Abstract
The boom of the later 1980s was not due solely to financial institutions greater freedom to lend to the private sector. This was activated by over-optimism about the economy's performance. These two influences combined to cause the 'over-heating' for which the current recession is seen as the cure. Although the removal of restraints on financial institutions contributed, it was a once-for-all process which is now virtually complete. The case for returning to a regulated financial system is weaker than the case for living with an unregulated one, despite the higher debt ratios and other conditions which have resulted from the transition to it.
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