Free market economics are redundant

" I also accept that, there has always been an element of regulation in banking, which has traditionally been fiercely resisted by the finance industry, right-wing politicians and Libertarians, as a consequence of which it has been light, and as we have seen, ineffective." Last I checked, having a government body directly control the flow of capital to institutions (a la the Federal Reserve), universally insure an entire category of account (the FDIC), etc, are not light regulations. And that's just scratching the surface. In order to understand the degree of financial regulation in the United States, which you hold is less regulated than the rest of the world, it takes an ELEVEN VOLUME book (http://www.seclaw.com...)... and that's just the stuff on statute, let alone the case law, thousands upon thousands of things published in the Federal Register for unlegislated regulation, etc. Then State laws, and stuff that's probably illegal, like about half the bailout, that never really gets written down anywhere. Finance is about the most regulated industry there is other than the ones that have been completely outlawed. "Light" regulation would describe, say, software. Not finance. Libertarians, electorally speaking, do not exist in Europe, and neither do significant numbers of "right wing" politicians in the American sense. Yet Europe has been hit by the crisis too. As such, your accusation of causation is not just false, but impossible. And in America we don't have any power, as evidenced by the bailout :). " However, if the latest financial crisis were allowed to develop without any government intervention, chaos would have ensued." The latest financial crisis was a DIRECT RESULT of government intervention. Austrian economics (the most free-market school of economics out there) was predicting things essentially like our current crisis would result from government intervention over three quarters of a century ago (I direct you to the work of Ludwig von Mises). Fannie and Freddie, artificially low interest rates from the Fed, the CRA, etc, were a lethal, unstable concoction. This crisis was the inevitable result of that. This crisis would not have existed without government intervention. Chaos HAS presently ensued, but it would not have in a free market. " The banks would have collapsed, leaving not just private depositors and savers out of pocket, but also corporate investors such as pension funds and insurance companies" The banks in question in this crisis would have collapsed a LONG TIME AGO in a free market. Long before they had many investments. Better banks would have resulted, banks immune to this sort of crisis. " If you don't believe me, why else would a Republican administration nationalise private organisations at the cost of trillions of taxpayer's dollars?" Because it's a Republican administration that is both stupid and evil, I thought the left knew that :). Why are you trying to imply "Republican" means "free market" anyway? It hasn't meant anything within miles of that since Goldwater. " That is why no Western government can afford, politically or economically, to allow this situation to develop again and which is why they will insist on introducing legislation to regulate the banking industry far more tightly. " Contradiction. The legislation in question will, by it's very nature, cause this situation to develop again, and worse. You don't say "I can't allow you to die" before you shoot someone, so why would you say you can't allow a credit crunch (or "recession") to happen and then extent unbacked credit (the source of all the regulations) to make it possible?