Money management has been a profession involving a lot of fakery - people saying they can beat the market, and they really can't.

Marketers know that if people you respect - perhaps laughably including entertainers and athletes - say they like a product, you're more likely to buy.

As I write in 2012 we certainly do not believe that it is over yet, and the worst may be yet to come. Efforts by governments to solve the underlying problems responsible for the crisis have still not gotten very far, and the 'stress tests' that governments have used to encourage optimism about our financial institutions were of questionable thoroughness.

Can a controlled experiment explain why people like Kewpie dolls in one year, Beanie Babies in another, and American Girl dolls this year? Yet social scientists are asked to answer analogous questions. We economists and perhaps psychologists shouldn't overreact to the derision. That is, we shouldn't try to overlay a false sense of precision on our admittedly squooshy work.

Consider our difficulties avoiding junk food and overspending. Such addictions were carefully planned-for by professional marketing teams.

I am worried that the collapse of home prices might turn out to be the most severe since the Great Depression.

My clinical psychologist wife of 40 years has always had a close intellectual influence on me. When I was beginning to talk openly in the economics profession about irrationality in decision-making, I received a lot of criticism. Ginny would support my views and remind me that a whole other profession - psychology - studies people's irrational sides.