I don’t know if the market turmoil of last week marks the end of the financial crisis. But I do know that the crisis has changed the very nature of financial markets for far into the future. All over the world, the “hands off” approach to financial markets is being abandoned as quickly as it was adopted decades ago. The hype and certainty of the “let the markets be markets” mentality is now recognized as silly and irresponsible, as the life savings of millions of innocent investors have been wiped out or severely reduced, and the world’s financial system teeters under threat of collapse. An orgy of irresponsible risk-taking by our financial and political leaders has shown them to be small men in big jobs.
We now find ourselves in a strange, upside down universe, where the lead role of socializing the financial system in America is being led by a President who just weeks ago was touting the benefits of deregulation and singing the praises of neglectful capitalism. All the followers of the Reagan Revolution, it seems, are now counter-revolutionaries, looking in every quadrant for targets of their finger pointing—everywhere but where it belongs—right at themselves.
Fortunately, the American people, while fooled then, aren’t now. We get it that our welfare is too important to abandon to the greedy gyrations of unfettered financial markets. We knew it in the 1930’s, but, after decades of successful regulation, we forgot what got us there.
We need to turn the corner, and, if the polls are correct, voters will set this straight in a few weeks. There will be pain ahead, but we will recover. Americans can rise to the occasion, and the occasion is now.
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