"How Elite Economic Hucksters Drive America’s Biggest Fraud Epidemics"

William Black is a former bank regulator and author of "The Best Way To Rob a Bank Is To Own One"  - via Naked Capitalism:

What do you get when you throw together economic fraudsters, plutocrats and opportunistic criminals? A financial crisis, that’s what. If you look back over the massive frauds that have swept the country in recent decades, from the savings and loan crisis of the 1980s to the 2007-'08 financial crash, this deadly combination always appears.

A dangerous cycle begins when prominent economists pander to plutocrats and bought politicians, who reward them with top posts, where they promote the perverse economic policies that cause fraud epidemics. Crises develop, and millions of people are ripped off. Those who fight for truth are ignored or ruined. The criminals get wealthier, bolder and more politically powerful, and go on to hatch even more devastating cons.

The three most recent financial crises in U.S. history were driven by a special type of fraud called “control fraud” — cases where the officers who control what look like legitimate entities use them as “weapons” to commit crimes. Each time, Alan Greenspan, former chairman of the Federal Reserve, played a catastrophic role. First, his policies created the fraud-friendly (criminogenic) environment that produces epidemics of control fraud, then he failed to identify those epidemics and incipient crises, and finally, he failed to counter them.

On the lack of serious discussion or an honest opposition

Professor Krugman channels the outrage at alleged GOP "policy wonks" who are little more than ethically-challenged propagandists:

I fairly often receive mail pleading with me to take a more even tone, to have a respectful discussion with people on the other side rather than calling them fools and knaves. And you know, I do when I can. But the truth is that on most of the big issues confronting us, there just isn’t anyone to have a serious discussion with. Ezra Klein offers a nice illustration of this point today, in his takedown of Avik Roy on Obamacare in California.

The thing you want to bear in mind is that Roy is widely considered a good example of a reformist conservative, not to mention a health policy wonk. So what does this reform-minded wonk have to say about Obamacare?

Klein tries really hard to keep his temper even; too hard, I think, because I wonder how many readers will stay with him all the way through. But to cut to the chase, Roy claims that Obamacare will cause soaring insurance rates, using a comparison that is completely fraudulent — and I say fraudulent, not wrong, because he is indeed enough of a policy wonk here to know that he is pulling a fast one.

Reinhart And Rogoff's Pro-Austerity Research Now Even More Thoroughly Debunked By Studies

Mark Gongloff @ Huffington Post:

The debunking of Carmen Reinhart and Kenneth Rogoff continues.

The Harvard economists have argued that mistakes and omissions in their

influential research on debt and economic growth don't change their ultimate austerity-justifying conclusion: That too much debt hurts growth.

But even this claim has now been disproved by two new studies, which suggest the opposite might in fact be true: Slow growth leads to higher debt, not the other way around.

In a post at Quartz, University of Michigan economics professor Miles Kimball and University of Michigan undergraduate student Yichuan Wang write that they have crunched Reinhart and Rogoff's data and found "not even a shred of evidence" that high debt levels lead to slower economic growth.

And a new paper by University of Massachusetts professor Arindrajit Dube finds evidence that Reinhart and Rogoff had the relationship between growth and debt backwards: Slow growth appears to cause higher debt, if anything.

The Unemployed Need Bold, Creative Moves from the Fed

Mark Thoma @ Fiscal Times:

The Federal Reserve has increased the size of its balance sheet nearly four-fold

since the onset of the financial crisis, from around $870 billion in 2007 to $3.35 trillion today. This has caused people like Peter Schiff to predict that we are headed for a severe outbreak of inflation. An inflation problem is just round the corner we’ve been told again and again since 2008, yet inflation remains below the Fed’s 2% target, long-run inflation expectations are well-anchored, and there is little evidence in recent data that inflation is or will be a problem. 

Why is inflation so low?

More on the persistence of low inflation

Catherine Rampell @ New York Times Economix:

The personal consumption expenditures, or P.C.E., price index, which the Fed has said it prefers to other measures of inflation, fell from March to April by 0.25 percent. On a year-over-year basis, it was up by just 0.74 percent. Those figures are quite low by historical standards, and helped push consumer spending up. (Measured in nominal terms, consumer spending fell slightly in April. After adjusting for inflation, it rose.)

