Written by a former IMF Chief Economist, the central thesis is that the financial industry has gained a hold on the U.S. policy comparable to that found in emerging markets, and with similar results. This phenomena is relatively recent, beginning in the early 80s but accelerating rapidly in the Clinton and George W. Bush years.
From my experience, I have seen at least one of the dynamics described -- the amazing sway of Wall St. on policymakers. A description of how X or Y policy will cause a sector's profits to fall or investment to drop off is enough to scare a healthy cadre of Congresscritters, political appointees, and career civil servants of both parties into paralyzed conniptions. Worse, these statements are simply assumed to be accurate, despite obvious financial interests of the analysts giving this advice. Even more ridiculous, all too often the reason given for the drop in investment is "we need these companies to keep market power so they can meet profit projections on which the stock valuation is based."
I will also point to the hold this has on the media. Given the foreclosure crisis and consumer debt, one would expect that the previous attempt to enact "cram down" bankruptcy reform (an amendment to the bankruptcy code that would allow judges in personal bankruptcy cases to reduce the mortgage obligations on primary mortgages) would get very significant press attention and outrage among populist pundits (to the extent we have any). But it fleeted across the stage and vanished. The current bill pending before the Senate to regulate the worst practices of the credit card industry -- now appearing before the same Senate that defeated the bankruptcy reform by a lopsided margin of 51-45 (12 Ds crossed the aisle against their own party's bill) -- is getting equally short shrift in the news.
This is a combination of many factors, especially the culture that is built around the financial sector as infallible and that any blame belongs on "stupid" consumers for spending beyond their means. The fact that credit card companies have the power to unilaterally rewrite terms and that consumers do not enjoy the same ability as "stupid" businesses to eliminate debt in bankruptcy is disregarded.
But whatever the prevailing mythos of the gods of the marketplace, the gods of the copybook headings demand their tedious accounts. We are in a world in which nearly 30% of home owners are under water with absolutely no mechanism to readjust mortgages in line with property values. Combined with runaway credit card debt, the stranglehold on the economy is inevitable. (This Reuters piece gives a good summary, noting that Citigroup supported the cram down legislation for precisely this reason.) The refusal of the financial institutions to understand this, and the continuing deference showed them by policymakers, does not augur well for the economic recovery.