Bad Repetitions

I do not view the financial collapse as a partisan issue--at least, not in its origins (its results are a different matter because the Democrats are likely to use it as an excuse for a binge of socialization programs). The basic problem is that no one in a position of power seemed to consider what might happen if the largest bubble in world history did what all other bubbles have done in the past: collapse. The Fed, the Treasury, the White House, the major banks should have recognized that a collapse on this unexampled scale could cause systemic risk. The first responsibility of the government in its regulation of financial markets and banks is to prevent systemic risk. Instead, the government, in many different ways, each reinforcing the other, virtually invited the risk. To compound the disaster financial institutions that were too big to be allowed to fail underwrote risks that could lead to their failure, unless the government bailed them out.

 

And in the end those individuals who are most culpable, who led these institutions, both public and private--will walk. They seem to have performed the trick of achieving power without bearing accountability. Under such a system the capacity to deter a repetition of these events does not exist.