Maybe capitalism works better when the skeptics are in charge

Yeah, right. We'll see.

If you had met your deadlines, Justin, you could have a best-seller right now, and be working the pundit circuit.

Perhaps. But by waiting I've gotten a lot of excellent new material for the book's introduction and conclusion.

Maybe the Amazon page is down but I've still got an active order from them for 2 books.

The thesis is silly, because an argument could be made that even this mess is government caused.

- Fannie and Freddie had disproportionate power because of the government.
- Fannie and Freddie hired government cronies.
- FDIC insurance makes people complacent about where they place their money.
- Mortgage papers are reams long because of government mandates making them ever more complex, instead of a simple sheet that clearly states on the front page you will pay this amount a month for the next 30 years.
- Government (FL) gave mortgage broker licenses to 4000 felons that were ineligible for licenses yet consumers thought they were 'approved' as brokers because the government said it was okay.

My point is that we are so far away from a Friedman economy, it is unfair to lay the blame at his feet.

rrsafety,

How have we gotten away from a Friedman economy?

Until the bailout, FNM/FRM were not on the government books and we had engaged in significant deregulation allowing the market to self-regulate. If you ask me, that is exactly what Friedman would have liked. I say let's expand the deregulation to all of our energy companies and health care as well. Let's really put his theories to the test. I've got enough cash in the bank to hold out for 5 to 6 years and make my mortgage payment.

The solution to the crisis is by far the more complicated issue.

The solution going forward is actually quite simple: Tax the crap out of any company that gets "too big to fail".

Kinda like FDIC insurance, the larger a company gets, the more insurance it must carry to ensure that its potential collapse would not impact the economy beyond those directly involved (e.g. employees, stockholders).

I think the real problem is that people expect others not to game the system.

When California passed the "three strikes" law, it was intended to keep violent and repeat offenders off the streets. Instead it clogged police and court systems because everyone and their brother started to go to trial instead of taking pleas.

It's the same in financial and economic markets. The SEC or Congress or the Fed or whatever passes/writes a regulation or rule or law that's intended to do something useful - increase home ownership, extend credit to poorer households, grow the economy, etc. What really happens is millions of people look for a way to benefit themselves from the new rules and sometimes do so in ways that are detrimental to everyone.

Computer game manufacturers know this will happen, that's one reason they do public beta's. Not just for bug fixes, but also to find balance issues that players will exploit and use to make the game work in ways it wasn't intended to.

Some kind of "beta" system for laws and regulations would probably result in significantly better rules that contain far fewer unpleasant side effects.

Ballad of Hank
(Tune of Beverly Hillbillies)

Come and listen to a story about a komrad named Hank
A swanky Goldman banker, who ably kept his partners fed,
Then one day he was laughin at some AIG fools,
And up through the ground came a toxic derivative stew.

CDSs that is, fools gold, Wall Street krud.

Well the first thing you know ol Hank buys $70 billion of CDOs n shares,
Kinfolk said "Hank move away from here"
Said Zheleznodorozhny is the place you ought to be"
So he loaded up the junk and moved it overseas (to Moscow that is).

Szwimming pools, Oligarchs , and everything.

Well now its time to say good by to Hank and all his kin.
And they would like to thank you kapitalist folks fer kindly droppin in.
You're all invited back a gain to this socialist locality
To have a heapin helpin of state hospitality
Set a spell, Take your white shoes off.

Do swidania, y'hear?.
http://williambanzai7.blogspot.com/

capitalism is a game in which everyone does his or her best to make a buck off of the others by any and all means.

some are better at it than the others,

but the outcome can NEVER be equitable.

have faith in the system, even when it works against you, as it is only a temporary setback, technically speaking.

good luck.

Houston, the entire argument is built on a fallacy, that is, the last ten years were a Friedman-ian paradise. It was not. Some aspects of the economy experienced certain types of deregulation but much of our economy continues to be regulated, taxed and legislated. I'm not making an argument for or against such regulation, but the mere thought that the past 10 years have been a utopia for Friedman followers is a total joke.