Chapter 5 of 6
Chapter v · After the crash
2008
A banking crash the models left out.
Lehman Brothers, a Wall Street investment bank, filed for bankruptcy on 15 September 2008; American output went on to fall further than in any postwar recession, and in 2009 world output shrank, which the IMF called the first such fall in 60 years. That November, at the London School of Economics, Queen Elizabeth II asked why nobody had seen the crisis coming; the British Academy's reply blamed “a failure of the collective imagination of many bright people”. Economists put banks and credit back into their models, but no single new school was born.
The question it made urgent
No new school has formed in this chapter yet. The schools of earlier chapters are still arguing over what it means.