A ‘safety net’ is not always an unwelcome prospect, it allows new businesses to take a chance. Many fail, to be sure, but some go on to succeed exceptionally well.

If you compare a scociety like Germany for instance, once you fail you’re a failure for life. Such an environment does not foster very much creativity and imagination.

The system can (and does) get abused, but there are many checks and balances in place to minimize abuse.

The same goes for credit cards and home mortgages. With an intact financial system (such as we used to have) people were forced to pony up a 20% down payment, have good credit scores, and qualify for a 30 year fixed loan with a debt to income ration of not more then 35%. This worked very well for many years.

It is when these rules are relaxes, such as they have been the last 4 years or so, that we get into trouble. A restoration to the normal requirements will put us back on track again. Nobody is arguing that there’s going to be a lot of pain and suffering, but that is normal, and discourages future binges. Sounds a lot like dieting.

Don’t be so quick to denounce the system we enjoy in the US, but we should also not be so naive to believe that it is the best or a perfect system. We must keep on our guard and squash errors before they become catastorphies. This is where the Fed and regulators failed, they looked the other way for far too long, enjoying short term benefits and ignoring the long term consequences.