Leopold focuses on five, uncorrected areas in the US: 1) high systemic unemployment, 2) unregulated financial institutions, 3) unregulated synthetic securities, 4) unregulated securities dealers and market makers, and 5) increasingly lopsided wealth distribution.  I'll save #2 for last.

1 and 5 are really flip sides of the same coin, which becomes crystal clear when you realize that the systemic problem is three-headed: unemployment, underemployment, and declining value of employment.  The last head has been grinding the US middle class under the wheel for over three decades.  First a single wage turned into two, then the two had to work more hours at lower pay rates, then health insurance went away and pensions went down the drain.  Debt papered over the gap for awhile, but that of course was on a collision course with itself (Hence the 2005 bankruptcy "reform."  The US consumer was headed into the wall, and the banks that had handed out credit like candy saw it and wanted to cover their assets.  They bought themselves a couple of years and a bigger mess.).  Now people aren't spending because there isn't anything to spend.

So how are they flip sides?  There are two great makers/breakers in the US: education and health care.  You don't make a living wage in the US on a high school education unless Daddy can grubstake you in business.  You need college.  And even with all the upside down real estate, the leading cause of bankruptcy in the US remains medical bills.  If you stay healthy, you stay afloat; if you get sick, you sink.

Both quality education and quality health care have increasingly become the exclusive province of the wealthy and increasingly beyond the reach of more and more Americans.  The middle class took on more college loans only to find that the available jobs did not service the increased debt load.  If serious illness or surgery cropped up, the game was over.  There was no margin to live on but debt, and now that margin is gone.  The upper class, which can afford access to education, health care, and capital, sees increasing amounts of income roll its way while the middle class spins in.

There's a problem with concentration of wealth that not even the most ardent Austro-Chicagoan can't ignore, especially if you're trying to jump start a consumer economy: marginal return on consumption.  Take some money, spread it among a bunch of people, and they will spend it because they all need basic levels of food, clothing, and shelter and they all want a few perks on top of it.  Take the same money and give it to a small percentage of that population, and it won't get spent because they need fewer basics and there are only so many perks they can soak up.  The rest of the money turns into a dragon's hoard, out of circulation, while the general population goes without.  Not a good way to get things moving again, not to mention the inevitable social instability ("Grab yer torch and pitchfork, we're a-headin' fer The Bastille.").

3 is the gift that keeps on giving.  The kids over in the finance firms just keep coming up with new ways to chop up mischaracterized risk, slap a new wrapper on it, and spread it all over the market, just as they have for years (Millikin, anyone?  LTCM?).  Little time bombs planted everywhere, just like before.  And that isn't even addressing the little question of, if the capital markets are fully leveraged, where does the slack come from to turn things around when the economy noses down?

2 and 4 are simply the same thing, at least since since Gramm-Leach-Bliley legalized unsupervised financial incest in the US.  The banks and investment houses are doing what they want, when they want, and we've returned to "It's Good to be King."  Just remember that when someone says "too big to fail," what they're really saying is "too big to fail yet."

The part I find really interesting is in #2, the bit about securitizing life insurance on the sick and the elderly.  As I've noted a number of times here and elsewhere, credit default swaps were insurance policies that were treated as securities, which was a bad idea at best and disastrous in practice.  Holding an insurance policy on something you don't have an insurable interest in isn't an investment, it's a bet at the roulette table, and that's why it isn't allowed.  But we did it anyway.  And now we're back at it, but instead of betting on infirm firms, we're betting on infirm people.

Just how many spins of the wheel can the system survive?