When looking at price changes, a lot of economists like to strip out food and energy, since costs in those spending categories can be volatile. Instead they focus on so-called “core inflation.” On a monthly basis, core inflation was flat. But year over year, this core index grew just 1.05 percent, which is the lowest pace since the government started keeping track more than five decades ago.

                             Source: Bureau of Economic Analysis, via Haver Analytics. The core P.C.E. price index refers to the price index change for personal consumption expenditures, excluding food and energy.

Low inflation may be one reason that consumers have proven so resilient in recent months (in addition to the lift they’re getting from rising home prices). A measure of consumer sentiment released Friday by the University of Michigan surged in May, and is at its highest level since July 2007.

Thought for Memorial Day on The Hate-America Right

This can't be said too often - contemporary "conservatism" isn't conservative, it's extremist.  The GOP is batshit crazy and totally dysfunctional.  Denizens of this far Right zoo hate the America that actually exists. Ryan Cooper @ Political Animal:

The problem with the conservative movement isn’t that mainstream Republican policies are all insane (they are), it’s that the party has completely lost it. It is “ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition.” Taking the debt ceiling hostage, for example, is not the action of a conservative party. It’s the action of an extremist party, willing to risk economic Armageddon for trivial policy changes.

Honestly, to a large degree the problem is today’s Republicans don’t believe in the American system. They’re unpatriotic.

This is, I think, due to the conservative media ecosystem and the perverse incentives of minority parties in the US constitutional system. Conservative media is ruled by liars, con men and charlatans who actively profit from having Democrats in power, and who whipped the Republican base into a seething frenzy after the election of Obama.

Matters of policy have dissolved almost completely into the froth of tribal resentment and Obama hatred, which produced a huge class of new Republican house members who were slavering to attack the president with whatever tool was closest.

"Why the world faces climate chaos"

Financial Times' Martin Wolf has an excellent column on the looming climate change disaster:

Last week the concentration of carbon dioxide in the atmosphere was reported to have passed 400 parts per million for the first time in 4.5m years. It is also continuing to rise at a rate of about 2 parts per million every year. On the present course, it could be 800 parts per million by the end of the century. Thus, all the discussions of mitigating the risks of catastrophic climate change have turned out to be empty words.

Read the rest HERE @ Financial Times.

The Inflation Is Too Damned Low!

Professor Krugman @ New York Times:

Larry Ball makes the case that we would be a lot better off with a 4 percent inflation target rather than the 2 percent that is now central bank orthodoxy.

Intellectually, this position is hardly outlandish; indeed, Ball’s case is very similar to the case Olivier Blanchard made three years ago, just stated more forcefully and with more evidence.

The basic point is that a higher baseline for inflation would make liquidity
traps, in which conventional monetary policy is up against the zero lower bound, less likely and less costly when they happen. Ball estimates that if we had come into this crisis with an underlying inflation rate of 4 percent, average unemployment over the past three years would have been two percentage points lower. That’s huge — it amounts to millions of jobs and trillions of dollars of extra output.

Gangster Bankers: Too Big to Jail

This is several months old, but a "must read" by Matt Taibbi @ Rolling Stone:

The deal was announced quietly, just before the holidays, almost like the government was hoping people were too busy hanging stockings by the fireplace to notice.

Flooring politicians, lawyers and investigators all over the world, the U.S. Justice Department granted a total walk to executives of the British-based bank HSBC for the largest drug-and-terrorism money-laundering case ever. Yes, they issued a fine – $1.9 billion, or about five weeks' profit – but they didn't extract so much as one dollar or one day in jail from any individual, despite a decade of stupefying abuses.

People may have outrage fatigue about Wall Street, and more stories about billionaire greedheads getting away with more stealing often cease to amaze. But the HSBC case went miles beyond the usual paper-pushing, keypad-punching­ sort-of crime, committed by geeks in ties, normally associated­ with Wall Street. In this case, the bank literally got away with murder – well, aiding and abetting it, anyway.

 Read the rest HERE.

A Stock Market Boom in the midst of a faltering economy

James Surowiecki  @ The New Yorker takes a look at the stock market boom - driven by a growing disconnect between the welfare of Americans and the profits of "U.S." corporations:

With the stock market setting new highs on a nearly daily basis, even as the

real economy just slogs along, there seems to be one question on everyone’s mind: are we in the middle of yet another market bubble? For a growing chorus of money managers and market analysts, the answer is yes: the market is a house of cards, held up by easy money and investor delusion, and we are rushing all too blithely toward an inevitable crash. Given that we’ve recently lived through two huge asset bubbles, it’s easy to see why they’re worried. But in this case the delusion is theirs.

