"What is YOUR point? That the original poster was wrong because of one incorrect example?"
seems like a fair point to me. List of 18 countries that it's banned in, 3 are non-dictatorships, which is supposed to make some kind of point, except one of those is actually
This is not proof, just evidence.
The answer is, mostly, neither. Finance is a gambling game played by dreamers. I think Fred Schwed had it right when he said "We expect a child to grow up in time, and learn what is reality, as opposed to what are only his hopes. This however is too much for the romantic Wall Streeter - and they are all romantics, whether they be villains or philanthropists. Else they would never have chosen this business, which is a business of dreams. They continue to dream of conquests, coups and power, for themselves or for the people they advise." Aaron brown of AQR holds the same view. Essentially, people love to gamble, so people play the markets. Then afterwards when people need to explain why it's done, professors come up with reasons like "efficient allocation of capital" - to some extent, this is an effect of finance, and probably the reason it isn't as restricted as gambling is. But the reason people do it is to get rich quick - by gambling.
I spent some time studying the credit crunch too. I believe the effect of CDOs was to allow banks to avoid holding sufficient reserves. They could take their loan books, get an AAA rating on them by packaging them as CDOs, and then take up more debt. This then created an old-fashioned banking crisis like the ones in 1907 and the late 19th century, before reserving was enforced. The mathematical models were largely irrelevant detail - these deals were marked to the market price for correlation, which was supported by the AAA credit ratings. But it's worth bearing in mind that the banking collapse was really just a trigger, the bigger problem was the huge, unsustainable level of debt held by American consumers, and the bad investing decisions they made in housing. The banking collapse caused a tightening of credit, which made things hard for business, which caused redundancies for overstretched consumers, which caused Americans to suddenly start saving, which caused a reduction of demand, which made things harder for business. The problem is in a modern, free market democracy, individuals need to take some responsibility for their financial continence. Either that or we need a revival of strong moral leadership across corporate and political America - but I don't think the system is set up for this to happen.
A list is only as strong as its weakest link. -- Don Knuth