 Alright, what I want to do now is finish the discussion about these multiple underlying causes of the financial crisis. I talked earlier about the financial sector became too big, it became too risky, it relied too heavily on innovations in mortgage financing, putting together mortgages into big mortgage backed securities and selling them off to everyone around the world. But there are other problems. One problem is that the banks who, remember, borrowed enormous amounts of money, they went from 20%, their debt went from 20% of GDP to 120% of GDP, they lent heavily to each other. So to create these securities, the banks would go to the capital markets and borrow money from a bunch of other financial institutions, create these securities and then sell them off to a bunch of other financial institutions. So that meant that all the banks' health and safety began to depend on the health and safety of all the other banks, right, so that they were kind of networked and tied together by these debts. So when we got the housing crisis and then we got the mortgage backed security crisis and then we got a whole bunch of banks having problems. All these banks owed money to each other, so when a couple of core banks got serious problems in Bear Stearn's investment bank or Lehman Brothers' investment bank got in trouble, it meant that everybody was in trouble because the few firms that were first had problems couldn't pay their debts to all the other firms and then so they had problems, they couldn't pay their debts to other firms. So it was the whole, the interlocking debt structures meant that the system was enormously vulnerable everywhere to a serious problem that developed anywhere. Now this is part of another problem which is that the financial markets across the globe became integrated. So financial institutions in one country lent and borrowed to financial institutions from another country, lent and borrowed to financial institutions from another country and so forth. This meant that a problem in a single market, the U.S. mortgage backed securities market could spread first to other U.S. markets because the banks had all lent money to one another and then it would spread all over the globe. So this network of global integration which in some ways was positive or had some positive results turned out to mean that along with the banks being so big and lending so much money to each other that now there was a systemic, global systemic vulnerability to crises anywhere and the U.S. mortgage backed security crisis and home construction crisis triggered a global problem. It created challenges of contagion. Now the last one I want to talk about is you have to understand when all these banks took all these risks, they put the shareholders in severe problems of the financial institutions if the governments hadn't rescued, financial institutions all the shareholders would have wiped out. They had very perverse or dangerous incentive structures. So if you were in an investment bank and you could create these dangerous mortgages and sell them off to somebody, you got enormous bonuses. So we saw that top executives, traders, financial traders in these firms were making 10 million a year, 20 million a year, 50 million a hundred million dollars a year in good years. Now if the problems came up in those mortgages that you traded there was somewhere else you'd have to worry about that. So you had every incentive to take risk and no incentive not to take risk. If the risk that you took to get these huge bonuses that everyone's read about, I think, if it led your own firm into difficulties, the government would bail you out, which they just did. The firms that created the global financial crisis in 2008, in 2009 got the largest bonuses in the history of Wall Street. So this was a win-win game. Take risk, take risk, take risk, there's no blowback, there's no problems for you. Now this is a peculiar and bizarre way to run a firm and to run a financial system. So what's the policy lessons we should learn from this? Let's go back to the policy lessons we learned from the 1930s. Banking works best in financial markets if they're small relative to the economy, if they're safe and don't take much risk, and if they're kind of boring and don't play around with really exotic and risky gambling and don't innovate new products that in fact are more dangerous than they are helpful. So what we need to do through policy is to shrink the size of the banking system, to tightly regulate the banking system, to break up these giant financial institutions which are so big that the government feels it has to rescue them in order to understand and see why this is a good idea, it's helpful to have a Keynesian perspective on financial