The global financial crisis isn’t over yet, but early lessons are starting to emerge.

And the Prime Minister, Kevin Rudd, had a few to offer, when he launched Ross Garnaut’s book, the Great Crash of 2008.

Notably, Rudd said the crisis has shown that Ronald Reagan was wrong, when he famously declared that “government is the problem.”

The Prime Minister recalled that the economist, John Maynard Keynes, had concluded, after the Great Depression of the 1930s, that market economies cannot function without governments playing “a balancing role.”

That is, they had to step in when the private sector is “in retreat.”

Keynsian economics fell out of fashion, in the 1960s and 1970s – and direct government intervention in economies became harder to justify.

In some circles, for example, governments were regarded merely as “the lesser of two evils.”

Rudd argued, though, that the flaws in that argument were exposed, when Lehman Brothers went broke, late last year, setting off a huge crash on world stock markets.

He noted that the latest crash had, in fact, been bigger than the one that set off the Great Depression.

Twice as big, in fact.

The great crash, of those times, saw world stock markets plunge by 20 per cent.

This time, share prices fell 40 per cent.

The Prime Minister’s speech is worth reading, in its entirety.  It’s on the web at www.pm.gov.au.

Ross Garnaut, though, harbors some reservations about the Rudd government’s response to the crisis.

He is, frankly, worried by the level of structural debt, that is being built up – and believes that could put a brake on Australia’s recovery.