The ceremony had been arranged months before—but a mere seven weeks previously, the leading U.S. investment bank Lehman Brothers had collapsed into bankruptcy, sparking a global economic crisis of unprecedented severity. It was an instance of serendipity too good to pass up. The Queen asked the international aristocracy of economists assembled before her an obvious question: why had none of them seen the crisis coming? The question struck a chord. The popular press took it up. Why was it that all those brilliant economists and highly paid bankers, with their elaborate theories and their computerised models, had failed to foresee such an enormous catastrophe lurking at the heart of the economic system? The British Academy convened a conference to formulate an answer, and in July 2009, sent a response to the Queen.2 It described a by now familiar litany of problems, including global macroeconomic imbalances, failures of risk management in banks, general over-exuberance due to a long period of low inflation, and lax regulation.
