There is a common myth about the current crisis that nobody saw it coming, and that it in some way invalidates market regulation. Well I know of at least two neo-Keynesians who saw it coming right from the get-go – Paul Krugman and Nouriel “Doomsday” Roubini.

Roubini’s research into third world economic collapses led him to noting that high foreign deficits financed by foreign loans were a common denominator. He further noted that the rise of US house prices didn’t have much of a reason behind it, and that thus it was a bubble and when it popped, it was going to be painful.

Paul Krugman argued that GW Bush’s tax breaks were simply raising America’s deficit in the long term without really stimulating demand. In 2005 he criticised Allan Greenspan for not regulating the mortgage market enough – saying he was “like a man who suggests leaving the barn door ajar, and then – after the horse is gone – delivers a lecture on the importance of keeping your animals properly locked up.”

Both were dismissed as being nothing more than doom-and-gloom mongers – even by other economists.

It is our nature as a species to plug our ears when people are screaming warnings and then plaintively ask “But why didn’t you say anything?” We do it because when people are shouting warnings, we tend to be thinking “I don’t care if it makes sense, I am making money.”

And that is an important thing to take forward from this crisis, that sometimes when an expert is trying to warn us of something, it is worth listening. As the two above economists’ predictions demonstrated this crisis did not dismiss the nature of economics as it stands now – but it raises serious questions about a lot of our economists.