Our friend Larry White at Division of Labor puts it succinctly:

On greed, let me repeat: If unusually many airplanes crash during a given week, do you blame gravity? No. Greed, like gravity, is a constant. It can’t explain why the number of crashes is higher than usual. And let me add: This isn’t a morality play. What we’re seeing are the consequences of monetary-policy distortions of interest rates and regulatory distortions of incentives, amplified in some degree by private imprudence, not the consequences of blackheartedness.

And what all of this points out is that laying the finger of blame on "the free market" is utterly in error, but it's an error that's going to get made continually over the months and years to come. If there's one thing those of us on this side of the battle of ideas can do as this all unfolds, it's to do whatever we can to remind people that the interventionist economy that caused the problems and led to privatized profits and socialized losses (and the "solutions" that will further socialize losses) are NOT "the free market." Asking why anyone would think bigger government will solve these problems when it was the major cause is another public service we can provide.



Even though I firmly believe that the fundamentals of the US economy remain strong and that this is not the start of another Great Depression, it is disconcerting to be apparently living through the start of a round of the Higgsian ratchet.