Well, we've moved beyond all that, and you've asked a useful question, since the so-called free market capitalism has failed utterly and we're now in socialist capitalism - whatever that might be - a welfare state for banks?
The Russian TV station on SKY and others are now milking this failure for all its worth and it makes interesting listening and viewing.
People are incorrectly assuming that we had/have a free-market economy. The world economy is riddled with government interventions like direct/indirect subsidies, tax (dis)incentives, stimulus packages, etc. That is not a free-market economy but more adequately called interventionism or corporatism
Yet it was arguably the banks fault that we are in this mess.
I think we need to gain some leverage on these lending institutions.
Institutions that lent money to people who couldn't pau it bank, banks who bought such debts without checking, central banks who met and imposed higher capital ratios causing local banks to become insolvent overnight - who are totally unelected and unaccountable - institutions like the B.I.S.
Yes the banks had their fair share in causing the problem but they were only doing what the world monetary and banking system allowed them to do. Fractional reserve, central banking is the disease, bankers bahiours and the financial crisis are merely the symptoms.
There is a lot of anecdotal evidence to suggest that this crash, like othere before it, was not "inevitable" as those who like to invoke higher powers to cover their tracks might like to claim.
It is a certain fact, for example, that not one of the watchdogs or regulators did their job even moderately well - a statutory body looking the other way in the face of a build up to a bust suggests either they did not know what they were doing [plausible - if so why hire them in the first place] or they did [also plausible and this implies corruption and collusion with those riding the crest of the wave - to keep it going].
That's known as a family fork in chess.
I have spent some time trying to make sense of the wordings of financial regulations (it is very difficult unless you are from a legal background), but I have yet to find a specific regulation or legislation that points to any 'wrong-doing' on behalf of banks. Therefore I do not believe that any past, present or future regulations would have averted the financial crisis. Ultimately, taking away the 'loss' part from the profit and loss system, as has been done with large financial institutions, is paving the way for the same people and companies to take on the same types of risks, as they know they will always be saved.
The boom and bust cycle of a free market causes a lot of damage to societies, institutions, communities and considering the world-wide government bail outs perhaps all banks should be nationalisd or at the very minimum brought under government control.
Otherwise the American Experiment - which we all slavishly ape - will be seen for what it is, not - a government of the people, by the people for the people - but - a government of the people, by the banks, for the banks.
And so will ours unless we get a handle on it.
As for the government not knowing how to run a bank - that old canard trotted out when nationalising was first suggested - can you show me a banker who does?
Boom and bust cycles are a phenomenon of interventionism/corporatism and fractional reserve central banking. Britain invented it, the US copied and perfected it, and it then spread to the rest of the world, as you rightly point out. But it is not free-market capitalism, not even in the remotest sense.
Could somebody please explain the need to even have Irish banks. Let them go to the wall, because the vacuum would soon be filled by continental banks.
I agree. Apoint liquidators to sell off whatever can be salvaged and let the rest wind down. Foreign banks could come in and buy up existing branches to use as their own. Ideally new banks would be formed, but I believe that regulatory requirements pose to high of a cost for new banks to be created.
Bankruptcy does not have to be chaotic. I'm not saying it wouldn't be difficult and without interuptions, but it would ultimately set a precendence for existing or new banks, that if they make mistakes they're on their own.
Nationalising or bankrupting banks is only a viable option if there is viable solution to prevent a crisis from happening again. Many financial crises have occured over the past decades, and every time new regulations are introduced, and every time banks find new ways to mess things up. The only thing these corporations understand is loss of money and bankruptcy, and if they don't fear this as a possibility then we will end up going from one crisis to another.