Subprime mortgage loans were the catalyst, not the cause, of the crisis. Policy errors in both the public and private sectors stretch back nearly 40 years. Inflation, monetary policy and lax regulation all played a role in allowing individual greed and irrational risk-taking to flourish. The paper provides background to the mania that generated an alphabet-soup of derivative “obligations” with uncertain—possibly unknowable-values. The growth of derivatives and the failure of Fannie Mae and Freddie Mac are linked to the tenfold growth of median house prices in the United States, which ballooned from $11,900 in 1960 to $120,000 in 2000. Residential properties became trading inventory for speculators rather than fixed assets for homeowners. Turmoil, the author suggests, will continue as long as financial instruments are manufactured and sold through “fantastically complex” statistical models and mathematical strategies that bear little relationship to fair market values of real assets.

The debate about road use charging continues. No simple and effective proposal to limit center-city congestion has attracted popular support. The economic case for reducing vehicle congestion in towns and cities is indisputable, as shown in the recent article by Begg and Gray, but their solution could take a generation to implement. The present article proposes using existing infrastructure to create a low-tech, flexible and country-wide method of limiting the use of automobiles in the centers of cities at specified times and in easily defined areas.