Quote Originally Posted by slapout9 View Post
we would never have a recession again!!!!!!
You can't revoke the business cycle by reforming banks. And this particular downturn has been led down by an insurance company (AIG), not a bank, that was employing obscene amounts of leverage with insufficient capital ratios. Focusing simply on banks is missing the larger problem, which is leveraged bets big enough to sink the whole economy if they go the wrong direction.

What we need is to understand the implied social contract between moneyed institutions that employ fractional reserve lending and/or financial leverage and the consumer. When times are good, they profit off of financial leverage and provide liquidity that makes the economy expand and provides the 'rising tide' that lifts everyone up. But in order to prevent catastrophe when the leveraged bets turn against them the government needs to regulate their capital ratios and make sure they don't get drunk making leveraged bets that the good times will always continue. If we taught high school kids about the business cycle, about money, banks, leverage, etc we might not get into messes as bad as this.

All we have to do is recognize that when people with money are making enormous bets that the good times will always continue perpetually, that inevitably the bad times that are are sure to come will be really bad and we're going to all get stuck covering their tab. Prevent it up front, and not after the fact, and don't get suckered in by "free market" complaints about regulation during the boom times -- the people making money off of the boom who are whining about free markets will immediately turn to socialized losses when the tide turns, every single time -- stop falling for that.