D. McHattie

Another Look at Krugman's 'Hangover Theory'

"it may be necessary to restrict the degree to which the portfolio of firms and individuals can be diversified. This implies forcing individuals to bear more risk than they would otherwise choose, in order to reduce systemic risk."

Sort of like a ship with a compartmentalized hull so that if the hull is punctured the entire ship doesn't fill with water - only that portion that receives the puncture.

The economy is naturally compartmentalized. The problem is that we had a federal reserve, congress and 16 years of federal governments whose technological ignorance/arrogance, political opportunism and blindness caused them to steer the ship at full-steam straight into waters infested with icebergs.

And the band (CNBC) played on.