So, the banks are really just reverting to type?

OOOHHHH, banks, don't get me started. I refuse to support them any longer. I know that there are a few good ones out there, but until the industry cleans up their greedy act I refuse to keep any kind of bank account at all.

Interesting facts you shared about Haiti. I was aware that the island nation was almost completely de-forested and eroded and I saw the same PBS program you mentioned. What made me most angry is the fact that it took 60 years for the USA to recognize Haiti because we did not wish to encourage the uppity folks of a different race and we had our own slave-economy to protect. Still, the US occupied Haiti for about 20 years until 1934 and we almost got them on their feet. Things went sour for them again after we left.

It is also sad that Haiti was forced to pay anything to the French. The bloody war of independence in Haiti was fought only after France went back on their pledge to free all slaves on the island.

California seems to be going the way of Haiti in some respects. When strict pollution legislation was enacted many businesses left the state for sootier pastures. There are so many home foreclosures in the state that it is impossible to know what the value of property is now. Now there are over 2 million acres of fertile farmland lying fallow in the Central Valley because we don't have enough water for irrigation. Our economy is based largely on unrestricted, foolish growth - some day the we will pay a huge price for all the greed and lack of effective planning.

Great question Titou. (((HEMP))) "California Dreamin" is a favorite of mine too. Like you, I feel that things are pretty whacky everywhere. I know folks living in rural areas who avoid cities like the plague.

Are you saying that American investment and commerical banks destoyed Haiti's economy? Or are you making a borader point that in the absence of effective government regulation and oversight many/most commercial activities will tend to such extremes in pursuit of profits that they often/inevitably destroy the host economy?

It can't be the former, so it must be the latter or something much like the latter point. In which case you have to ask the question, where was the effective government regulation and oversight and why were those dificiencies not examined by PBS' Frontline.

It was a surprisingly small percentage of sub-prime mortgage defaults following a rise in interest rates that precipitated the residential mortgage foreclosure crisis which morphed into a multi-pronged economic crisis due in part to the securitization of mortgages whose values fell more and more precipitiously as the foreclosure crisis persisted and eroded residential real estate values and put into play the complex OTC financial derivatives of which you speak. Financial derivatives which might have been otherwise been minimally regulated to provide process transparency to investors and/or government regulators and some minimal but sensible substantive regulation like requiring one to have an "insurable interest" in the transaction involving those credit default swaps.

It was the GOP-controlled Congress in 2001 that passed the bill prohibiting the regulation of credit default swaps, and which Republican Presdient George W, Bush subsequently signed into law. I don't believe that this Democratic-controlled Congress has done anything to remedy the situation and it hasn't been a priority for President Obama, so if you think banks will change their behavior in this regard, except to adopt what are presumably better risk models, without the federal government making changes to existing law, then I would suggest you may be delusional.

By the way all businesses seek profits in a free market economy. That is precisely the point of such an economy, and the various levels of government all benefit from taking a slice of thos profits plus a slice of the income earned by their workers and investors. There was a benefit to government as well as the private sector economy in de-regulating OTC financial derivatives or they would not have rushed to enact that legislation. There always is a benefit, the bigger question is have you correctly guaged the risks and projected the costs and the amount by which they may exceed the benefits that you have projected. And the resounding answer is no the federal government did not accurately identify and weigh all the likely risks and benefits with respect to the deregualtion of OTC financial deriavtives, and they still haven't done so in 2010 and counting.

Excellent question and excellent responses by TK and Gene.

I would agree with TK's articulate comments up until the last sentence: I believe the federal government has accurately identified and weigh all the likely risks and benefits with respect to the deregulation of OTC financial derivatives, which includes the risk of not getting reelected without the financial support from the banks and related lobbying groups.

Is it me or do our political, social, and economic institutions look more and more dysfunctional?

Gene- "California Dreamin" use to be my favorite song!

EDIT: Titou- I understand your point.
Gene- A few years ago I took a trip to Utah. On the way, for the heck of it, I followed a dirt road that led to a small "settlement" at the base of a canyon (off the grid). It is looking more and more attractive!

Type?