The bubble believers make their case with a blizzard of charts and historical analogies, all illustrating the same point: the future will look much like the past, and that means we’re headed for trouble. Smithers & Company, a London market-research firm, says that, according to a number of market indicators, stocks are, by historical standards, forty to fifty per cent overvalued. The bears admit that corporate profits are high, which makes the market’s price-to-earnings ratio look quite normal, but they insist that this isn’t sustainable.

They think that earnings will return to historical norms, and that, when they do, stock prices will be hit hard. Today, after-tax corporate profits are more than ten per cent of G.D.P., while their historical average is closer to six per cent. That’s a vast gap, and it’s why bears believe that the market is, in the words of the high-profile money manager John Hussman, “overvalued, overbought, overbullish.”

It’s certainly unusual for corporate profits to soar during a slow recovery. But the argument for a stock-market bubble is flawed: when it comes to the role that corporations play in the U.S. economy, the present looks very different from the past, which means that historical comparisons to the nineteen-fifties, let alone the thirties, tell us little. The four most dangerous words in investing may be “This time, it’s different.” But this time it is different.

Take taxes: one big reason that after-tax corporate profits are much higher than their historical norm is that corporations pay much less in taxes than they used to. In 1951, corporations had to pay almost half of reported profits in taxes. In 1965, they had to pay more than thirty per cent. Today, they pay only around twenty per cent.

"How the Case for Austerity Has Crumbled"

Professor Krugman has a long essay

on the austerity fallacy
HERE, @ NY Review of Books

Slowdown in health-care costs creates problems for right-wingers

John Chait @ New York mag:

The recent slowdown in health-care costs is one of those facts, like climate change or the rapid growth after Bill Clinton raised taxes, that flummoxes American conservatism. The slowdown of health-care costs is one of the most important developments in American politics. The long-term deficit crisis — those scary charts Paul Ryan likes to hold up, with federal spending soaring to absurd levels in a grim socialist dystopian future — all assume the cost of health care will continue to rise faster than the cost of other things. If that changes, the entire premise of the American debate changes. And there’s a lot of evidence to suggest it is changing — health-care costs have slowed dramatically, and experts believe it’s happening for non-temporary reasons.

Journal Publisher Rupert Murdoch

The general conservative response to date has involved ignoring the trend, or perhaps dismissing it as a temporary, recession-induced dip likely to reverse itself. Yesterday, the Wall Street Journal editorial page offered up what may be the new conservative fallback position: Okay, health-care costs are slowing down, but it has absolutely nothing to do with the huge new health-care reform law. “It increasingly looks as if ObamaCare passed amid a national correction in the health markets,” the Journal now asserts, “that no one in Congress or the White House understood.” It’s another one of those huge, crazy coincidences!

Of course, it’s not just that the Journal didn’t predict the health-care cost slowdown. The Journal insisted it couldn’t possibly happen. Indeed, it insisted that Obamacare would destroy — was already destroying — any possible hope for a health-care cost correction, and would instead necessarily lead to a massive increase in health-care inflation.

Why Washington saved the economy, then permanently destroyed the labor market

Derek Thompson @ The Atlantic:

On April 24, Minnesota Sen. Amy Klobuchar scheduled a hearing. Fun story,

right? A hearing in Washington is like a fern in the rainforest. But this hearing was notable for both its subject and its attendance. It was a meeting about the most important economic crisis facing America today: long-term unemployment.

At 10:30am, the hearing began. She was the only attendant.

***

I have two stories for you about Washington and the economy. Both true. But very different.

The first story is called: How Washington Saved the Economy. You might begin in 2008, when the Federal Reserve went on an unprecedented spree of asset-buying to un-gunk the banks, push down interest rates, and spur investing in mortally weakened economy. This was followed, in 2009, with an equally historic stimulus package aimed at filling holes in state budgets and sending cash back to families and businesses. The government ran steep $1+ trillion deficits to keep as much money in the weak private sector as possible.

There is little question that monetary and fiscal stimulus blunted the recession -- and saved the economy.

