The spirit and rewards of risk

by Daniel Henninger:

The greatest danger in the current economic crisis is that the United States will lose its historic appetite for risk. The mood now is that risk-taking got us into this mess. Risk, though, is the quintessential American trait that built the nation -- from the Battle of Bunker Hill to the rise of the microchip. If we let risk give way to a new ethos of commercial reserve and regulatory restriction, the upward arc of the U.S. ascendancy will flatten. Maybe it already has.

By "we" I mean the policy makers in Washington who will write the new rules of finance, our stunned bankers and businessmen, and the average Joes of Main Street who with reason have lost confidence. If all lose faith at once in the American idea of risk, refinding it when the recession ends may prove difficult.

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What's worrisome is that Congress and an array of piling-on regulatory bodies -- the Fed, Tim Geithner's Treasury, the SEC, the CFTC, a new derivatives regulator -- will create too many designated drivers for American finance and business, producing a status quo of caution.

The current crisis is the result of a world gone madly long on real estate. Daniel Boone, the famed American frontiersman, went belly-up speculating on Kentucky land. He moved on in 1788 and paid his debts. So should we, without losing sight of the American frontier, where we discovered the rewards of risk.