Yes. I want the economy to crash! It will emerge stronger and the mistakes won't be made again - at no cost to the taxpayer. Such a crash would also remove inefficiency in every market and encourage competition for the shrinking number of customers, who will be more careful about where they spend their money. As an example, how many people are going to keep buying expensive MS Office during a recession when OpenOffice is free and will fulfil all the needs of most computer users? Consumers would be forced to look at all of the options.

Oh, and the reason why it was favourable to sell mortgages to people who couldn't pay was due to government intervention in the first place - an act of Congress that changed the rules to encourage it.

 Well, as you should know; things are, on the whole, going to be far more regulated than what they were before, I doubt any government would want to see this again.

^Now that's what I call a complex sentence.

One thing people must learn, however, is that the economy is on a cycle, and after every boom, there is a recession, then depression, and then a recovery period, and then another boom. This cycle usually lasts 7 years.

So you're hoping a economic crash will speed up the adaption of open source :) (btw fedora 10 is out today !)

I agree with you though a crash and rebuilt of the system would be a better way of solving this instead of just trying to patch things up with a ridicolous amount of money that belongs to the people not the banks.

I think we're always going to disagree on this, but I think the increased regulation and intervention that will be in place long after this situation subsides are BAD and will cause more inefficiency in the economy. The economy "works" usually because it has freedom to react - good or bad - to unplanned events. Governments will never be able to make it work that well.

Yes, I agree that we will always have a boom-bust cycle - regulation to stop booms or busts is bad, though, right?

 Yes, it is, but this credit problem is something that has happened on top of the regular cycle, making the recession far worse than what it could have been. Regulating credit control can help the economy overall, help people become happier, and can make the next recession far easier to get through.

EDIT: Forgot to add "imo"

We'll never know. The deregulation way has never been tried - governments always give in about now in a recession.

Not at all. The point of any government is to make the long-term investments businesses can't or won't make - science, education, research, infrastructure, a diverse mass media, a fair and equitable legal system.  

Just look at global warming. Why hasn't the magic of the marketplace solved that problem? Because you can't price future costs of warming today, no market mechanism can do that. You need objective scientists to tell us what's going to happen, and then a diverse mass media to report the truth, and then governments to step in and jump-start renewable energy programs, by subsidizing clean energy so consumers can afford to buy it. Only then can entrepreneurs step up to the plate and carry the ball from there. Germany is doing this, China is doing this. Successful economies are a blend of smart government and innovative businesses, working together. 

The problem with letting the banking system go under is similar. Yes, any individual bank which makes bad decisions should go under, no question. But when the entire credit system seizes up, even sound, well-managed banks are exposed to runs and crises of confidence. That's what's happening now - most of the banks are fine, it's the mortgage mess which is the problem, and trust has broken down. So the government does have an obligation to rescue the system - but not the bankers involved, who should be fired, their bonuses seized, their assets impounded. 

I do recognise the importance of government and how it works better in some areas. I just want a clear division between the two: anything that works best as a monopoly (e.g. education) should be government, and anything that works best with competition (e.g. banking) should be private. Therefore private monopolies and government economic intervention are my big two problems with the current systems.

The problem I have with these interventions is that everything seems to be covered in a cloud. I'm not exactly sure where the money is going. I have no idea if billions are being fleeced out of the system or not. There doesn't seem to be a whole lot of transparency or regulation and for all I know Paulson is handing out checks to his buddies.

^not that we could stop him since he was given total control