Massachusetts, like many states across the country, is facing its worst fiscal crisis since World War II. The consensus among politicians and pundits is that the problem is the recession or, alternatively, "extravagant" state spending in the 1990s. But an analysis of state tax revenue data...

The authors argue that the current financial crisis, the worst since the Great Depression, can be seen as the latest phase in the evolution of financial markets under a radical financial deregulation process that began in the late 1970s. Deregulation accompanied by rapid financial innovation...