A Global Financial Tailspin

If a penalty is not present for those who take a risk and fail, what disincentive do they have to not try the risky maneuver again? I am a hands-off, deregulation man myself but after reading some of these articles and gaining an understanding of what went on, I think that if any regulation is needed it is in the bond market.

The stock market is fairly translucent, the bond market is opaque. This is what allowed the bond institutions to package up all of the junky mortgages and get them reclassified at a better rating. This was not the cause of the subprime mortgage catastrophe, but it certainly made it worse.

I believe it shouldn't be allowed to get to the point of failure in the first place, at least not on such a massive level based on a massive bet that was founded on unethical financial practices.

The more I read about this the more I come to understand that what happened in the secondary markets, the rolling of the bad loans into tranches which were then rolled into CDOs to mask the bad loans which were then insured with credit default swaps, it was like "Dumb and Dumber Go to a Casino." The problem is, they were having fun making these high stakes, ludicrous bets with billions of dollars. I find it hard to believe that a few key individuals could have been responsible for throwing us into a global, financial tailspin but the more I read, the more I believe this to be the case.

I believe in capitalism and free markets but when a few key players have the power to destroy the free market and opportunity for others, a referee must step in.