In all these cases though, in the final analysis there was not enough capital behind the risks that were being taken. The sophisticated financial system of the 21st century was supposed to spread risk, but a lot of the risk ended up being concentrated on the books of highly leveraged institutions. High risk and high leverage proved to be a fatal combination.
It always does. Some significant questions arise from all this. The main one, put at its broadest and simplest, is whether something can and should be done to dampen the profound cycles in financial behaviour, with associated swings in asset prices and credit, given the damage they can potentially do to an economy. This debate has been going on for quite some years.