A lot has been written - often exceedingly well - about this debacle. I would personally recommend Noah Smith who has had two strong posts on the subject but there's also Mark Thoma, Paul Krugman, Matt Yglesias and the actual debunking by Arindrajit Dube, among others.
After so many quality posts, I am not really looking to add much myself. I would rather summarise a couple of points I think are important.
1- Macro-economic data is useful but not, in and of itself, the answer. We still need... well, either a "story" or, more scientifically sounding, some "first principles"...
2- A consequence of the above is that it can be hard to distinguish "just-so" stories from actual macro-economic insights. Skepticism and humility ought to be Macro's bywords.
3- The economy may not be a morality play but it is self-deluding to believe that macro arguments are not, in our days and age, political arguments. We may eventually get to Keynes' "macro-economists as dentists" but we're not there yet. We're still the "political economy" sciences, regardless of economists' physic envy.
4- Thus, wearing our political opinions on our sleeves is not, in and of itself, bad manner when discussing macro-economy. What is bad manner is closing our minds due to those political biases.
5- When we don't have uncontroversial "first principles", it's not yet time to get bogged down into super-technical modelling questions or, at least, the fact that some people's job is to get bogged down into super-technical modelling questions should not deter the amateurs among us from trying to participate to the debate.
And, yes, this last item is definitely self-serving... :)
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