  The Extended Theory of Finite Fermi Systems is based on the conventional
Landau-Migdal theory and includes the coupling to the low-lying phonons in a
consistent way. The phonons give rise to a fragmentation of the single-particle
strength and to a compression of the single-particle spectrum. Both effects are
crucial for a quantitative understanding of nuclear structure properties. We
demonstrate the effects on the electric dipole states in $^{208}$Pb (which
possesses 50% more neutrons then protons) where we calculated the low-lying
non-collective spectrum as well as the high-lying collective resonances. Below
8 MeV, where one expects the so called isovector pygmy resonances, we also find
a strong admixture of isoscalar strength that comes from the coupling to the
high-lying isoscalar electric dipole resonance, which we obtain at about 22
MeV. The transition density of this resonance is very similar to the breathing
mode, which we also calculated. We shall show that the extended theory is the
correct approach for self-consistent calculations, where one starts with
effective Lagrangians and effective Hamiltonians, respectively, if one wishes
to describe simultaneously collective and non-collective properties of the
nuclear spectrum. In all cases for which experimental data exist the agreement
with the present theory results is good.
