The original paper was useful for the economy in that it provided loans for productive uses, even if a portion of them were bad loans in that the lendees should never have been given such large loans or that the terms of the loans were usurious or deceptive.  A good banking system is supposed to provide good loans for productive purposes.

But our banking and finance system has been drastically changed: what used to be non-banking institutions act a lot like banks, and they have invented new means for shuffling money around that not only are not productive to the economy, but are outright harmful.  For instance, a financial institution that has an arm that functions like a bank can make loans, and the brokerage side of the institution can make bets that the loans will fail, thus making it in the institution's interest to issue very bad loans so that it can make a ton of money by selling them short.

I take your point: all of those teaming numbers of excess brokers that our schools of higher education have produced had to create some means for cashing in, and without any regulations to limit how unscrupulous or unproductive they could be, deceptive loans and worthless derivatives were the natural result.

A lot of those derivative "assets" that are now held by the larger institutions actually are worthless, and they have large liabilities attached to them.  We've temporarily staved off the consequences of the creation of those valueless "assets" by shoving so much money into the brokerage-banking industry that they've been able to shuffle numbers around enough to pad their balance sheets to show profits even when they've supposedly given back -- or never actually took -- the TARP money.  Every cent of the profits and bonuses which were distributed to the bankers and brokers should have been given to the taxpayers.

But there actually should not have been enough money left over to create such profits and bonuses because relatively little was done to take those actually worthless assets off the books.  A lot of institutions should have failed, been declared bankrupt, and their assets and liabilities re-valued and sold off.  But with the intervention of the government in lieu of a well-functioning bankruptcy system, we have allowed the brokerage-banks to reinflate the bubble with the creation of still more worthless paper.

No one seems to know it yet, but Goldman-Sachs and their brethren actually are bankrupt because they still hold mostly worthless paper.  It's just that they're allowed to say that the derivatives that they shuffle around actually have value.

It seems to me that nothing has really changed since before the collapse except that the taxpayers are deeper in debt and there is more worthless paper in the derivatives market sucking money out of markets that do have actual value than ever before.