In theory, you're right that more regulations might fix things. Of course, "in theory," my free market ideas are right, too.

In the real world, things get messy. Anybody who says they fully understand the financial situation, or the current regulatory environment, particularly when you expand it world wide, is lying like a rug.

It's painfully obvious that the people in Washington are feeling their way through this, trying almost random actions hoping something will work. Unfortunately, it shows. From watching what's happening, I no longer know where the real fiscal problems end and the problem of fear, uncertainty, and panic start.

They can heap regulations on the problem. Some may plug the leaks for a while, but the market will either route around them, or all-too-human politicians and their financial supporters will create openings in the rules for political and financial advantage. Make a hundred new regulations, and ten years from now some Congressman with his pockets filled with Wall Street or GSE cash will be fiddling with it to make his voters happy and his contributors rich and powerful. We're here because that's what happened before.

Remember, this crisis follows many other financial disasters over the past decades, all of which were declared "fixed" by new laws, new agencies, and new regulations. The New Deal banking regs were supposed to end bank failures forever.

Lather, rinse, and repeat.

People need to sit down and think about how the entire system is structured. I wish I had a brilliant solution. I don't. My first run at most systemic problems like this is to see if you can decentralize things. Fix it so damage doesn't spread through the system like wildfire. Maybe the key isn't so much banking regulations as anti-trust issues, but I'm shooting in the dark there.