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 crisis of confidence in corporate governance and the opacity of public company reporting are growing concerns. These flaws in the market system have been highlighted by the stock market bubble and pose a threat to orderly capital flows. Reform is needed, but legislation may have little effect and can carry unintended consequences. Better solutions can be found by examining the way in which private companies are directed and the type of financial and operational reports they use for budgeting and control. Institutional investors, bankers, professional advisers and Boards of Directors can implement the changes needed to provide more reliable information for valuation of public company securities and to counteract the casino mentality that infects capital markets.

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.