Normally I try to ignore blanket "fix the broken world" advice; however, when it comes from Nassim Nicholas Taleb, author of "The Black Swan" and certified macroeconomic prophet when it comes to the global credit crisis/economic meltdown we're currently laboring under (watch Charlie Rose's interviews) I tend to pay attention.
Here are a couple choice points from Taleb -- the entire Financial Times article is a must read.
Nothing should ever become too big to fail.
No socialisation of losses and privatisation of gains.
People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. Instead, find the smart people whose hands are clean.
No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.
Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products.
Governments should never need to "restore confidence". Governments cannot stop the rumours. Simply, we need to be in a position to shrug off rumours, be robust in the face of them.
Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. We need rehab.
Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the "Nobel" in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.
I've written about a couple of these issues before -- look at my tags marked "criminal class" -- but it takes a heavyweight to hammer the point home. And it's a remarkably simple point to make: We need to make banking boring again, and get back to recognizing actual production (i.e., goods produced and services rendered) as productivity.