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I had become interested in economics, an interest that was transformed into a lifetime dedication when I met with the mathematical theory of general economic equilibrium.

My decision to leave applied mathematics for economics was in part tied to the widely-held popular belief in the 1960s that macroeconomics had made fundamental inroads into controlling business cycles and stopping dysfunctional unemployment and inflation.

This crisis exposed very significant problems in the financial systems of the United States and some other major economies. Innovation got too far out in front of the knowledge of risk.

The dominant economic approach of the last thirty years is now on its last legs. Letting the market rip and an indifference to inequality are now seen as important causes of the greatest economic crash since the 1930s.

The reality is, risk is variable. Those in the financial world know it.

In the 1970s, as historians became enchanted with microhistories, economists were expanding the reach of their discipline. Nations, states and cities began to plan for the future by consulting with economists whose prognostications were shaped by investment cycles rather than historical ones.

In falling markets, there is nothing that has not happened before. The bear or pessimist sees only the past, which imprisons the wretched financial soul in eternal circles of boom and bust and boom again.

The crisis and recession have led to very low interest rates, it is true, but these events have also destroyed jobs, hamstrung economic growth and led to sharp declines in the values of many homes and businesses.

Risk models are a substitute for historical knowledge, because they tend to work with just three years' worth of data. But three years is not a long time in financial history.