Greed

Greed was the sole reason why subprime mortgage mess ocurred in the US. Big financial institutions, hedge funds, gave credit to people having low credit score in order to earn more returns and thus in the process inviting more risk to their credit exposure. This is precisely what happened and happened with vengence, hitting stocks especially financial stocks across the globe! Credit risk containment measurements needs an overhauling before anything happens again in the credit markets.

Reason For This Carnage

Market players always try to find reasons for market falls as and when it happens, this time around excessive credit lending to not--trust-worthy people(having very low credit score) in the sub-prime mortgage market is sited as the main culprit behind steep stock market fall as they have de-faulted on their loan obligation. But i say excessive GREED was, is, and will always be the biggest culprit behind every melt down in the asset prices.

Look Credit Score Before Giving Credit

Sub-Prime Mortgage mahem in the U.S. has taught one very important lesson for lenders across the globe that a lender must check the applicants credit score before sanctioning the loan.
Markets across the globe are tanking for the past few days as investors/traders are now very much concerned about health of the credit system in major economies in the developed world and hence taking a very cautious and selective approach towards financial markets.
In 2004, 2005 stock markets crashed by fears that chinese economy will slow down and that lead to sell off in both commodities and stocks.
Now in 2007, Financial stocks are causing the sell-off.
One is left with guessing what's next.