The second story is called: How Washington Permanently Scarred the Labor

Market. You might begin this story in 2011, when Congress (led by Republican obstructionism) embarked on a historic quest to crush deficit spending by any means necessary. Hold the economy hostage over the debt ceiling? Check. Kill the American Jobs Act while scheduling a too-awful-to-be-a-real-law sequester? Check. Allow the too-awful-to-be-a-real-law sequester to become a real law? Checkmate.

The deficit fell fast. As unemployment ebbed, the ranks of long-term jobless calcified, creating two separate job markets. One broken market for people out of work for more than six months. And another slowly healing market for everybody else. But the combination of a thermostatic recovery and a deep aversion to stimulus crushed any hope that the long-term unemployed would get the help they needed. Long-term unemployment isn't special just because it's longer; it's special because it's self-perpetuating. Skills atrophy, networks dry up, and employers discriminate, creating a vicious cycle of joblessness that can't be cured by normal economic growth.

There is little question that, in the last two years, Washington has essentially left the long-term unemployed to fend for themselves -- and permanently scarred the labor market.

***

This isn't so much a tale of two cities, but a tale of one city that responded differently to two crises: (1) the collapse of the financial system and (2) the scarring of the labor market. These are both emergencies. So why did we respond to the first emergency like an ambulance siren and the second like a harmless murmur of white noise?

What's wrong with the economy?

Here's the biggest problem with the US economy:

This is a chart of percentage of national income going to wages:

Since the end of the 1960s, the percentage of national income going to wages has decreased by ten percentage points. That's not a "10% decrease."  That's nearly a 20% decrease - from just below 54% to just below 44%.  This is a national scandal and a shift of wealth from labor to the very wealthy and to corporations - whose earnings are other than "wages" - that is as extreme and structural as any of our myriad economic problems.

In terms of overall economic growth, this suppression of consumer demand and rising inequality is as bad for real businesses that make things and sell things as it is for workers. 

"Deficit reduction" is killing jobs and stalling economic growth (which is the key to long-term deficit reduction)

Today's New York Times:

The nation’s unemployment rate would probably be nearly a point lower,

roughly 6.5 percent, and economic growth almost two points higher this year if Washington had not cut spending and raised taxes as it has since 2011, according to private-sector and government economists.

After two years in which President Obama and Republicans in Congress have fought to a draw over their clashing approaches to job creation and budget deficits, the consensus about the result is clear: Immediate deficit reduction is a drag on full economic recovery.

We need a bigger deficit!

Professor Krugman @ NYT:

Bad news for Dr. Evil fans: the days of a ONE TRILLION DOLLAR deficit are over. In fact, the deficit is falling fast...

This is not good news — or not unambiguously good news, at any rate. A deficit falling to probably less than 5 percent of GDP this year and well below that next year is MUCH TOO LOW for an economy whose private sector is still engaged in a vicious circle of deleveraging.

Clown Shoes?

Oh, by the way, it is now 26 months since Bowles and Simpson predicted a US fiscal crisis within two years.

7 Myths About Keynesianism

Economics professor and master econo-blogger Mark Thoma @ Fiscal Times pushes back against the cranks, ideologues and academic fundamentalists who attempt to peddle distortions of the Keynesian tradition:

Harvard Historian Niall Ferguson has apologized for suggesting that John

Maynard Keynes’ sexual orientation and lack of children made him indifferent to long-run economic issues. However, leaving the references to sexual orientation aside, it is commonly asserted, “Keynesian economists often dismiss … long-run concerns when the economy has short-run problems.” The claim that Keynesians are indifferent to the long-run is one of many myths about Keynesian economics:

Myth 1: Keynesians do not care enough about long-run economic problems: This has it backwards. Conservatives who oppose Keynesian economics are not concerned enough about short-run economic problems, particularly unemployment, and failing to address our short-run problems can bring long-run harm. Prolonged recessions, for example, cause people to permanently exit the labor force and this lowers our long-run growth potential. Keynesians care very much about the long run, but they do not go along with the idea that neglecting short-run issues is the best way to solve our long-run problems. 

Myth 2: Keynesians are not concerned with economic growth: Keynesians understand the value of economic growth, but they want firms to take full account of externalities such as carbon emissions, and they care how growth is distributed. If all of the income is going to the top of the income distribution even as the productivity of workers is rising – as it has in recent decades – then there is reason for concern. Growth is the key to rising incomes, but growth must lift all boats, not just the yachts, and avoid fouling the water.

