"If Only"

Richard Posner lists the lessons he thinks we should learn from the economic crisis:

Capitalism in Crisis, by Richard A. Posner, Commentary, WSJ: ...It's not too soon ... to derive some important lessons from the economic crisis:

First, businessmen seek to maximize profits within a framework established by government. ... Rational businessmen will accept a risk of bankruptcy if profits are high... Given limited liability, bankruptcy is not the end of the world for shareholders or managers. But a wave of bank bankruptcies can bring down the economy. The risk of that happening is external to banks' decision-making and to control it we need government. Specifically we need our central bank, the Federal Reserve, to be on the lookout for bubbles, especially housing bubbles... Our central bank failed us.

The second lesson is that we may need more regulation of banking to reduce its inherent riskiness. ... Finally, let's place the blame where it belongs. Not on the bankers, who are not responsible for assuring economic stability, but on the government officials who had that responsibility and failed to discharge it. They failed even to develop contingency plans to deal with what everyone knew could happen in a context of escalating housing prices (it had happened in Japan in the late 1980s and the 1990s). Lacking such plans, the government responded to the crisis with spasmodic improvisations, amplifying uncertainty and mistrust and thus retarding recovery.

And let's not forget to apportion some of the blame to the influential economists who assured us that there could never be another depression. They argued that in the face of a recession the Federal Reserve had only to reduce interest rates and flood the banks with money and all would be well. If only.