Atrios writes that “the powers that be patted themselves on the back two years ago thinking they’d solved the problem.”
They certainly did. But that the powers that be were overly optimistic about their initial response to the crisis is unsurprising and in its way unforgivable. If you read This Time It’s Different, you’ll see that’s basically what always happens. What’s strange to me is what happened next. Instead of recognizing that they’d repeated the time-honored errors of the past, the powers that be started specifically reading This Time It’s Different as not an indictment of policy errors but an apologia for them. Instead of saying “we thought we’d learned the lessons of the past, but instead we’re repeating them” the powers that be started saying, “the lesson of the past is that these problems are inevitable, so don’t blame us for everything being terrible.” That’s a perverse attitude to take. It’s true that it’s not unusual to screw up in the wake of a financial crisis, but that doesn’t make it okay.