Cato's Analysis of the Financial Crisis

What Didn’t Happen

Some commentators (and both presidential candidates) have blamed the current financial mess on greed. But if an unusually high number of airplanes were to crash this year, would it make sense to blame gravity? No. Greed, like gravity, is a constant. It can’t explain why the number of financial crashes is higher than usual. There has been no unusual epidemic of blackheartedness.

Others have blamed deregulation or (in the words of one representative) “unregulated freemarket lending run amok.” Such an indictment is necessarily skimpy on the particulars, because there has actually been no recent dismantling of banking and financial regulations.

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