" We'll never know how this newly liberated financial sector might have performed on a playing field designed by Adam Smith."

Via David Boaz at Cato, I came upon this post from the Washington Post:

"The new capitalist model that emerges from this crisis must operate according to more consistent principles. The Fed should set interest rates with the long-run value of the dollar in mind. Government must be more selective about manipulating markets; over the long term, business works best when it is subject to market discipline alone. In those cases -- and there will and should be some -- in which government intervenes on behalf of social goals, its support must be counterbalanced with taxpayer protections and regulation. Government-sponsored, upside-only capitalism is the kind that's in crisis today, and we say: Good riddance. "

David doesn't like it as much as I do, since I basically agree with everything the post says. Note this:

"The deregulation of U.S. financial markets did not reflect only the narrow ideology of a particular party or administration. And the problem with the U.S. economy, more than lack of regulation, has been government's failure to control systemic risks that government itself helped to create. We are not witnessing a crisis of the free market but a crisis of distorted markets. "

Absolutely. The government guarantees helped cause this mess, as well as poor policies.