The crisis, then, was, much more than the stagflation that discredited Keynesianism, a crisis of ideas. It was a crisis of the instruction sheet of the past thirty years. The claim that the prices at which financial assets traded represented the true economic fundamentals was, when the boom was exposed as a bubble, off by orders of magnitude. The rational expectations of sophisticated investors turned out to be shortsighted and bubble chasing, as irrational exuberance on the upside gave way to runaway pessimism on the downside, just as Keynes had warned about eighty years ago. Viewing moral hazard as the only policy problem led to the decision to let Lehman Brothers fail, which suddenly exposed the global banking system to the risk posed by unbacked CDS contracts.

Mark Blyth, Austerity, loc. 133