Our story begins in the summer of 2005, when Kudlow offered his thoughts in National Review on the sustainability of the housing boom in "The Housing Bears Are Wrong Again." The opening paragraph will live in infamy:

Homebuilders led the stock parade this week with a fantastic 11 percent gain. This is a group that hedge funds and bubbleheads love to hate. All the bond bears have been dead wrong in predicting sky-high mortgage rates . So have all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Florida, to bring down the consumer, the rest of the economy, and the entire stock market.

For those whose memories are short, let us review: The end of the boom and the collapse of the housing market did bring down the consumer, the economy, and the stock market, and would have sent most of the nation's biggest financial institutions into bankruptcy were it not for massive government intervention.

Kudlow's reason for optimism: Since the early 1970s, demand for homes had "far outstripped the supply of newly built residences." But as the (almost never wrong) blogger Calculated Risk pointed out three years later, Kudlow even managed to get that part cockeyed. From 1970-2005 "There were significantly more housing units built (57 million starts)... than new households formed (44.6 million)..."

Fast forward a year and a half, to December 2007, by which point the question of whether the housing boom was sustainable had been thoroughly settled. Now the question was: Whither the greater economy? Blogging at National Review's the Corner, Kudlow was definitive:

There is no recession. Despite all the doom and gloom from the economic pessimistas, the resilient U.S economy continues moving ahead -- quarter after quarter, year after year -- defying dire forecasts and delivering positive growth. In fact, we are about to enter the seventh consecutive year of the Bush boom....

There's no recession coming. The pessimistas were wrong. It's not going to happen ... Yes, it's still the greatest story never told.

The National Bureau of Economic Research later determined that the recession officially began in December 2007.

It gets better: In July 2008, Kudlow called a housing bottom. Wrong. That same month, he also declared:

"Phil Gramm was right: We are in a mental recession, not an actual recession. And the low-tax, free-trade, free-market, capitalist economy is a whole lot more resilient and durable than the pessimistas and declinists would have us believe."

In September 2008, the month that the economy effectively collapsed, Kudlow posted a prediction that falling oil prices would serve as a "tax cut" that would "solve" the problem of weak consumer purchasing power. That, in turn, would boost the overall economy and "for those of us who prefer to look ahead, through the windshield, the outlook for stocks is getting better and better." Incredibly, amazingly, almost hysterically wrong.

(In the same post, Kudlow also predicted that Sarah Palin would strengthen McCain's presidential campaign. Maybe we'll give him that one.)

We could go on. Searching the Internet for instances of Kudlow's wrongness is an exhausting task -- there's too much material to properly filter. But just as a coda, let's note that just last December he predicted a mini-boom in the stock market and declared that "there's a lot of upside left" in the rally that by that point had been cruising along for nine months. Of course, the market promptly tanked.

There are other reasons to find Kudlow's candidacy risible (not least of which is the revelation, per a post by Salon's new news editor, Steve Kornacki, that the Draft Larry Kudlow Committee's finance chairman is John Lakian, who has his own notorious troubled relationship with the truth). But one must still concede that a political career for Kudlow is not inconceivable. He worked in the Reagan White House, was chief economist at Bear Stearns, and was considered a rising conservative star before revelations of drug and alcohol abuse put him on the sidelines in the early '90s. His signature policy prescription -- cut taxes for everyone and everybody, in every situation, as a cure for every ill -- is standard Republican orthodoxy, so he'd fit in quite well with the current GOP.

So go ahead tea partiers: Draft Kudlow! New York's had a rough couple of years. The state deserves some fun.

It makes sense. If you can write off the interest payments on debt as a tax deduction, but have to pay taxes on the income generated by actual ownership of equity, you will be steered toward debt by the not-so-invisible hand of the tax code. Davis writes that "the corporate income tax deduction for interest produced a -6.4 percent tax rate on debt financed investments, while the double taxation of equity income (dividends and capital gains) produced a 36.1% tax on equity financed investments."

So Wall Street went mad for debt-financed investments. We all know how that turned out.

James Surowiecki wrote an excellent piece on the problem for The New Yorker last November, pointing out that previous proposals to eliminate the corporate interest deduction have gone nowhere, but suggesting that "we're in a different historical moment now: the perils of too much borrowing have never been clearer."

