When you think about what a synthetic CDO is -- [as with] so many of these instruments on Wall Street, it's really just a casino, there is no underlying assets, they don't actually own these mortgages, people aren't getting mortgages because of this... What is the social utility of that?
Remember that financial services are an intermediate product -- that is, we don't eat them, or live in them, or put them on in the morning. They are supposed to enable a more efficient allocation of capital, so that the nonfinancial economy is more productive. But what we saw since the 1980s was the unmooring of the financial sector from the rest of the economy.
Making goods is on balance -- with exceptions -- more productive than providing services, and rising productivity is the fundamental source of prosperity... a major nation must be able to maintain a balanced current account (and trade balance) over time, and goods are far more tradable than services. Without something to export, a nation will either become over-indebted or forced to reduce its standard of living.