Having zero expertise on the financial crisis, and thinking Davy is doing a bang-up job of sorting it out, I'm going to post on something different. I want to talk a little about the normative/positive distinction and why it is so difficult for people to make this distinction consistently. Basically, a normative statement is one that includes the idea that something SHOULD be the case, and a positive statement holds that something IS the case. Undergraduates (the motivation for my recent thoughts on the matter) often seem unaware of this distinction. For example, John Mearsheimer's claim that war is a recurrent feature of international politics and the claim that this should not be the case are not inconsistent with each other. Claiming that the Holocaust happened is different from saying that you think it was a good idea.
Sorting out which is which goes beyond undergrads struggling with a paper. It strikes me in the face all the time while I am watching political speeches, debates or adverts. Recent use by the McCain campaign and Sarah Palin of a quote by Barack Obama that US troops in Afghanistan are "air-raiding villages and killing civilians" is a prime example. There is little doubt that US troops are in fact doing this. So, why should Obama get flack for stating an empirical fact? It must be because saying this is being interpreted to have some normative content as well as the descriptive content. Maybe there is something in the latent US cultural militarism that requires Americans to say that US troops are doing a great job, or maybe it is an aversion to the idea that US troops are not winning (both also possible motivations behind the blind acceptance of the claim that "the surge worked"). It could even be something to do with the idea that America is "the greatest force for good in the world" and if this is true then US troops can't possibly have killed anyone who wasn't a terrorist.
Actually, Obama's quote was itself probably being used to imply normative claims. I doubt that he went on to say "... and that is a great thing". But you could do so and not be logically inconsistent. It comes as no surprise that political rhetoric doesn't play by logical rules, but maybe this is something that is theoretically interesting. The process by which statements of fact become proxies for moral/normative positions and how this can be manipulated (I'm looking at you Karl Rove) seems like it is important politically. Practically speaking, the quality of public discourse suffers from excessive simplification if there is no way to distinguish between what is and what should be the case. The only reason I can think of that this kind of discourse is effective and proliferating is that people do not consciously make the normative/positive distinction when they are thinking about stuff in general and politics in particular.