Surowiecki's implication is that maybe now, as we survey the wreckage, we have the freedom to make some reforms. But Pete Davis is less hopeful:

The hard part of tax reform is that you have to raise taxes on those getting the subsidies. There are far fewer of them than the many taxpayers who stand to get slightly lower tax rates, so Wall Street corporations will finance the lobbying to kill tax reform before it has to chance to prevent the next financial crisis. We'll end up with watered down quick fixes at best, and the roots of the next financial crisis will remain in the Tax Code.

The last two paragraphs encapsulate a theme that appears in nearly every consideration of the possibility of meaningful financial regulatory reform today. We are in a different historical moment. The pro-deregulation ideological consensus that reigned supreme for the last 30 years has been broken.

And yet this difference makes no difference. The Wall Street banking lobby seems just as powerful in Washington as it was before the crisis. Even worse -- after the Supreme Court ruling earlier this year throwing out restrictions on political spending by corporations, it may even be more powerful.

Gross writes that "On the Brink" provides "plenty of excellent color and detail," but "a surprising inability to see the big picture." And much of what he does tell us, we already knew. For example:

John McCain comes off worst of all: impulsive, ill-informed and counterproductive. "This was crazy," Paulson writes of McCain's decision to suspend his campaign in late September 2008 and demand a White House meeting on the bailout. At the climactic meeting in the Cabinet room, Obama spoke for the Democrats, delivering a "thoughtful, well-prepared presentation." But McCain? "When it came right down to it, he had little to say in the forum he himself had called."

We waited a year and a half for an insight that was apparent the week it happened?

Abelson observes that "On the Brink" "gives the spectacularly unsettling sense that world history is decided by an assortment of guys who are improvising, and may not be particularly good at it." This almost makes me think the book might be worth reading, after all, because understanding the improvisational nature of reality might be unsettling, but is also important. Nobody's got a plan -- they're just making it up as they go along!

But the kicker does not lend itself to enthusiasm:

Not only did Mr. Paulson "not have time for regret, recriminations, or second-guessing," but he doesn't use the newfound power of hindsight.... Surely he has more sophisticated and subtle insights into the ugliness of American finance, but he keeps them to himself. "

But if you are in the mood for a good, long, meaty read, I second Felix Salmon's recommendation to read Moe Tkacik's opus distilling the essence of the financial crisis in The Baffler.

Tkacik pulls together elements of 13 different books (but not including "On the Brink") on the crisis into a masterpiece, and I say this not just because she coins the phrase, "soft bigotry of subprime moral standards." She does a really good job of trying to figure out what it all means, and finishes with a great flourish.

And that is why so many journalists, economists, intellectuals and financiers now scramble to churn out books that for the most part read like the memoirs of people trying to make themselves feel less stupid. The current financial system was constructed to make us all feel stupid, and in the process of building it the architects allowed themselves to become stupid as well. That ignorance begat infantilization, which bred cowardice and systemic moral decay. The only sustainable way out is to reacquaint ourselves and our fellow citizens with the wisdom of asking stupid questions.

"There are two bedrock principles on which I will not compromise: the safety and soundness of the financial system and taxpayer protection against bailouts. I fully support enhancing both consumer protection and safety and soundness regulation. I will not support a bill that enhances one at the expense of the other, however. In order to strike the appropriate balance they must be integrated with each other, not separated from each other.

"Consumer protection is not the only issue that remains unresolved. We must craft a resolution regime that ensures taxpayers will never again bear the losses for risks taken in the private marketplace. I will not agree to any legislation until I am satisfied this goal is also achieved. "

The smartest thing to do would be dismiss Shelby's statement as mere boilerplate. Who could disagree with the principle that taxpayers never again bear the costs of bailing out Wall Street? Heck, if that's all that slowing progress down, I'm sure good men and women of sturdy resolve can come up with a satisfactory solution.

However, as Simon Johnson never tires of reminding us, simply coming up with a "resolution regime" for financial institutions run amok isn't going to solve the fundamental problem of having too-big-to-fail banks in the first place. If they're too big to fail, no "resolution authority" is going to simply wave away the damage that their collapse will do to the larger economy, no matter how smoothly their dissolution is handled. If we want to keep taxpayers from footing the bill, then we've got to reduce the size and interconnectedness of these institutions. But that, alas, doesn't seem to be the kind of thing that either Democrats or Republicans have the stomach for.