Deregulation gave borrowers a new-found freedom, and for some of them it was a case of giving them more rope with which to hang themselves. “Failure builds character”, they say: so, too, does failure give rise to a corrective process that makes a repeat less likely.
We certainly had this experience in Australia during the 1980s, which was the main reason why our financial sector was in such good shape when the Asian crisis hit in the 1990s. The corporate sector also learned the dangers of currency speculation and became much more cautious.