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I am not seeking to deny that a few people saw important pieces of the emerging puzzle and some saw more than a few pieces. In my gallery of heroes are Avinash Persaud, who told us early and often that the risk-management models on which regulators foolishly relied were absurd individually and lethal collectively, a point also made by John Eatwell; Kenneth Rogoff, who warned of the US external deficit; Wynne Godley, who warned no less powerfully of the domestic financial imbalances associated with those external imbalances...
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Alternatively, we could have spent more time studying the work of Hyman Minsky...But what if we are now making new and even bigger errors in rushing back to Keynes? The thought worries me. What if now that households in the US and UK are no longer able, or willing, to borrow any more, we are set on breaking the back of taxpayers, instead? Is the end of this crisis the destruction of the credit of some of the world’s most creditworthy governments? It is a thought I would like to suppress. But it haunts me. It should haunt you, too...