The global financial crisis that broke with tremendous force in the late summer of 2007 has received wide coverage in the media and official reports, and only the main features need recapitulation here. 1 In many respects the crisis resembled a ‘perfect storm’ in that almost everything that could go wrong in innovative but over-exposed banking systems did go wrong: imprudent lending and faulty risk-management by bankers; destabilising activity by speculators; misjudgements by credit rating agencies; slackness and incompetence among financial regulators; and errors by central banks and finance ministries not only in the management of the crisis but also in the conduct of macroeconomic policy. A key question is whether the crash was a truly exceptional event – a massive stroke of bad luck, such as might occur once in a lifetime or even a century – or a disaster waiting to happen. If the latter is nearer the truth then macroeconomic policy, and indeed the policy regime itself (the 1990s synthesis) must be partly to blame.