The striking thing about America is - it's historically, extraordinary unusual, I don't of any other instance - is that productivity of workers and wages have not moved in tandem.

The war in Iraq has been very, very expensive - partly because the Administration tried to keep the apparent costs down. But the benefits have been elusive at best - partly because the ostensible reasons for going war were unconnected with reality - no weapons of mass destruction, no connections with 9/11.

I don't think if we had been able to make that choice rationally, we would have said that's what we want to do. We would have said: "Can't we save the banks and solve our health care problems?" The answer is yes. You could have.

Fortunately, America remains a robust democracy, where most individuals are not afraid to speak out. What we have done in Iraq has, however, compromised out standing as an advocate of basic human rights - the prime minister of one country responding to criticism of America for its human rights put it, it was liking having Dracula guard the blood bank. The loss of America's moral standing has been one of the great losses of this war.

Much of my work in this period was concerned with exploring the logic of economic models, but also with attempting to reconcile the models with everyday observation.

No one would look just at a firm's revenues to assess how well it was doing. Far more relevant is the balance sheet, which shows assets and liability. That is also true for a country.

The momentum today behind the idea of a new global reserve currency reflects, in effect, the rise of the rest in world politics and economics, led by China.