This wouldn't have been possible without John Meriwether, perhaps the founding father of the No-Consequences movement. Meriwether presided over Long-Term Capital Management's demise, the most spectacular hedge fund blowup ever. It put the global financial system into such peril that the Federal Reserve had to intervene. For his recklessness, Meriwether was sentenced to Greenwich, Connecticut, where he manages billions at his new hedge fund.

Once, it was considered polite to at least shake your head (with envy if you were a hedge fund manager, with disgust if you were just about anyone else) when referring to Meriwether's comeback. Now? Dow Kim and Tom Maheras held top positions at Merrill Lynch and Citigroup, respectively, overseeing those firms' disastrous moves in the credit markets. But by January, the two were bouncing back. Kim was raising money for a new hedge fund. Maheras was choosing between taking a top job in finance and getting $1 billion to start his own fund. (That seems to be the preferred escape hatch: Even Brian Hunter, of the failed hedge fund Amaranth, has been able to raise money to hang out his shingle.) Instead of golden parachutes, they get golden trampolines.

Heads I Win; Tails I Win

What does it tell us when Angelo Mozilo, the head of mortgage lender Countrywide, spent months selling his stock while proclaiming that the company would weather the housing slump, and then, when the market failed, sold it to Bank of America and kept his monster compensation? It tells us that the pattern of being rewarded for failure has been laid into the foundation of the speculation society.

There was the junk-bond crisis and the savings-and-loan disaster. There was the regulator-coordinated bailout of L.T.C.M. There were the Fed's shock interest-rate cuts after the Nasdaq bubble popped. Over and over again, there were blunders with no corresponding negative response.

The science of securitization led to a severing of the relationship between lender and borrower. Bankers used to know whom they lent money to, and vice versa. In the past few years, however, borrowers have called a 1-800 number for loans. The ultimate lender didn't know much about the borrowers and didn't really care.

Now plenty of homeowners are walking away from their houses and sending "jingle mail"—putting the keys in an envelope and giving the house to the bank. Effectively, lenders have no recourse. But who can blame the little speculators when the big speculators were running amok?

Whole classes of securities and derivatives were devised with No-Consequences logic. Take credit-default swaps, which are supposed to protect buyers from a default on a company or a mortgage security. Soon enough, we will realize that over the past 10 years or so, we created a gigantic insurance market with such investment products. But because we labeled them derivatives, we exempted them from the basic rules and regulations that insurance providers have been subject to for decades. Insurers, when they offer something called insurance, are forced to put some money aside as a reserve so that they can make good on their policies. Not so with derivative alchemists and speculators.

Some stockholders will no doubt sue, and some will win. But settlements are years away and don't provide adequate recompense or sufficient deterrence. Why isn't there a greater shareholder uprising? The fund managers may lose your money, but where else are you going to go? The vast majority manage other people's money too, and many of these investors just check off a box to make their 401(k) allocations.

When All Else Fails, Go Shopping

Of course, there are differences between acting as if there were no consequences and there actually being no consequences. Already, we are adding to the ranks of the laid off, the homeless, the bankrupt, the pensioners on diminishing fixed incomes. Perhaps soon, consequences will affect the instigators as well. "First, there's greed. Then fear. Then retribution," says Simon Mikhailovich, a partner at hedge fund Eidesis Capital. "They are now in fear that the whole system is going down the drain. The next phase is going to be the show trials and the hangings once it becomes clear what the extent of the damage is."

Ah, but that's where the Fed comes in, cutting interest rates to ease the pain for banks that must struggle to raise money to stanch their losses. Of course, rate cuts have consequences as well: a ruined dollar, runaway inflation, moral hazard.

A better way would be to curb incentives for speculation. Mitchell, the G.W.U. professor, argues for high short-term capital-gains taxes to penalize the flippers. Wall Street bonuses should vest over time, with mechanisms to claw back ill-gotten fortunes. That way, if a deal goes bad three years in, bankers forfeit their bonuses. The obvious hurdle, though, is that no bank would move first. For this reform, we need a greater crisis and a regulatory mandate. Finally, banks and other financial institutions should be paying insurance to the Fed or the Treasury at all times for the right to access credit lines at below-market rates during emergencies. There is no reason that this particular industry should be subsidized in times of crisis if it hasn't paid in during good times.

At this point, however, little is likely to change. It's time to refinance. The government hands people money in the form of a tax rebate and asks them to spend it. When our political leaders need the country to come together, they give us cash and urge us to buy something nice for ourselves. Go to the mall.