Still Too Big to Fail

"In fact, stimulus alone was never going to bring recovery. This crisis was caused by financial collapse, rooted in massive banking fraud. The financial system is our economic motor and when it fails it cannot be revived simply by pouring money on it, any more than a wrecked reactor can be restarted just by adding fuel. Team Obama faced a situation not seen since the 1930s—a worldwide banking meltdown. The financial system needed to be rebuilt—and it still does. But Team Obama chose to overlook this.
"The result was debt-deflation. Falling asset prices tipped more and more households into insolvency, business stagnated, tax revenues dropped, states and localities cut their budgets and deficits widened."

In the Los Angeles Times, James K. Galbraith argues that the current debate over economic policy overlooks what is needed.