Overloading the foundation, whether of building, a government, or an economy, can only result in failure. As you pointed out, the only way to prevent a future collapse is to reduce the size of banks to a level where they are aware of the base they depend on. Giant banks tend to ignore local conditions, resulting in problems reaching unmanageable levels.

The effects are much the same as the British Empire actions that led to our Revolution. To large an organization encourages overlooking problems until too late.

I generally don't agree with your take on regulation and its reform, but I think you've really hit the nail on the head when it comes to Fannie and Freddie. I particularly like the fact that when you bellyache about a problem, you provide an alternate solution. It truly takes a person of substance and deep understanding to not only complain, but also provide a viable substitute.

Your alternative to TARP last year remains my favorite of all analysts' responses to that ill-thought-out fiasco.

It's lamentable that commonsense and market forces are all being thrown out the window in exchange for politically expeditious and popular short-term band aids. Consequently, your superb advice will be completely ignored by our leaders. What's worse, I believe your suggestion that a decade-long downturn could be the result of the current mismanagement of our government hedge funds is much too optimistic. I instead envision a generation-long malaise that might even go longer. In effect, I foresee a gradual Latin Americanization of the United States a la Argentina of the last decade, and Brazil of the 70s and 80s.