Joseph Stiglitz has gotten to precisely the correct diagnosis and treatment of the problem in the core problem: looting by way of externality cost scamming, when he says: "There is a basic principle in environmental economics called "the polluter pays': polluters must pay for the cost of cleaning up their pollution. American banks have polluted the global economy with toxic waste; it is a matter of equity and efficiency that they must be forced, now or later, to pay the price of cleaning it up."
This needs to apply to asbestos, cigarette smoke, oil spills and now "debt bombs" (like AIG's CDSs--all $5.5 Trillion of them).
There's a new and "innovative" style of robbery by "negative externality cost displacement"--which neither Willie Sutton nor Charles Ponzi would have believed, because of its ability to be done right out "in plain sight" and perfectly legally, if the government is stupid enough to not recognize it as a crime.
The broader seminal issue, at heart, is that there is either no understanding, or no willingness, to address the prime issue that so-called investing, creating, building, financing and undertaking any economic activity must first and foremost be recognized as spawning two types of societal "externalities"--positive or negative. This simple, but essential truth of realistic political economy is the most important (but missing) factor in any serious and pragmatic decision making about what is "good" (i.e., will actually "fix" our economy--not just right now, but always).
Addressing one compelling economic activity, war, it can be simply seen, and proven, that war is the greatest "negative externality cost" producer of any possible economic activity--in that war is a 100 percent producer of "negative externality costs" and a zero percent producer of any "positive externality benefits."
Economic actors, producing war, cigarettes, or "debt bombs," are similarly close to 100 percent producers of "negative externality costs" against us, our country, our environment, our world, and zero percent producers of any "positive externality benefits."
This immutable truth of economics does not by any means mean that a specific economic actor (corporation, bank, hedge fund, private equity pirate) can not turn a handsome profit on war, cigarettes, "debt bombs," etc.--as is amply demonstrated today by the vast riches so produced and funneled to these private faux profit-makers, and also proven by the pure costs and losses, in both deaths and monetary pain, heaped upon us, our country, our environment and our small fragile planet.
Thus, the claim that "any" sort of investing, financing or economic "growth" is helpful is absolute lunacy.
What we (in the US most particularly, and the capitalist world generally) desperately need is a new kind of EPA--externality protection agency--that analyses and ranks the "negative externality costs" compared with any "positive externality benefits" of any public market-financed economic actions, and then uses regulatory, and/or tax policy to dissuade or incent such economic activity in the public interest. (The analyzing and cost assessing body could be purely governmental, but would be much more efficient, effective, and unimpeachable if it included governmental, academic, scientific and private experts.)
Lacking such a Hippocratic-like agency to insure that the pledge to "first do no harm" is enforced, the capitalist world, led by the ruling-elite "corporate financial Empire" nominally headquartered in the US and controlling our country by hiding behind the facade of its two-party "Vichy" sham of democracy, and supported by its equally Vichy propagandist media, will very likely and very soon destroy all of us, our families, our country, our environment and our small fragile planet--while blissfully and arrogantly reporting wonderful GDP growth, great return on investment and faux private profits right up to extinction.
However, with the right regulation and tax (incentives/disincentives), and the right terminology of banking "democratization" rather than "nationalization" a socially responsible political economic solution is still achievable.