I've been by the inane decoupling of risk and reward in the financial markets over the past five years: I quit. I spent a decade clawing my way into prominence as a financial journalist and commentator--a television gig, books, a column in this magazine. And the reason I quit opining about finance for a living basically boils down to disgust. Mostly with Alan Greenspan's pathetic desire to preserve his own reputation by flooding the globe with cheap dollars, no matter what the long-term costs. But also with the market's willingness to accommodate those dollars, regardless of how obvious it became that such madness was unsustainable. When I wrote in Esquire's October 1998 cover story that this market was going to crash and stay crashed, I mocked the idea that "Greenspan at the wheel" guaranteed an ever-strengthening of the economy. I said "stock prices are ridiculous," but I had no idea that our Federal Reserve chairman and the presidents who employed him and the financial institutions that were fattened by his largesse were jointly capable of such delusion. We all have our favorite example: a friend with horrible credit who suddenly lives in a big house with a no-money-down, interest-only mortgage. Deadbeats defaulting on their mortgages so they can make their car payments. A homeowner besieged by his own bank--his partner in ownership--to take a home-equity loan that'll boost his loan-to-value ratio to 110 percent. A stupid business expanding so fast that it literally has stores on opposite corners (both of which sell coffee for three times what the Pakistani guy across the street sells it for), because banks are begging it to take cheap cash.

And now I'm happy. Not that people are hurting or that retirement accounts have been massacred or that many will lose livelihoods. No, I'm happy about the return of a little bit of goddamn common sense. The next treasury secretary will inherit a dramatically changed financial landscape. He will have to resist the temptation to create regulations that slow American business to a crawl. The idea that we can achieve reward while forbidding risk is as childish as the idea that put us in this pickle--that all the reward had been achieved without assuming risk. He should immediately erase the bailout safety net: You lever your bank past the point of danger, you don't get bailed out, you get taken over. And prosecuted.

And the next Fed chairman, or this guy if he stays on, should be a big enough man to accept the "blame" if his tenure includes a recession. Allowing the dust to settle from time to time--which Greenspan lacked the courage to do--will separate the viable ideas and reasonable expansion plans from the interest-only loans and Starbucks.

The sky is not falling. Things are going to be fine. This tectonic shift will probably spell the permanent end of several cherished American financial axioms. And we'll be better off for their demise.

Myth: Investment banks are an indispensable source of "innovation" and liquidity.

There are now no (major) investment banks. And no one will miss them. Like lawyers, these parasites basically create nothing, add no value. And now they don't exist. The global financial system will survive not giving tranches of ten thousand combined mortgages from the farthest-flung sections of America. And whoever invented these CDOs, these "collateralized debt obligations," should . . . find meaningful work.

Myth: Home ownership is an unalloyed good.

It's not. Not just because it's expensive and illiquid, but because it's inappropriate for many kinds of people. And I don't mean just in a class-division way. (Although that's true, too, and Fannie and Freddie never should have been tasked with the social mission to "improve" the lots of poor people by saddling them with loans they couldn't repay.) I mean for economic reasons. Fifty percent is about the maximum number of households that should ever own homes in a society. A modern, efficient workforce needs its members to be mobile and nimble and not tethered to homes they barely own and cannot sell.

Myth: "Deregulation" caused this.

We're so, so, so not deregulated. The institutions that are failing are some of the most heavily regulated in the world. Investment banks are regulated by the SEC, the Federal Trade Commission, state attorneys general, and state banking commissions. But too many regulators are as bad as no regulators--none of them feels responsible since a failure can be blamed on all the others. Hedge funds are a great example. For years, people have been crying about the wild world of hedge funds. But hedge funds have actually held up well during this meltdown. Effective regulations are needed and possible. But any rush to clamp down willy-nilly will result in an even deeper freeze on liquidity and push this crisis deeper and longer.If you're an investment banker or a mortgage broker, yes, these will be prolonged and difficult times. You should consider coaching Little League. But the rest of us? On October 10, I bought GE stock for $18.77 and Altria for $16.58--wildly profitable companies with price-earnings ratios under 10 and yields of about 7 percent. There are great American companies paying out suddenly valuable American dollars as dividends. I just can't cry too hard when the stock market is holding the greatest sale of my lifetime. It's enough to make me want to write a bullish finance column.

Ken Kurson is a contributing editor at Esquire and executive vice-president of Jamestown Associates, a political-consulting firm in Washington, D. C.

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