Ten years ago last week, on Aug. 9. 2007, the world began its slide into the worst financial crisis since the Great Depression. In fact, the events of that day marked the acceleration of a process that had begun months earlier, but the decision by the French bank BNP Paribas to block withdrawals from hedge funds that specialized in U.S. mortgage debt launched a credit crisis that resulted in the loss of trillions of dollars of net worth around the world, crushed Japan's nascent recovery and ushered in an era of once-unthinkable economic policies. The losses incurred in the chaotic days after that fateful decision have been recouped — statistically the global economy is larger than it was then — but the damage lingers in the lives of individuals who paid a price for financial malfeasance, regulatory complacence and sheer incompetence. Worse, there are fears that new bubbles are emerging and yet another "correction" is possible.

Hundreds of books explain what caused the crash of 2007: Many of them are more interested in advancing ideological and political agendas than providing an unvarnished assessment of what transpired. The simplest explanation is the most accurate, however: Credit was extended to unqualified homeowners in the United States. When a housing bubble burst in 2006, the default rate of those loans skyrocketed, destroying the value of securities that were based on those mortgages. Banks invested heavily in those securities because they were inaccurately rated — assessed as low risk — or bamboozled by smooth-talking salesmen, and they encountered liquidity crises as the value of those securities plummeted.

While nearly all the mortgages were in the U.S., financial institutions around the world had purchased the securities based upon them. Catastrophic losses ensued, resulting in the closure of several venerable financial institutions, such as Lehman Brothers. Ironically, Japan, which had little exposure to mortgage debt, was one of the economies hardest hit by the crash: GDP fell 12 percent in the quarter immediately after the collapse of Lehman Brothers as a result of shrinking demand throughout the world. Only unprecedented government intervention saved the global financial system from collapse. Acting in concert, central banks took coordinated action to recapitalize lenders, buy up toxic assets, injected liquidity into shrinking economies and lowered interest rates to unprecedented levels, including zero in some cases.