Well, another way of looking at the excesses of the market is that the rest of the world had a glut of savings, while America had a huge trade deficit and a lac

Well, another way of looking at the excesses of the market is that the rest of the world had a glut of savings, while America had a huge trade deficit and a lack of saving, so this naturally dictates a capital account surplus/net capital inflow. People in Europe and Asia have to put their money somewhere, and if the US is generating higher returns for less risk, they're going to go there, for either safety or opportunity. So if you have a huge influx of funds hungry for American assets, it is no surprise you see asset price inflation, as well as cheap, easy money. You could argue that perhaps, if it weren't for the fact that the US dollar is the world's reserve currency, we wouldn't be able to print dollars and run a trade deficit, and foreigners would never be storing up huge amounts of dollars to reinvest or loan to the US, but you could just as easily argue that raising taxes would increase national savings and reduce the trade deficit.