This article is pretty idiotic and yet another another attempt by new economists to try to excuse the terrible financial policies of the last 10 years under the silly and completely wrong slogan "nobody could have possibly predicted it would all turn out this way." This of course was the same excuse used for the housing crisis (even though most of the country actually predicted it) and for the Iraq debacle.

Take this quote "Nothing in mainstream “neoclassical” finance theory explains these persistent crises." That may be true but if so it merely reflects a weakness of neoclassical finance theory and not of our knowledge of economics as a whole.

In fact Keneyesian theory explains the boom and bust cycle as well as the periodic crises very well and has a pretty good solution for dealing with them. In fact we did deal with them pretty well during the postwar period of expansion and prosperity. Then of course we started progressively departing from Keneysian theory under the tutelage of the Chicago school and the crises, as if by clockwork, started intensifying and the crashes started getting worse.

So the answer is obvious, the theory is well known. The problem is that the new economists do not want to admit it because (i) they do not want to admit they are wrong and (ii) they sure as hell do not want the correct medicine that Keynesian theory prescribes.

So they go on with this ridiculous farce where they pretend that the economics crises are some unexplained phenomenon.