America has always had self-corrective economic cycles, but now we have more regulators than ever before, and they are doing their damage, as never before.
We could have avoided the severity of the current deep recession.
1) By avoiding the massive bailout by regulators offering the illusion of doing something. Probably, all that was needed was a federal agency guarantee of all bank assets, in return for a fee charged to the banks.
2) By avoiding “mark-to-market” accounting of mortgage assets, which had no market appraisal, and which wiped out assets of major banks almost overnight, aided by short selling that such “mark-to-market” accounting enticed.
3) By having a government agency buy up, at bankruptcy, empty tract homes, in over-speculative states such as Nevada, Florida and California.
The government has repeated the same errors made by Herbert Hoover and Franklin Roosevelt during the Great Depression. In the process we have accomplished little for the economy but have constructed a form of state capitalism, a nasty type of socialism.
The Dodd-Frank Act, in further attempting to get us out of this mess, is a continuing disaster. ( See the Earl J Weinreb NewsHole® comments.)
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