The financial collapse of 2007 witnessed free fall of “debt-financed euphoria” caused by complex set of regulations and policies, enacted to direct modern capitalism. The action and policies of regulatory institutions facilitated financial institutions to indulge in risky lending and thus, employing unsupervised financial innovations. It is insurmountable that such widespread disaster was caused by shadow banking system alone. The nature and course of this crisis strongly suggests the presence of other factors. This prolonged crisis was not an asset bubble burst phenomena; it was a “Political Business Cycle” caused by actions and inactions of politicians.