The Economist's Digest28

Leaders
What went wrong with economics?
Originally from The Economist July.18th, 2009

Summary:
In the past, most economic crises didn’t challenge the economics itself. Economics was taken as gospel. However, after these two years---the financial crisis, economics is not honored as before. It’s in doubt. Even some people in Europe started to doubt economic liberalism, and it’s false and dangerous.
There are three main criticisms: that macro and financial economists helped cause the crisis, that they failed to spot it, and that they don’t know how to fix it. The first is half right. Actually, macroeconomists are careless of asset bubbles this time. On the other hand, some important economic theories---like the inefficiency of the market---were ignored or distorted in Wall Street.
Actually, almost all the economists failed to previse how bad the consequence would be, even though some of them felt something wrong before the crisis. The central banks believe the imperfection of economy by human nature, yet financial officers don’t do so--- their economic model ignoring it, thus causing the disaster.
This financial crisis has changed economics a lot, and economists and financial professors should know more about each other’s field. Economists are social scientists, trying to understand the world changed by the financial crisis.

My opinion:
This time economic theories are confronted with big problems and good chances. Many financial workers blame economists for this financial crisis. However, it’s ridiculous, like irresponsible politicians blaming each other for a co-committed crime.
Don’t be silly; monetary policies can’t solve all the problems as money can’t solve all the problems. Those who plays the money game too much will be flushed our by cash flow. Money sometimes can control people’s mind---it is where its power lies. However, the most powerful tool is our own mind---don’t forget!