The following comments represent my own thoughts, though, not his -- and though there is much overlap, like most modern political commentators, his perspective (at least in his writing) is secular. Here at Reformed Trombonist, all commentary is seasoned with the Reformed perspective.
1. The economy is a complex system, which we understand only in very small part; mostly, we just have collections of theories (or notions).
2. Every change in the legal framework of the economy, even the slightest, has implications its framers do not understand. They're hard to understand even in hindsight, let alone in foresight.
3. This ignorance opens economics up to ideological interpretation, which leads to politically-motivated decision-making, leaving the mechanism quite vulnerable.
4. Effective economic decision-making, defined as decision-making helpful to economic growth, consists largely of being afraid, very afraid, to tamper with the machinery; and, when forced to make changes, to make them in a manner which is reverent and respectful towards the good that exists, and suspicious of unsubstantiated promises -- not "Change that we can believe in," but, rather, change that is necessary and as reliable as we can make it. Save your faith for your Lord, and do not spend it on the imaginary wisdom of man. ("In God we trust; all others, bring cash.")
5. Effective political decision-making, defined as decision-making helpful to the decision-maker's political career, consists of convincing enough voters that you are on their side, which often diverges from effective economic decision-making.
Politicians have their own set of incentives, and they are not necessarily the same as the country's. (France and Norway may have suffered under the Nazis, but how much did Petain and Quisling suffer? Until after the war, that is.) When thinking of politicians, don't think of them as the brains of society. Just because a tick is attached to your scalp doesn't make him your brain. Politicians are at least as ignorant as the rest of us about how the economy works; they only know what they think is good for them. After doing his part to wreck the economy, when all is said and done, Sen. Dodd has a million-dollar country house in Ireland waiting for him when he retires to reflect on his years of public service. (Nice, huh?) We may struggle in the years ahead largely because of decision-making that took place at his level, but don't worry about him. He'll be fine.
This is the framework of our current ailments. Back to my dead horse: how is any of this not essentially a problem of morality? Somewhere along the line, we as a society lost the ability to inculcate a sense of honor and decency in our politicians to balance out their own human impulses toward self-aggrandization, allowing them to think only of getting re-elected. We lost the ability to instill a sense of shame about being greedy to those on Wall Street who thought only of inflating their portfolios, and consequences be damned. And even many homebuyers are at fault too, for chasing single-mindedly after their own McMansions and dismissing any nagging doubts that might have tugged them back toward financial prudence. A democratic republic such as ours cannot survive if too many of its citizens and decision-makers do not behave responsibly. This caveat has always been with us even from the outset -- "A Republic," proclaimed Ben Franklin, "if you can keep it."
These are the fruits of a deep spiritual problem. What can the media talking-heads possibly say that would convince decision-makers to regard the welfare of others more highly than their own? What economic theory can possibly provide, with any authority, a reason to put other people's interests ahead of one's own? If even one in ten Congressmen or financiers had seen this coming and made good moral decisions, would all this have happened?
We are paying a terrible price for the failure of the Church to teach good theology. It's been a long time coming, and now it's here. Congratulations, power-mongering liberals. Congratulations, greedy financiers. Congratulations, irresponsible borrowers. The system is broken. Good luck and Godspeed to all of us in our attempts to fix it or find something better. We'll need it.