a credit crunch, but starvation.
So when we are building the walls up again, the issue of trust between the lender and borower should be the uttermost importance. How to build this web of trust globally will be the key challenge, and may even not be possible.
I suggest this great article by Thomas Friedman, which helped me shape my thoughts.