TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

Crooked Timber writes on perhaps the most dangerous effect of this financial crisis – the discrediting of free-markets, even if they are not to blame:

Very roughly speaking, when a crisis occurs that is difficult or impossible for the prevailing wisdom to explain or deal with, intellectual entrepreneurs have an opportunity to create a new (partly self-reinforcing) collective wisdom. We’re most likely in just such a crisis now. Which set of intellectual entrepreneurs are going to succeed in reshaping a new collective wisdom – economic nationalists like Sarkozy and Putin, social democratic globalizers like Dani Rodrik, or some other crowd entirely – I have no idea.”

Unfortunately, whether the free market is to blame or not (and in this case, although partially at fault, companies were encouraged by law to give risky loans, and interest rates were too high in 2003), it tends to receive all of the blame. Even if government involvement played a large part in crises, people tend to respond that we need more government power, effectively calling for more poison that lead to the sickness.