There really are two sides of that coin.Hatta wrote:Insufficient regulatory oversight. Blind devotion to the idea that markets are self regulating, and that people are idealized purely rational self-interested beings.
Some do argue that regulatory oversight could have prevented this mess and tend to blame the whole thing on our free-market system in the US.
Others argue that government interference in the market, through FDIC insurance, loan subsidies, and congressional bills encouraging banks to make loans to people who could not afford them have poisoned the system and we were not in a free market to begin with.
It is naive to claim that this was a failure of the free market. Similarly, it is naive to apply pure free-market ideas to the United States' mixed market.
Hopefully I am not being too isolationist in this post. There were certainly factors outside of the US which hurt things, and this economy is affecting the rest of the world for better or worse. But I think most of the problems that caused things to get the way they were arose internally.
Government made mistakes. Businesses made mistakes. Individuals made mistakes. But things looked really, really good on paper, so most people just didn't question it.
