We will not achieve the understanding we need, however, unless we are willing to think clearly about our problems and to follow those thoughts wherev… - Paul Krugman

Sometimes economists in official positions give bad advice; sometimes they give very, very bad advice; and sometimes they work at the OECD.

The kind of economic trouble that Asia experienced a decade ago, and that we're all experiencing now, is precisely the sort of thing we thought we had learned to prevent. In the bad old days big, advanced economies with stable governments-like Britain in the 1920s-might have had no answer to prolonged periods of stagnation and deflation; but between John Maynard Keynes and Milton Friedman, we thought we knew enough to keep that from happening again.

But this warning was ignored, and there was no move to extend regulation. On the contrary, the spirit of the times—and the ideology of the George W. Bush administration—was deeply antiregulation. This attitude was symbolized by a photo-op held in 2003, in which representatives of the various agencies that play roles in bank oversight used pruning shears and a chainsaw to cut up stacks of regulations. More concretely, the Bush administration used federal power, including obscure powers of the Office of the Comptroller of the Currency, to block state-level efforts to impose some oversight on subprime lending.