The creation of the Casino Economy starting in the 1980s caused a massive misdirection of resources into real estate investment, based on low energy costs and easy access to cheap credit and illegal imported labor. It created the illusion of wealth creation lifting millions into large homes, large cars, and large investment portfolios heavily invested in this unsustainable bubble economy that the Casino Economy created. And so, when it burst - as it had to do eventually - we were left with lots of real estate stock and plenty of unemployed labor in construction, and middle class jobs in the service industries supporting this bubble.

However, returning to a rational economy based on rational investment decision-making is now very difficult due to all of the resources, both human and physical capital that had been misdirected and wasted for over 30 years, is proving extremely difficult and wrenching. There is no going back, but how do we go forward? That is the question.

Brian, the student loan issue relates to a question you asked a couple of weeks ago regarding whether parents would refuse to pay for the kids' college educations. The real issue is not whether parents -- or kids -- are selfish, but whether middle-class couples are being forced to choose between educating their children, and long-term security.

To the banker that called in: your honesty and clarity is refreshing, i hope you continue providing your insight to the show.

Obama got played like a fiddle by the banks....

he really looks like a little boy against them..

We have a great crises... the banks are obviously to blame... And the banks make it look like they did nothing wrong...

real joke

Volcker has a proven track record of keeping inflation down. NYC would be more in debt than CA if not for him.

Tarp money was given because the govt didn't believe the debt to asset ratios. At the time of tarp the banks did not have a full understanding of their over exposure to risk.

put another way, hedge funds are just banks with cojones.

failure=bankruptcy

The risk management departments of banks have a great understand of what is and is not a proprietary trade

aside from having "too big to fail" insurance, can you mention other reasons a bank or investment house would hold onto that status rather than simply become hedge funds instead (as most of their talent did 1998 to present)?

what's stiglitz' position?

"Volker rule" is a Senates and Executive branch excuse for not being willing or able to get meaningful reform..

Everyone knows that they will not have to follow any menaingless "rules"...

So our governement goes back to doing nothing but asking for donation $$$ for elections...

so volker is the chap who set up Reagan's deregulation tsunami, by creating a huge demand for credit during the 80s (by jacking up interest rates so high our farmers rioted)?

so he's back for redemption? or is he our savior just because he was born before commercial flight?

Pete Peterson, Sarah Palin, Greenspan's briefcase, America's grey beards pick the darndest superheroes!