The classic case, cited in thousands of places, is the financial crash in Europe several centuries ago, that was preceded by "Tulip Mania". In that case, the instrument of their destruction was tulip bulbs. People invested in something they thought would only go up and up and up in value, many sinking (and then losing) entire fortunes in items which had only a few cents worth of intrinsic value.
I will mention here the items that preceded the last three significant US recessions, where the population of financial instruments of a particular nature grew so large, and consumed so much cash, that when their values began to collapse, they took the US economy into recession, sinking hundreds of billions or even trillions of dollars of "value" into a financial black hole.
Recession of 1990: Savings & Loan Crisis & Sub-prime Mortgages (SPM's)
Recession of 2001-2002: Dotcom stocks
Great Recession of 2007-2009: Sub-prime mortgages (SPM's)
Credit default swaps (CDS's) and Mortgage-Backed-Securities (MBS's)
Each of these recessions was also accompanied by rampant fraud at high levels within companies, where executives subverted accounting controls and practices, to commit massive frauds. (see William K. Black's book "The Best Way to Rob a Bank is to Own One"). Regulators very often do not see these frauds until
they become so massive that they topple under their own weight. The collapse of Enron, the collapse of Worldcom, and the collapse of the Madoff Ponzi-scheme, all came about AFTER huge frauds, abuses and excesses took place. Spotting these types of activities, and other forms of financial "wallpaper" creation, is critical to seeing the topping activity that occurs during the onset of a recession. The ensuing collapses, if large enough, only exaggerate the effects of the recession by consuming capital that could otherwise be put to good productive use.
This is a great short article to read on this topic. Note the frequent references to "paper". In normal times, paper simply means loans, bonds, contracts etc. But in times of financial stress, this real paper often turns rapidly into wallpaper...