The Current Discussion: Does the crisis on Wall Street mean that the American style of capitalism is no longer the model for the world?

The job I held longest was in banking, for well over 25 years, and a major portion of it involved trading in the markets. A few lessons I learned from were actually common sense (which is not very common these days) and quite easy to grasp:

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The Current Discussion: Will the current financial crisis discredit free-market policies in your country? Is socialism an echo of the past or a preview of the future?

The basic presupposition of a free market approach is that people will be responsible for the choices they make. The choice to participate in an already over-leveraged market is not an imposed one. At the end of the day the person investing in the stock market knows, or should know, the risks that he or she faces.

Thus to assume that the practice of free market economic choices when leading to a crisis will result in a discrediting of the free market itself stretches the argument a bit too far. What is now happening in the financial markets is akin to a bloodbath, and nothing is being spared in the ensuing meltdown. It will eventually stop - it has to. The question is how far down. For a man tumbling down the cliff without a parachute, it's little comfort to shout, 'You'll be OK, only another fifty feet to fall!' The fact is that this particular man will not be okay -- however, the sentiment of the market will return and once asset values have depreciated enough to be reasonably comparable to the equity levels that support them, the market will then settle down.

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