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If you are Alan Greenspan, you retreat from your 2008 epiphany in which you acknowledged your “state of shocked disbelief” that “the whole intellectual edifice” of your deregulatory ideology had collapsed. Now, you condemn reform efforts as “the current ‘anything goes’ regulatory ethos” — a phrase that paradoxically recalls your own failed policies at the Federal Reserve. In short, after driving the economy over the cliff, you offer to give driving lessons.If you are JP Morgan’s chief investment officer, you refute the statement that your chairman and chief executive, Jamie Dimon, made to the FCIC in 2010 blaming the failures of major financial institutions on “the management teams 100 percent and . . . no one else.” You revise your opinion on the causes of the crisis to instead focus blame on government housing policies. The source for this newfound wisdom: shopworn data, produced by a consultant to the corporate-funded American Enterprise Institute, which was analyzed and debunked by the FCIC report.

If you are most congressional Republicans, you turn a blind eye to the sad history of widespread lending abuses that savaged communities across the country and pledge to block the appointment of anyone to head the new Consumer Financial Protection Bureau unless its authority is weakened. You ignore the evidence of pervasive excess that wrecked our financial markets and attempt to cut funding for the regulators charged with curbing it. Across the board, you refuse to acknowledge what went wrong and then try to stop efforts to make it right.Does historical accuracy matter? You bet it does.   Traveling down a road unfettered by facts will take us far from where we need to be: prosecuting financial wrongdoing to deter future malfeasance; vigorously enforcing financial reforms to rein in excessive risk; and rooting out Wall Street’s conflicts of interests, abysmal governance and badly flawed compensation incentives.Worst of all, it will divert us from the urgent task of putting people back to work and creating real wealth for America’s future. Over the past decade, we squandered trillions of dollars on rampant speculation rather than on making investments — in technology, infrastructure, clean energy and education — that increase our productivity and economic strength. The financial sector’s share of corporate profits climbed from 15 percent in 1980 to 33 percent by the early 2000s, while financial-sector debt soared from $3 trillion in 1978 to $36 trillion by 2007. With tens of millions still unemployed, isn’t it time to shift from an economy based on money making money to an economy based on money creating jobs and genuine prosperity?

What were the American people to do in this vast new war? In his address to Congress on September 20, 2001—the speech that gave his most eloquent account of the meaning of September 11th—the President told Americans to live their lives, hug their children, uphold their values, participate in the economy, and pray for the victims. These quiet continuities were supposed to be reassuring, but instead they revealed the unreality that lay beneath his call to arms. Wasn’t there anything else? Should Americans enlist in the armed forces, join the foreign service, pay more taxes, do volunteer work, study foreign languages, travel to Muslim countries? No—just go on using their credit cards. Bush’s Presidency would emulate Woodrow Wilson’s and Warren G. Harding’s simultaneously. Never was the mismatch between the idea of the war and the war itself more apparent. Everything had changed, Bush announced, but not to worry—nothing would change.

At the time of the attacks, few educated Americans born after 1950 had any direct experience of war or persecution or cataclysmic failure. After 9/11, this gap in the résumés of intellectuals gave them both a sense of inadequacy—an outbreak of envy for the Greatest Generation—and a compensatory tendency to inflate the drama of the war on terror and their own role in it. This took place at a level of abstraction that is made possible when the fighting is eight thousand miles away. As a result, a number of the country’s best minds mistook the post-September 11th era for a new American golden age.

After the attacks, Americans asked, “Why do they hate us?” This turned out to be the wrong line of inquiry. The most pressing questions were about us, not them: our leaders, our institutions, our ability to act as a cohesive nation and make rational decisions, our power to take action abroad in a way that would not be a self-defeating waste. Starting with the intelligence failures that did not foresee the attacks, every major American institution flunked the test of the September 11th decade. The media got the W.M.D.s wrong. The military failed to plan for chaos in postwar Iraq. Congress neglected its oversight duties. The political system produced no statesmen. C.E.O.s and financiers couldn’t see past short-term profits. The Bush Administration had one major success: it succeeded in staving off another terrorist attack in America. It botched almost everything else.

