What Went Wrong, And What Did Not

An editorial in the October 16th issue of The Economist details how we should not view the recent crisis as an excuse to re-regulate the market, that to do so would take us away from a path which has the ability to create crises like the present, but has otherwise benefited billions who would have been worse off. We should instead view the crisis as an opportunity to learn how to better manage the market.
This begins by how to view the bail-out, not as an ideology-driven choice, but as a pragmatic solution. The current choice of adding public capital to banks is due to the belief that it is what is necessary to allow them to provide credit, and that the cost of not doing so would be greater.
Aware of the danger that having such a clear safety net might have on behavior of future banks, they recommend clarity in the government's role. By making certain that when making this rescue, they not engage in protectionism, cronyism, and by getting out of the public sector as quickly as possible and with a profit to the public.
They also see a second battlefront as the market moves forward, and this is an ideologically contest which will attempt to undo the success of anglo-american capitalism. The first place they see it coming is in a populist response from a global public that has had the virtues of free markets preached to them for the past 30 years. The challenges could come from those countries who perceive the lessons to be learned from the credit crisis such that they apply them to non-financial sectors and create more regulation on goods and services in their countries and between countries. Even allowing for the present credit crunch, hundreds of millions of people around the world, in countries like China and India, have had their lives improved by their governments lowering barriers to trade.
The second place they see challenges coming is from those who criticize deregulation, and they give some credit to this position. The credit market and the positions that banks took in them led to situations that would be untenable the moment that problems arose or became too difficult to continue to handle. While they agree there need to be some regulations in place to prevent another credit crisis in the future, the other policies, such as the Chinese and other Asian countries keeping their currencies artificially low to such an extent that the American market was flooded with investment, and also the Federal Reserve keeping the interest rate too low for too long, need to be examined in how they contributed as a part of the revision of policies that led to the larger crisis.
Remembering the virtues of capitalism is their final point, that investors and regulators learn and seldom make the same mistakes twice. They hope to see good regulations in place, and a limit on the regulations that could end up contributing to a future crisis.