A Failure of Securitization?

Paul Krugman argues that securitization has proven to be a failure and a dishonest one at that. Specifically, he says:

But the wizards were frauds, whether they knew it or not, and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization — that it would make the financial system more robust by spreading risk more widely — turned out to be a lie. Banks used securitization to increase their risk, not reduce it, and in the process they made the economy more, not less, vulnerable to financial disruption. 

Read the whole thing.