“There are three straightforward and rather obvious lessons from the collapse of Lehman Brothers Holdings Inc. five years ago: The financial crisis was devastating; we haven’t ended the problems associated with “too big to fail” financial institutions; and we must force the biggest banks to break up — or risk dire consequences.
“The crisis had huge costs, in both economic and human terms. Almost every official and politician understates these costs, though fortunately Tyler Atkinson, David Luttrell and Harvey Rosenblum of the Federal Reserve Bank of Dallas have produced a definitive accounting.
“I would begin with their measures of lost output. Their crucial point is that this recession recovery wasn’t V-shaped, but rather something much more protracted. Lost output — goods and services that we shall never see — was at least 40 percent of 2007 gross domestic product and probably considerably more. Add other costs, including the human damage caused by long-term unemployment, and the shortfall easily reaches at least one year’s output — say, $15 trillion in round numbers.”
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