After 9/11, life in America changed in a few palpable ways: you needed I.D. to get into an office building, and boarding an airplane became an ordeal. But all the structural trends stayed on course: the stock market, after a setback, maintained its relentless upward climb; inequality soared, as Wall Street fortunes reached unimaginable new heights, while average wages began to decline; just about every remaining textile job in Surry County disappeared; Americans sank deeper into debt and depended more on their houses for wealth; the iMac progressed to the iPad; CBS News continued its descent into irrelevance and Fox News its corrosive rise, while newspapers kept cutting back or closing shop. The political division of America into red and blue hardened into the mutually hostile and unintelligible universes in which we live today. Bush, already viewed as illegitimate by many Democrats, became one of the most hated Presidents in American history; the writer Nicholson Baker even published a novella about the merits of assassinating him. Meanwhile, the Republican Party fell completely under the control of its most extreme elements, and “traitor” became a routine term for its opponents. For all the talk of national unity and a new sense of purpose, the terror attacks did nothing to bring together the country. America after September 11th was like a couch potato who survives a heart attack, vows to start a strict regimen of diet and exercise, and after a few weeks still finds himself camped out in the living room.

The Bush Administration collapsed in the late summer of 2005—not in Falluja or Kandahar but in the submerged neighborhoods of New Orleans. The response to Hurricane Katrina gave Americans such a devastating picture of official failure that it suggested something fatally wrong with an entire approach to governing. Iraq, of course, had provided evidence of high-level arrogance, incompetence, and neglect for two years, and Afghanistan for even longer than that, but, because these places were far away and American troops were risking their lives to serve the nation, the public wasn’t ready to withdraw its support. When the footage came out of the Gulf Coast—when, for the second time in four years, a great American city looked like Kabul or Kinshasa—it was Iraq in fast motion, and right around the corner. Government at all levels, but especially in Washington, had failed to plan for the worst outcome, even when the entire country saw it coming. An Administration staffed by cronies neglected to take care of citizens for whom it had the greatest responsibility. Katrina made brutally clear that the White House had substituted passive, self-congratulatory bravado for serious organized effort. Like Iraq, New Orleans represented a failure of individual leaders, but also of national institutions.

After Katrina, support for the Iraq war evaporated. Having been asked for very little ever since September 11th, other than to take the Administration’s way on faith, Americans had little trouble reframing their allegiances. This was the price of a foreign policy based on assertion rather than on persuasion. The war on terror had been a kind of confidence game: it depended on a belief in American virtue and ability that had proved unwarranted. With the exception of his advocacy of the surge, in 2007, Bush became an increasingly irrelevant figure, and his foreign policy crawled away from grand projects for “world order.” When Vice-President Cheney called for new wars with Iran and Syria, there were no takers.

In the years after Katrina, Americans began to see that the same unstable combination of hoopla and neglect that had characterized the war on terror also characterized the decade’s supposed economic boom. While the media were riveted by the spectacle of celebrity wealth, large areas of the country were—like Surry County—left to rot. The boom had been built on sand: housing speculation, overvalued stocks, reckless deregulation, irresponsible deficits. When the foundation started to crumble with the first wave of mortgage defaults, in 2007, the scale of the destruction became the latest of the decade’s surprises. Hardly anyone foresaw how far the economy would fall; hardly anyone imagined how many people it would take on the way down. Even the economic advisers of the next Administration badly misjudged the crisis. The trillions of dollars spent and, often, misspent on wars and domestic bureaucracies were no longer available to fill the hole left by the implosion of the private economy. Reborn champions of austerity pointed to the deficits in order to make the case that the country couldn’t afford to spend its way back to health. And, like the attacks that were supposed to change everything, the recession—which was given the epithet “Great” and was constantly compared with the Depression of the nineteen-thirties—inspired very little change in economic policy. Without effective leadership, the country blindly reverted to the status quo ante, with the same few people making a lot of money, if a little less than before, and the same people doing badly, if a little worse.

This malignant persistence since September 11th is the biggest surprise of all. In previous decades, sneak attacks, stock-market crashes, and other great crises became hinges on which American history swung in dramatically new directions. But events on the same scale, or nearly so, no longer seem to have that power; moneyed interests may have become too entrenched, élites too self-seeking, institutions too feeble, and the public too polarized and passive for the country to be shocked into fundamental change.