Analysis on the Current Financial Crisis - What happened?

I have found Marin Wolf of FT to be one of the best analysts of the ongoing turmoil in the global economy. Below, I paraphrase one of his video analysis:

The financial panic has ben cooking over a long period of time. One of the key reasons that we are in this mess is the over leveraging of the global economy. The amount of debt has been increasing rapidly since the 1980s. Nowadays, the private sector debt to GDP ratio is at an all-time high. If we look at the component of this debt, we can not miss the remarkable growth in the financial sector debt. It's increased from 20% of GDP 30 years ago to over a 100% of GDP now. The HouseHold debt has also doubled from 50% of GDP to 100%.

Another thing has happened in the last 10 years to exacerbate the economic woes. The global economy has witnessed a drastic imbalance of saving and investments. Countries like China with extraordinarily large savings resulted invested in the western countries, generating tremendous current account surpluses. The US was the principal borrower. Capital flew from the poor countries to the rich and it was basically the Households in the latter which did most of the borrowing. THe housing bubble in the US helped eat-up all this capital inflow.

The third element to this financial crisis was the cleverness of the financial sector in creating instruments in absorbing all this money. We saw the rise of all sorts of complex derivatives and what have you.

Now, when the prices began to tumble, people realizing that all these assets were not worth what they paid for them. They also found out the riskiness of these investments. This was the stage when panic set-in and turned into hysteria with the collapse of Lehman Brothers on September 13th. These assets became toxic and lending dried-out in the financial markets. The financial sector effectively stopped functioning. When there was no one willing to borrow, the demand in the western economies ala US, UK collapsed. This triggered a massive global recession since the excess savings from the East could not find a sink. The exporting companies began to worry now since they were living off the bubble in the US. In this manner the entire world is now effected by this crisis.