Peter, it's a great theory. Please keep in mind that Marx and Engles put a lot of time into the people and economic concepts. Das Kapital is a tome and covers all aspects. Hwever, they had the same problem that rocks all, from Voltaire and Jefferson to Smith and Gresham people!
In an ideal world all would work, but there exists larceny in just about each and all of the human race and when it comes to money it becomes enhanced. There is also the adventure spirit. The 1849 goldrush is the best known, but if you compare this to the dot.com and currrent housing there is little difference. These have been going on for ages and it is a human trait.
The only way that these types of situations can be prevented is direct oversight and intervention. Failure arises because the watchdogs are human and wind up with a fat bone themselves. The current housing relief bill is doing just that - replace one watchdog with another. While there is public attention everyone will do there job. Twenty years from now, when all of this is forgotten, it might start again. All of the current failures can be addressed and the loopholes closed but this will not prevent the human mind from finding new ways to get around the obstacles.
To believe, you only have to look at internet security - updates are daily.

I like some of those ideas, especially the one tying long-term performance to compensation. Sometimes, the simplest and clearest idea is pure genius.

Yes, bankers' pay should be placed in an escrow account for 5 years or more, to see if loans have been paid off. Great idea.

I decided to return to this post for the second reason, but read the others and have to comment on the idea of a 5 year escrow. This is a great IDEA but it infringes on the very concept of free market capitalism. Like I said, great idea, and we could also apply this concept to ALL private investor held business. With this type of plan in place execs. would not walk away with golden parachute packages. Great idea - with the glide path of a rock.

The reason I returned here was your comment on the firing of experience and the business being taken over by youth. You have a major point. I am the only one with this theory, but all are welcome to check the historical record. Reasons given for the great depression are many, but none contain this: One of the main reason was the removal of experience that may have constrained the "roaring twenties". The Spanish flu of 1918-20 was a pandemic that killed a full one-third of the worlds population, but it had a peculiar twist. The majority of deaths were in the 30-45 year old bracket. It left this country with a youthful population. I rest my case. It's fact.

We need to set a limit on Fannie Mae and Freddie Mac's ability to be used as a dumping ground for worthless paper created by junk loans. They hold far too many worthless mortgages for anyone to believe that a reasonable person, with skills in this business, actually put in the proper jurisprudence before accepting these from the banks. Our government gets too caught up in these bubbles building also, and fails to provide any regulatory guidance until the druken party is over.

Why is it so difficult? Speedy adoption of the FAIR TAX would solve our economic troubles in one fell swoop. By eliminating personal AND corporate taxes and institutuing a 22% sales tax, America becomes a tax haven for entrepreneurs from all over the world. They bring their wealth, ideas and businesses with them. EVERYONE pays tax from the newest illegal immigrant to the toniest trust fund baby. If you live here you're forced to support the country. The method of collection is easy since it's "point of sale." Mike Huckabee was right when he proposed abolishing the IRS and instituting the FAIR TAX. Why not give it a try? What do we have to lose? The IRS?

Greed! Greed! That's the only problem we need to solve. As Mohatma Gandhi said, earth has enough resources to satisfy all man's need, but not enough to satisfy their greed. The salary escrow is a great idea, but it won't happen. Why? Because of Greed.

This particular succession of bubbles is a direct result of supply side economics and failed fiscal policy, followed by an attempt to correct it by failed monetary policy, plus the pernicious influence of "free market" religion. Cut taxes and push all the money to the supply side, and what you get is speculation, not productive economic activity (although there is always some, and some new technology, just enough to cover the big lie of supply side theory with a thin veneer of credibility). When you give a lot of money to the already well off, you get a lot of speculation, which rushes first from one area to another. The money will not come back into the larger, broader more productive economy with reversing supply side. Raise taxes where they were cut and redistribute the past insane push of all the money in the economy into the financial markets. End of bubbles. For a generation or two until it is all forgotten again.

The best way to escrow bankers’ bonuses would be to pay them with non-tradable stock. This could help them focus on the long term interest of the business. As stockholders they might look forward to increasing dividends. We have bubbles because everyone’s looking to increase price instead of dividends. Stock prices reward ex –stockholders. Dividends reward current stockholders.