What I realized about the entire chapter of Greece was that you can't blame the government and corporations for all the problems in the world.

Sometimes we as individuals need to step back and think of our own financial future. Reckless spending on our behalf without planning for the future are disastrous. Savings and investments are important for our future. And we need to think of it.

There is a point where the government's job ends and ours begins.

1. I wouldn't think for a second that Michael Portillo is a reasonable unbiased analyst here.

2. How do we prevent individuals from spending recklessly? Seems like government is going to have to play a large part in that story.

On (2), it's not an issue of blame, and personally I'm not interested so much in who to 'blame' - we're doing economics, not philosophical ethics. Rather it's an issue about what we do about it. Simply telling people to act differently is unlikely to be a sensible solution.

How about not bailing out banks that insist on making poor loans?

The History shows that some of the banking system with less regulation (and sometimes not central bank) have shown to be much stronger. This is large subject if you are intressting look for "free banking".

The most comprehensive book on the subject is: The Theory of Free Banking: Money Supply under Competitive Note Issue by George Selgin

Download here: http://files.libertyfund.org/files/2307/Selgin_1544_EBk_v5.1...

It might be easier to just go to youtube and look for some videos.

The most importend thing is that you dont just bail out the banks, it dosn't matter what size they are.

http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act

'Many commentators have stated that the Gramm-Leach-Bliley Act’s repeal of the affiliation restrictions of the Glass-Steagall Act was an important cause of the late-2000s financial crisis.'

Here in the UK we had something similar with the 'big bang' of bank liberalisation in the 1980s, resulting in the City of London becoming the world's largest financial centre - and subsequent problems.

Whilst I'd look into History and Economic Theory, I wouldn't look to Cato Institute fellows for sensible views on this matter.

The deregulations allowed banks to be more agressiv, that is only bad if you give them a strong insentiv to be agressiv. Maybe it mad some of them more unstable but it would not have changed the fundamentals of the crash and it is in such a situation only more importent that YOU DONT BAILE THEM OUT.

Prof. Selgin is btw a well regard specialist on banking and money, he does not earn his money from the Cato Institute and they dont direct his research. Its nice that only attack where somebody is working not what they say.kj

Since all you did was paste the first counter argumetn you fund on wikipedia I highly doute that you even no any ecnomics, and only posted it because of your 'deregulation = bad' bias.

I was only mentioning the Free Banking School because of the comment "suitably sized and regulated" is not the only way of looking at things. Infact I think pretty much every economist agrees that the banking regulation pre 1933 where very bad and made the great depression worse. Passing rules to make banks smaller does not really help in itself.

If you have read the article by Stigliz that is refrenced after your comment on wikipedia, you will see that stigliz agrees that the bubble was caused by inflation ("Greenspan presided over not one but two financial bubbles. After the high-tech bubble popped, in 2000-2001, he helped inflate the housing bubble.") and he says:

"The most important consequence of the repeal of Glass-Steagall was indirect - it lay in the way repeal changed an entire culture. Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people's money very conservatively. It is with this understanding that the government agrees to pick up the tab should they fail."

What you will notice that he is pro bailing out bank! The banks that failed in the crash where not acctually banks that where "Commerical banks" but the government bailed them out anyways! Its funny that the free-market guys are the ones that are "pro-buissness" acctually its the other way arount people like him are the reason taxpayer are paying for failed banks.

Free Market guys dont go deregulate and then bailout, if a bank investment or not goes done thats what they deserve!

With the FDIC and the FED banks can go on longer then the should and therfore pay back less when they are finally go down.

http://en.wikipedia.org/wiki/Moral_hazard

The Reserve Bank of India (India's equivalent of the Federal Reserve) does this by encouraging saving in small ways.

In India, savings accounts are the default for retail individuals, not current/checking accounts. Most banks only permit you to open an interest-free current account as a business account. The small amount of interest earned in a savings account acts as some incentive to keep the money in it. I believe no overdrafts are permitted on savings accounts either, so easy credit in the form of spending more liquidity than you have becomes just a little more inaccessible.