I understand why political leaders in the beginning want to be cheerleaders to generate optimism. But to admit that they didn't understand the depths of the problem afterwards, I found a little bit surprising.

Nationalization of private debts undermines prudential lender behavior and is a government intervention in the market.

The country has large unfunded liabilities - social security, health care, and there will have to be some adjustments to these problems. What is scary though is how much worse things have gotten in the last eight years, and the Iraq war is one of the main factors.

We noted the psychological problems facing many of the returning from Iraq veterans - of the 700,000 returning veterans, more than a 100,000 have been diagnosed with problems, but the numbers are likely to get worse, as those with multiple deployments return. We should have valued the loss of life as a result of these suicides, using the same procedures we used for the loss of those who died in combat.

In the early 1990s, there was a debate among economists over shock therapy versus a gradualism strategy for Russia. The people in Russia who believed in shock therapy were Bolsheviks a few people at the top that rammed it down everybody's throat. They viewed the democratic process as a real impediment to reform.

I understand why political leaders in the beginning want to be cheerleaders to generate optimism. But to admit that they didn't understand the depths of the problem afterwards, I found a little bit surprising.

International lending banks need to focus on areas where private investment doesn't go, such as infrastructure projects, education and poverty relief.