The danger as I see it is the government get into their heads that everything needs regulated. Just get CDS market sorted out (if there is one going forward), ban self certification mortgages and only allow a portion of the debt you securitise to be passed onto 3rd parties, keeping the remainer on your books. Rather than the whole obfuscated mess going round the washing machine at 1400rpm.

Also, please to god Gordon Brown, don’t go the way you’re heading and start to believe that the government is an efficient allocator of capital.
As said in this article http://cityunslicker.blogspot.com/2008/10/what-do-we-get-for-our-recession.html we do not need “Equality advisers, firework officers and wheelie bin detectives.”

Or maybe the New deal could be a computer for every home. Mind you Hitler coined that type of idea after the last depression with a VW for every home.

Ted, well free market fundamentalists tend to assume that rules governing competition are bad in and of themselves. I think there is only one way to characterise these people: a hopelessy naive bunch of idiots.

Consequently, Brown’s short term decisions like plundering tax credits from UK pension funds and creating SIPPs (Self investment pension Plans) saw investors make an entirely rational choice to react to the devaluation of their future returns from equities (the tax credit may not have been huge but compounding is powerful) by buying alternative assets to fund their retirement.

Given that long run returns from property exceed short term financing costs, that property is a familiar asset and that households can gear up to acquire it (try going to your bank manager and telling him you want to borrow £180,000 to invest in equities for 25 years and see how far you get) and that they have to live somewhere anyway, for many it appears the ideal nest egg solution. households don’t think about opportunity cost and risk they way that economists do, otrherwise our rental sector would be a hell of a lot bigger.

The intangible, relative benefits of owning a home in the UK (not sure re US) have also been increased by the successive attempts by the landlord lobby to undermine security of tenure. In many European companies, long term unfurnished lets with discretion over decor etc are common. Many German people never own a home whereas in the UK, short assured tenancies with 1 month notice are prevalent in the private sector.

The intangible benefits of course, turn out to be a kick in the nuts when you are 30% underwater and need to move 100 miles to replace the job that you have just been canned from. Our addiction to home ownershio exacerbates our inability to maintain labour mobility at a level to cope with inevitable periods of economic stress and perpetuates pockets of unemployment in hard hit areas.

However, the “getting on the ladder” urge remains a key part of the british mindest regardless and most government policies perpetuate rather than erode this. Why not tax houses just like other capital assets and give tax incentives to focus people on more diversified savings packages? Then landlords and houseowners would focus on present value and yield a lot more than capital gains from property.

We know that we are exhausting the planet’s resources, but no-one will ever reduce their red meat intake just for that. Everyone in finance involed in creating the bubble must have known it was a bubble, long before it burst. What it comes down to is the fact that we are a herd animal, and despite our ludicrous boasts about the size of our brains, we are basically just sheep – all of us.

The same instinct that saw financiers create the bubble from which we are now suffering is identical to the bubble that creates media hysteria around a shit new band – no-one wants to be last and no one wants to miss out.

And of course, the partisan question. The Blair/Clinton axis has massve resonsibility for this crisis. Incidentally, the same resonsibility that Obama will be taking on, because he is the same kind of charismatic, populist economic conservative that Blair was. That Clinton was, And that Brown is, The left in America may be in for a disappointment f they elect Obama, but McCain has so little to offer that they would appear to be better off with disappointment than complete disaster.