I was reading your article How Did Economists Get It So Wrong. Who are these economists who got it so wrong? Speak for yourself kemo sabe. And since you got it wrong - why should we believe your discredited theories?Read Levine's complete response here.
A progressive who would like to see higher taxes and more government programs? Wait until there is an economic crisis and call it a "fiscal stimulus bill." Here we are, the recession is over and we've spent 10% of the money...Not the 200% you thought we needed to end the recession.
If there was some sort of irrationality involved in a panic, prices ought to bounce right back the next day when everyone wakes up and sheepishly realizes that they were wrong. In fact asset prices seem to be tracking news of fundamentals pretty well - gradually recovering as we get better news about fundamentals.
Also see my post on Cochrane's response to Krugman here.
David K Levine is the John H Biggs Distinguished Professor of Economics, Washington University in St. Louis.