Torture versus collateral damage; the bigger evil?

[carl]

The banking sector is supposed to serve the national economy as a mediator for efficient resource allocation. It failed grossly, and that's how the problems and vulnerabilities were set up in the first place. The exact point where the fracture began which lead to the break is of little interest.

Next time an airplane breaks up in flight and people are investigating to find out where the exact point the fracture began was, I am going to write them and tell them the important thing is that the airplane broke up, not where the exact point of where fracture began was.

The banking sector can't do and efficient job of allocating resources if an important part of its business is mandated by gov fiat. That distorts the thing.

Of much greater interest is whether and how the banking incompetence in credit allocation and risk management can be tackled and what exogenous factors amplified the problems (loose money by Fed, useless SEC and Fed oversight, mandated loans, ...).


You cannot prevent a repeat of the crisis by tackling the subprime mortgage issue only. The roots of the problem would simply manifest themselves elsewhere, maybe in towns going bankrupt or another dotcom bubble or a raw materials speculation bubble etc.).

The problem wasn't banking incompetence. The problem was the gov forcing them to be incompetent to further a political goal.

Not towns going bankrupt, states going bankrupt. And again, that is caused by political decisions.