Myth 3: Keynesians are advocates of big government: This is probably the biggest and most common confusion about Keynesian economics. Keynesian stabilization policy involves increasing government spending or lowering taxes to stimulate the economy in recessions, and then reversing those policies when the economy improves. Thus, under Keynesian policy the change in spending or taxes is temporary, e.g. spending goes up in recessions and then goes back down after the recovery, and the average size of government does not change over time. If, however, politicians decide to increase taxes rather than cut spending after the economy recovers then the average size of government will increase. If politicians do the reverse, use tax cuts to stimulate the economy and then pay for it by cutting spending when things improve, the average size of government will fall. But when the changes are truly temporary as Keynesian policy requires, the average size of government does not change at all.

Myth 4: Keynesians do not care about government debt: Keynesians understand that debt can be problematic under certain conditions, and that we need to address our long-run debt problem. The issue is getting the tradeoff between the cost of debt and the cost of unemployment correct. In severe recessions and at debt levels such as ours, the cost of unemployment is much larger than the cost of deficit spending. As the economy recovers, the tradeoff will change so that deficit reduction provides the larger benefit; but for now, unemployment should be our biggest concern. 

Myth 5: Keynesians are unconcerned with inflation: Keynesians care first and foremost about maintaining high and stable levels of employment and income for working class households. To the extent that inflation interferes with these goals, of course it is of concern. What Keynesians object to is the misstatement of the costs of inflation versus the costs of unemployment by those who are ideologically opposed to government intervention in the economy.

Myth 6: Keynesians do not believe in monetary policy: Keynesians don’t deny that monetary policy can help the economy, but they disagree with those who say that monetary policy alone can cure deep recessions. Fiscal policy is needed too. 

Myth 7: Keynesians use old, outdated, and inferior models: When the crisis hit and modern macroeconomic models failed, many of us turned to the old Keynesian model for guidance, a model built to answer the kinds of questions we were confronting. We didn’t have time to wait for the modern models to be fixed, and the old Keynesian model proved useful so long as its strengths and weaknesses were taken into account. At every point in the crisis Keynesians used the very best model available without being overly concerned with when the model was built. Sometimes the modern models were helpful, sometimes the insights were older – whatever was best to answer the important questions. Interestingly, as modern “New Keynesian” models have been fixed they have generally supported the policy recommendations that came out of the older models. 

If those policies had been aggressively pursued, problems such as long-term unemployment might not be so bad today – even at this late date there’s still a need to do more. I had hoped we’d learn from our experiences so far, but the myths described above continue to stand in the way of a more effective response to our unemployment problem.

Harvard historian Niall Ferguson is a world-class jerk and an academic fraud

Kathleen Grier @ Washington Monthly has a pretty comprehensive round-up of Harvard historian Niall Ferguson's latest venture into right-wing crankery (Ferguson wrote a famously insidious and dishonest Newsweek cover story rant last year - cleverly titled "Obama's Gotta Go" - that was skillfully dissected by James Fallows and likely helped to kill the magazine)

“There’s wrong, there’s very wrong and then there’s Niall Ferguson.” -

Fergie

economist John Aziz on Twitter

Aziz tweeted that earlier this week, before Ferguson made yesterday’s instantly infamous homophobic attack on John Maynard Keynes at a talk for financiers:

Harvard Professor and author Niall Ferguson says John Maynard Keynes’ economic philosophy was flawed and he didn’t care about future generations because he was gay and didn’t have children.

Speaking at the Tenth Annual Altegris Conference in Carlsbad, Calif., in front of a group of more than 500 financial advisors and investors, Ferguson responded to a question about Keynes’ famous philosophy of self-interest versus the economic philosophy of Edmund Burke, who believed there was a social contract among the living, as well as the dead. Ferguson asked the audience how many children Keynes had. He explained that Keynes had none because he was a homosexual and was married to a ballerina, with whom he likely talked of “poetry” rather than procreated. The audience went quiet at the remark. Some attendees later said they found the remarks offensive.

Ferguson should be the last person to be casting aspersions on anyone else’s personal life, given that, while still married to someone else, he began an affair with author and activist Ayaan Hirsi Ali and knocked her up. He then dumped his wife of over 20 years (they had had three children together) to marry Ali. What a heart-warming demonstration of traditional values!

