Economy stupid!

For those who want to know how the economics of the crisis works I recommend http://www.levy.org/pubs/sa_nov_07.pdf where the authors (Godley et al.) forecast the economic dimension of the current crises accurately, blaming the fiscal stance, disproving laying blame (as some in the US have) on too much saving by the US economy's trading partners (even though more domestic spending by China, Japan and Germany would be good), and predicting (years ago) recession in the USA this year followed by resumed balanced growth by 2010 if the fiscal stance is suitably relaxed to 2% or higher deficit to GDP (= $300bn borrowing requirement, which may be somewhat conservative?). For the global aspects see
http://www.undp-povertycentre.org/pub/IPCOnePager63.pdf
http://www.undp-povertycentre.org/pub/IPCOnePager62.pdf
but the above forecasts may be much altered by exchange rate rise of the $US, see
http://www.undp-povertycentre.org/pub/IPCOnePager38.pdf
The extreme US trade deficit paid for by the foreign acquisition of net US financial assets that funded much of the growth in asset backed securities had its well-spring in US comsumers spending 6% more than their incomes, see
http://www.undp-povertycentre.org/pub/IPCOnePager30.pdf
Much of the above is work undertaken by the UN. For macro-economists, the world model essentials are in: http://www.undp-povertycentre.org/pub/IPCWorkingPaper23.pdf
http://www.undp-povertycentre.org/pub/IPCTechnicalPaper1.pdf
An important point is to note that macro-economics warnings have been in train for years and were most clearly publicised since 2005, while before then I would say that technical warnings among bankers and economists were more subliminal!