Crisis of US contract enforement system

Krugman highlights the ongoing mortgage forecloasure crisis in US.

American officials used to lecture other countries about their economic failings and tell them that they needed to emulate the U.S. model. The Asian financial crisis of the late 1990s, in particular, led to a lot of self-satisfied moralizing. Thus, in 2000, Lawrence Summers, then the Treasury secretary, declared that the keys to avoiding financial crisis were “well-capitalized and supervised banks, effective corporate governance and bankruptcy codes, and credible means of contract enforcement.” By implication, these were things the Asians lacked but we had.

Read the whole article in case missed. The crisis is not just about economics and finance. It has disturbed everything in US. What was once seen as epitome of property right system, contract enforecement system etc looks so wobbly now.