Ferguson’s slur was ugly indeed — so much so that the no-doubt conservative audience fell into a stunned silence following his remark. But Ferguson — a man for whom the term “hackademic” would surely have been invented, had it not already existed — is part of a long right-wing hack tradition. He is far from the first to take this line of attack.

"Austerity for Dummies"

A "layman's guide" to anti-austerity from Stephanie Kelton @ New Economic Perspectives that does a pretty good job of tackling the central arguments in non-econospeak terms:

1. When we allow our economy to operate below full employment (as now), we are sacrificing trillions of dollars in lost output and income each year. We can never go back and recover it.  It is gone forever.  You’ve seen the debt clock?  Here’s the lost output clock.

2. Capitalism runs on sales. In survey after survey, we find that the Number One reason businesses are slow to hire and invest in new plant & equipment is a lack of demand for the things they produce.  Businesses hire and invest when they’re swamped with customers.  See this story in The Wall Street Journal.

3. The two decades after WWII certainly aren’t the only time that robust growth reduced the DEBT/GDP ratio.  During the late 1990s and early 2000s, the economy grew at an above average clip.  Unemployment fell to 3.7%.  Inflation remained modest.  There was a job vacancy for every job seeker in America — genuine full employment.  Because people were working, there was less spending to support the unemployed (food stamps, unemployment compensation, etc.) and more people paying income taxes. The deficit disappeared, and the national debt fell to around 40% of GDP.  So you do not need post-WWII conditions to support the argument that economic growth is the way to reduce the debt.

4. The debt/GDP ratio falls when the denominator grows faster than the numerator.  Right now, just about everyone is fixated on using austerity (raising taxes and slashing spending) to reduce the numerator (DEBT).  The problem, as Europe has kindly shown us for years, is that austerity “works” by crushing incomes, which in turn crush sales (or what we call GDP).  So instead of bringing the ratio down, austerity hampers growth, which causes deficits and debt loads to rise.

"Believing that we had made big economic fluctuations a thing of the past took a remarkable amount of hubris"

Some key insights from a very "wonky" post-crisis commentary by Joseph Stiglitz @ the IMF Global Economy Forum, emphasizing the need for more effective structural reforms:

In analyzing the most recent financial crisis, we can benefit somewhat from the misfortune of recent decades. The approximately 100 crises that have occurred during the last 30 years—as liberalization policies became  dominant—have given us a wealth of experience and mountains of data.  If we look over a 150 year period, we have an even richer data set.

With a century and half of clear, detailed information on crisis after crisis, the burning question is not How did this happen? but How did we ignore that long history, and think that we had solved the problems with the business cycle? Believing that we had made big economic fluctuations a thing of the past took a remarkable amount of hubris.

Markets are not stable, efficient, or self-correcting

The big lesson that  this crisis forcibly brought home—one we should have long known—is that economies are not necessarily efficient, stable or self-correcting.

There are two parts to this belated revelation. One is that standard models had focused on exogenous shocks, and yet it’s very clear that a very large fraction of the perturbations to our economy are endogenous.  There are not only short‑run endogenous shocks; there are long‑run structural transformations and persistent shocks.  The models that focused on exogenous shocks simply misled us—the majority of the really big shocks come from within the economy.

Secondly, economies are not self-correcting.  It’s clear that we have yet to fully take on aboard this crucial lesson that we should have learned from this crisis: even in its aftermath, the tepid attempts to fix the economies of the United States and Europe have been a failure.  They certainly have not gone far enough.  The result is that we continue to face significant risks of another crisis in the future.

So too, the responses to the crisis have not brought our economies anywhere near back to full employment.  The loss in GDP between our potential and our actual output is in the trillions of dollars.

Of course, some will say that it could have been done worse, and that’s true. Considering that the people in charge of fixing the crisis included some of  the same ones who created it in the first place, it is perhaps  remarkable it hasn’t been a bigger catastrophe.

More than deleveraging, more than a balance sheet crisis: the need for structural transformation

In terms of human resources, capital stock, and natural resources, we’re roughly  at the same levels today that we were before the crisis.  Meanwhile, many countries have not regained their pre-crisis GDP levels, to say nothing of a return to the pre-crisis  growth paths. In a very fundamental sense, the crisis is still not fully resolved—and there’s no good economic theory that explains why that should be the case.