In my lectures at the annual Rothschild Caesarea Center summit in May this year,1 the annual convention of the Israel Economic Association, and an evening workshop of the Pinhas Sapir Center for Development, also this year, I made it my goal to shed some light on the way the credit crisis that began in the summer of 2007 evolved into a systemic failure of the global financial system. The crisis savaged not only the financial markets; as it unfolded and in its wake, the economy itself collapsed temporarily: global Gross National Product fell by 3 percent, global trade tumbled by 12 percent, and several countries’ exports lost as much as 25 percent. The questions I raised in my lectures were: how did we get to the state of systemic failure, how did we climb out of it, from what did we climb out, and from what have we not climbed out?

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