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Sorry but you are just following a party line opinion from somewhere.

“The current financial mess is not a result of deregulation, but of government meddling in the economy.”

No, that’s the red herring.

It’s the over the counter derivatives and the housing bubble. The derivative trading allowed the creation of tradeable financial instruments that held mortgages in split risk forms of speculative market trading. Everyone was getting rich off the rising values of speculative real estate ownership. While it was going up it was OK. As soon as there were more properties for sale than buyers to buy them then the balloon burst. It always happens that way. All you have to do is to honestly look at the history of the housing market. BTW, I got the Greenspan memo that the housing bubble was about to burst. I knew there was going to be a collapse back in 2005. I’m a builder. I know things.

Yes, there was a housing bubble and yes it burst. And yes that always happens.

This time, the bubble was artificially prolonged by the government mandating loans that should not have been made and by massive fraud at Fannie Mae and Freddy Mac. Financial instruments based on the assumed value of the fraudulent loans were of course overvalued. The risk associated with the loans was underestimated.

Additional damage was done by the selective "bailout" (courtesy of the taxpayer) of some favored financial institutions. In addition to the initial cost to the taxpayer, keeping such institutions (e.g., Fannie and Freddie) alive will only perpetuate the problem. Further, the massive bailouts were used as justification for the obscene "stimulus" packages.

The current attack on Greenspan by Obama's minions is just part of the overall assault on capitalism by the communist in chief. Greenspan was the most recent Fed chairman with no Obama connection (Obama renominated Bernanke, so Bernanke can't be at fault!). The solutions proposed by the neo-communist (Democrat) party always involve more government control, so of course enemies of the state will be demonized for daring to suggest any sort of market solution to a problem.

Why have unregulated Canadian banks been so successful? I believe our love of small banks is one of our problems. I’m no authority, but as I understand it, our mini-banks fell like dominoes back during the Great Depression. I heard Mark Stein talk about the success of Canadian banks as well — less government control.

Bubbles very often come from government manipulation, such as coercing banks into accepting higher credit risks, or tempting them with artificial safety nets.