Arnold’s just written some of the best sentences I’ve read in years:

In the mortgage market, people saw risk-takers outperforming prudent lenders. So they took more risks. There is no simple fix for that. For the foreseeable future, we can count on investors sticking to prudence when it comes to mortgage lending. We don’t need any regulations to close that barn door.

But somewhere, some time, in some other market, there will be another outbreak of excessive risk-taking. You can’t make the system idiot-proof. They’ll just build a better idiot.

This is probably the most important pragmatic argument against paternalism. No matter how many laws you pass, there will always be high-risk investment strategies that happened to do well in the recent past. Foolish people who want to get rich quick will always be able to find these assets. Before long, the fools will be parted from their money. To make the whole economy revolve around their lack of foresight is just silly.