People certainly over-extended themselves. Lack of government oversight led to bizarre mortgages and financial products behind the scenes such as credit default swaps. Eventually the whole house of cards came down. Were home buyers greedy and hyped up by unrealistic increases in home values? Sure. This same combination of greed and lack of government scrutiny led Enron and A. G. Anderson executives to use wacky accounting to falsely value their assets, eventually leading to another spectacular failure.

"Lack of retirement savings"? Is the problem a lack of savings or people believing the stock market would never decline and making investments containing too much risk? George W. Bush wanted to privatize Social Security. Too bad I could not get my hands on my SSA account and invest the whole nut on breathtakingly complex financial products. Or better yet, take it all to Vegas and place it on "red".

What is the greater economic engine; people saving a lot or buying consumer goods? Probably a combination of the two. The government has the power to steer this with smart fiscal and economic policy and a system of regulatory oversight.