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Misallocated blame IMO. The US doesn't have free markets: there are plenty of regulations, laws, rules and government intervention. So if we don't have free markets, how did they fail us?
Note: Strawman Rebuttal linked below so everyone can be sure that there are plenty of people who called the 2008 collapse a failure of the free markets.
They didn't fail us. Our central bank did and blamed it on anything but it's self.
that isnt exactly true either. The Fed didnt fail. Fannie Mae and Freddie Mac did some shady stuff that certainy DID cause a large portion of the failure. but they arent the Central Bank.
What failed us was government. They created law that required lending to people who couldnt afford it. Then government got rid of regulation that seperated regular banking from investment banking thus allowing for the creation of financial instruments backed by loans made to people who could not afford to pay them back.
so both stupid over regulation and stupid under regulation caused the failure. the Fed had nothing to do with that.
The fed has worked hard to bring about inflation. and we may yet reap a further, larger, far more nasty whirlwind because of the fed, but it was bad lending forced by the government with no controls by the regulators that caused the economic meltdown.
Part of it is due to the extremely self-serving rhetoric used by bank executives themselves.
When it came to cutting regulations and introducing "reforms" like the CFMA in 2000, the bank executives testified before Congress that such things were important for "the free market" to thrive. They specifically used that kind of language.
But then when 2008 rolled around, they didn't hesitate even one moment before stomping their feet and demanding bailouts from the government. Once the "free market" they had legally created for themselves began to fail, they screamed for Uncle Sucker to bail them out, and we did.
A few months after that whole mess, the banks were right back to their normal "free market" rhetoric, explaining why they had to keep parceling out multimillion dollar salaries to their executives, even as the government was backdooring cheap money into them through an array of non-TARP programs and tax breaks.
So... you have to be careful about what is meant by "free markets." Powerful institutions contort that sort of language to their own ends, and can sometimes rally people to support them on the basis of buzzwords alone.
What regulations ? What laws ?
The total disregard for the laws and regulations is what got us in trouble.
Actually very few laws were broken which is what made it more challenging to consider prosecution, assuming there was an appetite to do so which there was not.
No one master mind could have planned a more perfect storm.
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The US doesn't have free markets: there are plenty of regulations, laws, rules and government intervention. So if we don't have free markets, how did they fail us?
