No – 1929 was simpler because financial markets were simpler then. We must quickly enact some version of the “bailout” the House rejected on Monday. Without a restoration of confidence, we can’t have working credit and capital markets, and without them our economy will simply stop, as it almost did in the 1930s. Some may think it unfair that the suits on Wall Street will be allowed to live, but, fair or not, we need those suits to avoid catastrophe.

Going forward, is more regulation the cure? No – regulators, like bankers, are fallible humans. We do need a more coherent regulatory structure: it is nuts to have five federal agencies regulating banks, huge hedge funds completely unregulated, and no federal insurance regulation at all. But regulation in the financial sector is hard to get right. Regulators can try to make sure investors have adequate information – but the investors at AIG and Lehman were experts, with all the information in the world. Financial sector regulation also tries to limit risk by imposing capital and reserve requirements – but reasonable people can disagree about how much capital is enough, particularly when it is held against new inventions like CDOs.

If Congress acts responsibly, I expect the US to avoid an economic catastrophe, though not by much. And I hope and expect that a better regulatory system will emerge, as in the 1930s. But I am not naïve enough to think that this will be the last U.S. financial crisis.