We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
The American financial crisis was no more a failure of free markets than the European crisis was. Just as investors tried to signal that something was wrong with the euro, they tried for decades to show that something was rotten in American finance. The rot remains, but Washington has spent the past two years demonstrating that it would rather distort or block market signals than rely on them. This strategy thwarts economic recovery.
The financial system crashed in 2008 because vital checks on the financial industry had eroded long before. One of these checks was that the bondholders who lent money to banks had known that they would lose money if those banks failed and didn’t leave behind sufficient assets to pay their debt; only small depositors enjoyed government protection. But in 1984, the U.S. government saved a failing bank, Continental Illinois, from the normal bankruptcy process because its failure would have posed a threat to the global financial system. Thus was born the phenomenon popularly called “too big to fail.” Bondholders and other lenders to banks began to realize that in a crisis, they could count on intervention from the U.S. government, and they started lending to banks more and more carelessly—so banks grew still bigger and still more threatening to worldwide finance. Immunized by the government against losses, investors could no longer provide important market discipline for big banks.