Why? People gambled on subprimes and CDOs and the market sorted things out. Sounds libertarian enough to me.
Right, and now we should just let the economy tank so businesses will learn a lesson.
It also makes libertarianism more attractive because it turned out that lending to poor people didn’t help them. It just screwed everything up, and put a big hole in the idea that society can and should lift up the poor.
If you’re a libertarian you probably believe the markets are better equipped than the government to handle just about everything. States around the world have been pouring trillions into banks. Bush even said something along the lines of ‘guys, I’m no stinking socialist’. The libertarian option would be to let the bad companies fail, so that better enterpreneurs seize their assets and make better companies. Creative destruction, so to say.
If you believe governmental intervention shouldn’t let the economy tank, then you implicitly agree with new Keynesian economics. The huge amounts of money poured into the markets and the expansion of fiscal policies shows that people in charge wouldn’t risk following the invisible hand theories of economic thought.
I don’t know what I believe. I don’t know enough about it. The best system is probably a combination between regulation and freedom. I do know that it should be pointed out the connection between the recession and lending to poor people who should not have been lended to, simply because its a real example about something people spend a lot of time theorizing about.
On the plus side, vacation in the US and Iceland just got a lot cheaper 
Does that mean DT is visiting Amerikkka? 
Curtis, of course you shouldn’t lend money when you can’t get it back. Either give $$ away or subsidise the loan, but don’t create a whole market on these loans. Loans without any downpayment? Loans with a monthly installment that’s 80% of your income? Yeah, poor saps and not-so-poor saps who thought their house’s rising price would set things right lunged at the cheap money. I’m shocked. I expect the guys who are the professionals in there to know when their lending schemes won’t get them money.
edit: Oh yeah, Iceland vacations! The euro/$ has been falling, which is good for German businesses and their exporting schemes to take over the world.
The Euro-dollar exchange rate is starting to tip in favor of American travelers.
The Euro now converts to $1.31 U.S. dollars, down from a peak of $1.60 earlier this spring.
So for Europeans, Amerikka just got a little more expensive to travel.
And speaking of Iceland, a little financial crisis joke:
Q: What is the capital of Iceland?
A: About $3.50
This kind of jokes (economy in trouble) suddenly became in vogue among industry insiders.
The credit crunch is getting bad, isn't it?
I mean, I let my brother borrow a tenner a couple of weeks back, it turns out I’m now Britain’s fourth biggest lender.
Q: What is the difference between an investment banker and a pigeon?
A: A pigeon can still make a deposit on a BMW.
Q: What is the difference between an investment banker and a large pizza?
A: The pizza can still feed a family of four.
Q: What does a hedge fund manager with no fund to manage say?
A: Would you like fries with that sir?