The existential cause was the too-liberal attitudes toward financial risk described on pages 119–120. Those carefree attitudes were inflamed by strong demand for high-yielding investments that resulted from the Fed’s lowering of general interest rates. Those two factors led to, among other things, an excessive willingness on the part of investors to accept innovative financial products, and to swallow whole the favorable extrapolation of history and the other optimistic assumptions on which those products were based.
