Free Markets limit excessive risk taking

I've probably been watching too much CNBC, but I keep hearing people talk about limiting risk taking, prohibiting "naked shorts" etc., etc.

Without even getting into the issues of central banking, I thought I'd document a really simple proposition: one of the beautiful functions of a free market is that it is the best way to limit excessive risk taking: excessive risk, by definition, means that you've gone too far with your risk taking.  The free market handles this quite simply: those that take on excessive risk will quickly lose their shirt, and having no more money can cause no more trouble.  The market systematically weeds these people out and informs them, not so kindly, that they need to be in a different line of business.  This leaves the market in the hands of the more sensible actors.  A bit of an obvious point, but in never hurts to keep saying these things...as the folks at CNBC are proving, they obviously haven't heard this argument enough!

China -- first impressions

I'm on a quick 5-day trip through Beijing, Hangzhou, and now in Shanghai for the weekend and will deliver some first impressions.  Overall, the sheer scale of everything in China is mind blowing.  It's very modern, reasonably orderly and clean.  It's vibrant and booming.  Here are some random thoughts:

• The communists believed that capitalism was the true road to communism, and may have been right. China, on the other hand, is a new flag away from being a full-blown capitalist (in the statist sense) nation. Go figure.
• Need anyone look further for an argument for free markets than the near universal dichotomy between state capitols and major trade centers? As a first time visitor to China, the contrast between Beijing and Shanghai says it all. Dc vs nyc? Sacramento vs san fran or la? Come on -- state capitals are always lame, whereas the major trade centers are vibrant and exciting.
• Why couldn't Shanghai be an independent country like Singapore is or Hong Kong was? Of course, all cities should immediately declare their independence, but just relating something like Shanghai to Singapore makes it seem all the more obvious.