The concept of a general equilibrium has no relevance to the real world (in other words, classical economics is an exercise in futility).

At times of recession, running a budget deficit is highly desirable. Once the economy begins to recover, you have to balance the budget. But it will also need additional revenues. Should the government not receive them, we will all get punished with higher interest rates.

I am not well qualified to criticize the theory of rational expectations and the efficient market hypothesis because as a market participant I considered them so unrealistic that I never bothered to study them.

I passionately disagreed with Treasury Secretary Hank Paulson's plan to bail out the banks by using a public fund called the Troubled Asset Relief Program (TARP) to help banks take toxic assets off their balance sheets. I argued that it would be much better to put the money where the hole was and replenish the equity of the banks themselves.

Merkel has realized that the euro is not working, but she cannot change the narrative she has created because that narrative has caught the imagination of the German public, and the German public has accepted it.

It is credit that matters, not money (in other words, monetarism is a false ideology).

China could easily emerge as the great winner if the Chinese leaders handle the situation well. On the other hand, they could also turn out to be the biggest losers if they handle it poorly. If the management turns out be wrong, this could lead to a political crisis in China.