Was it "Cheap Money that Made Us Stupid"?

I suspect it'll take an additional number of years for there to be greater consensus over what caused the financial crash that led to our "great recession". Two recent pieces by Megan McArdle, formerly of The Economist and now the Business and Economics Editor at the Atlantic, and Edward Chancellor from the Financial Times offer clues.

From McArdle who points out that it's inconvenient to place the blame on sophisticated bankers who took advantage of unsophisticated home buyers especially in the face of the new collapse in commercial real estate (the Atlantic):

The best explanation for the calamity that has overtaken us may simply be that cheap money makes us all stupid. The massive inflows of international capital, which Ben Bernanke has called the “global savings glut,” poured into our loan markets, driving interest rates lower—and, since most real estate is purchased with borrowed funds, pushing up the price of property in both the commercial and residential sectors. Rising prices, in turn, disguised any potential problems with the borrowers, because if they ran into cash-flow problems, they could always refinance, or sell. Everyone was getting bad signals from the market, and outlandish purchases looked almost rational.

Chancellor goes on to note the bubble wasn't restricted to the US (FT):

For a start, securitisation is unlikely to be a prime cause of the global housing bubble since home prices soared in many countries, such as Spain and Australia, which didn’t abound with exotic mortgage products. Given the dollar’s role as the global reserve currency, the Fed’s loose monetary policy had a far more extensive effect. [...] The connection between a loose monetary policy and asset price bubbles is pretty obvious to anyone with the slightest economic intuition: low rates make it cheaper to borrow, while acquisitions financed with credit drive up asset prices.

He goes on to warn that the US Fed seems to have learned little from the unravelling:

The Fed has returned to its old view, maintained during the Greenspan years, that bubbles cannot be recognised ex ante. Nor does the Bernanke Fed accept that glaring macroeconomic imbalances that characterised the last decade – such as the rapid growth of private sector credit, the falling savings rate, and the gaping current account deficit of the mid-2000s – were useful leading indicators of an approaching crisis.

Meanwhile, some economists are already warning that expansive monetary and spending policies today are already repeating the mistakes that caused this recent bubble and creating the environment for yet another asset bubble. From the WSJ, December 14: "Some analysts believe certain asset prices, including in emerging markets and corporate bond markets, may already be rising unsustainably, following a speedy recovery in recent months."