I think this sums it up nicely:

All the banter about Fannie and Freddie is interesting but no one seems to be asking: how did the people in a democratic republic, the world’s largest economy, host to the world’s reserve currency, the only remaining super power, let their economy become solely dependent on the ability to process and reprocess debt on homes? How did we let our government legislate into being, through the GSE’s, the largest Ponzi scheme ever?

Check out the entire, excellent post: http://www.oftwominds.com/blogjuly08/alcoholic-US7-08.html