Oh, if only our banks were nationalized, or at least more regulated, like in Europe. Then we'd never have gotten into this mess, right?

Via Arnold Kling I learn that:

We now know that it was French finance minister Christine Lagarde who begged Mr Paulson to save the US insurer AIG last week. AIG had written $300 billion in credit protection for European banks, admitting that it was for "regulatory capital relief rather than risk mitigation". In other words, it was underpinning a disguised extension of credit leverage. Its collapse would have set off a lending crunch across Europe as banking capital sank below water level.

Now look at this list of European banks with assets bigger than their nation's GDP. Tyler Cowen has more commentary, and a link to this story:

Europe moved to shore up more teetering banks Wednesday, as officials struggled to answer a basic question: How did their highly regulated banks, many of them state-owned, get suckered by the same speculative investments that have flattened Wall Street?