Thank you for your thoughtful response. You are right, the international financial system contains many problems at the moment that must be fixed. Developed nations around the world are now passing legislation to minimise future risk taking by banks (eg. by increasing capital reserve requirement, by suggesting ways to redesign executive compensation to minimise short term risk taking and by mandating increase in transparency and disclosure requirements) - the Basel Committee has issued the Basel III report with many standards that its member nations should adopt into national law.
Developed countries around the world know that banks are most important to an economy. Therefore as we have seen governments do not want banks to fail - they will bail out the banks as much as they can. Also, in times of trouble banks can raise interest rates.
Therefore, given the importance of banks to an economy, governments around the world will do everything they can to prevent it from failing - as we can see now. Other industries however do not get similar treatment.
Developed countries around the world know that banks are most important to an economy. Therefore as we have seen governments do not want banks to fail - they will bail out the banks as much as they can. Also, in times of trouble banks can raise interest rates.
Therefore, given the importance of banks to an economy, governments around the world will do everything they can to prevent it from failing - as we can see now. Other industries however do not get similar treatment.
