March 30, 2009

Krugman: Economic crisis has tarnished America's reputation

Posted: 08:49 AM ET

Ten years ago the cover of Time magazine featured Robert Rubin, then Treasury secretary, Alan Greenspan, then chairman of the Federal Reserve, and Lawrence Summers, then deputy Treasury secretary. Time dubbed the three “the committee to save the world,” crediting them with leading the global financial system through a crisis that seemed terrifying at the time, although it was a small blip compared with what we’re going through now.

All the men on that cover were Americans, but nobody considered that odd. After all, in 1999 the United States was the unquestioned leader of the global crisis response. That leadership role was only partly based on American wealth; it also, to an important degree, reflected America’s stature as a role model. The United States, everyone thought, was the country that knew how to do finance right.

How times have changed.

Never mind the fact that two members of the committee have since succumbed to the magazine cover curse, the plunge in reputation that so often follows lionization in the media. (Mr. Summers, now the head of the National Economic Council, is still going strong.) Far more important is the extent to which our claims of financial soundness — claims often invoked as we lectured other countries on the need to change their ways — have proved hollow.

READ MORE of Krugman's commentary HERE

Filed under: Economy • Paul Krugman

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Dodie from Irvine, CA   March 30th, 2009 3:29 pm ET

Sarah Palin abused her power as Governor of Alaska and appears to be into Aerial Wolf Hunting for big money.

We have enough corrupt people in Washington, Wall Street & big business. This country cannot cope with 4 more years of a Bush stragetist like Palin. It would be our demise!


My biggest concern with all this government spending is the wave of possible depression brought on by terrible inflation in the next 4 – 8 years.

Allan Widlits   March 30th, 2009 4:20 pm ET

We had seventyfive years of recovery and prosperity under the astute guidance of the Glas-Segal Banking regulations enacted by FDR to correct the abuses Wall Street sufered on the American Home and Homeowner. The Banking Act of 1933 ( otherwise known as "Glas-Segal") formed the backbone of the system that produced Fannie Mae and Freddie Mac as products that saved both American Banks and Homes. But the weight of Pres. Bill Clinton and a Republican Con gress saw fit to overturn Glas- Segal, allow Wall Street to again dabble in Real Estate. The result, Wall Street has crumbled, the Big Banks are on their knees, and the Amnerican Homeowner is in worse shape then during the Great Depression! What will it take to restore Glas Segal, an entire NEW Congress! That is our only hope for safety, financial rectification!

Jay   March 30th, 2009 7:01 pm ET

Deregulation and greed by the big Banks and Corperations led to the Economic crisis.

Rich, Kankakee, IL.   March 30th, 2009 8:49 pm ET

Why do they just reasrablish the laws that were used in the past to protect the Ameican people.

I think the Republicans are crazy for putting out that fake budget with out many numbers in it. The only thing that they put in there was a tax cut for the rich of another 10%, down from a current tax rate of 35% to a rate of 25%. All the Republicans care about is the rich, and using the ingorant for that purpose!

While the rest of us have to pay a tax rate of around 37%, how is that fair?

Rich, Kankakee, IL.   March 30th, 2009 8:51 pm ET

Why don't they just reastablish the laws that were used in the past to protect the Ameican people in the market place and wall street!!.

I think the Republicans are crazy for putting out that fake budget with out many numbers in it. The only thing that they put in there was a tax cut for the rich of another 10%, down from a current tax rate of 35% to a rate of 25%. All the Republicans care about is the rich, and using the ingorant for that purpose!

While the rest of us have to pay a tax rate of around 37%, how is that fair?

Rich, Kankakee, IL.   March 30th, 2009 8:55 pm ET

America doomed to repeat the errors of the past!

Bob Bertoldi   March 30th, 2009 9:19 pm ET

The UAW-Cio Union has a great amount of blame for high priced vehicles. Auto companys pay some first year assembly personal $17.00 an hour for just screwing Item "A" onto item "B"...not thinking involved, but yet...some young struggling graduates from college makes make less than that working for an Engineering company. How unbalanced is this? Whats wrong with this picture?

rick irwin   March 30th, 2009 9:30 pm ET

Hi Larry King! I am from Mississauga Ontario, Canada. My HEART goes out to every Man and Woman that works for these car companies. If President Obama wants to helps these car companies he should give everyone of us a $20.000.00 voucher to buy a NEW CAR. That would certainly help get those UNSOLD CARS off the LOT.

Gary Chandler in Canada   March 30th, 2009 10:12 pm ET

Too bad the economic crisis tarnished an, otherwise, great reputation, eh? ROFL
Obama is letting Bush off the hook! His BIG mistake was NOT recognising how badly Bush had driven it into the ditch.
He is trying to steer a ship that has run aground and is out of fuel.
The stock market is only element that is coming close to showing the reality of the situation, but will hit 3000, mark my words!
America HAS to circle the wagons!!!

Rich   March 30th, 2009 10:46 pm ET

It is time to remove the "tax-exempt" status of institutions such as Harvard, Yale, Princeton etc..............It would be interesting to see how much of their endowments were "invested" in AIG.......and which of the geniuses came up with these "credit default swaps" that decimated the retirement savings of millions of average "working" Americans such as teachers, policemen, and firefighters!!

Rich, Kankakee, IL.   March 30th, 2009 10:47 pm ET

Did you hear about the Assianation squad that Dick Cheney ran out of the White House!

bianka   March 31st, 2009 12:52 am ET

I think its selfish of Americans especially hollywood, not to respect other cultures.

rick irwin   March 31st, 2009 11:11 am ET

Let the MARKETS do their thing! We don't need BIG GOVERNMENT'S HELP! They have a HABIT of making things WORSE. So what if one of the BIG banks go under. Life will still go on. The more the BIG SHOTS ( GOVERNMENT) stay away from the MARKETS, the BETTER it will be.

Allan Widlits   March 31st, 2009 1:57 pm ET

The insults and excesses of Wall Street are now taking their toll on Detroit streets! The combination of over-priced autos and lack of either credit or confidence is crippling the auto industry. First, because Detroit began building autos for Wall Street and not drivers, their sales slumped. Then, the Real Estate excesses suffered on the entire World by Wall Street destroyed the credit that most need to buy the cars coming off the assembly lines. Detroit is returning to the tastes of the Drivers and Buyers to build the cars, but no one has the money to buy them! Let B of A go down the tube, Merril Lynch can buy the bank and sell shares in it to refinance both companies! Turn your dollars and attention to G.M., Chrysler and FORD. They employ real people from the making of the parts to assembling cars, selling and servicing those cars across the country.

Dodie from Irvine CA   March 31st, 2009 8:21 pm ET

@ Gary Chandler in Canada

You got that right! Love your analogy! Unfortunately so very true!

BILLIE   March 31st, 2009 9:23 pm ET


Doug Pendleton   March 31st, 2009 9:36 pm ET

Hello natalie
I am a 44 year old African American man. I have been on Hemodialysis for the past 18 years of my life. My real faliar was caused by Lupus, a very unlikely illness for a man, as only 5% of men acquire it. But at anyrate, I think it is such a blessing to have perfect strangers to offer up such a significant part of their beings in order to help to keep you healthy and well. Yes you are correct, we are on a life sustaining treatment but we can stay healthy as long as we are diligent and follow medical advice. I come from a large family and have never been offered by them to even get tested on my behalf. So it is truly amaizing the that a strangers heart will lead them to blessing you. God bless. I am also a huge fan of your and a friend in my head. If you recieve this note I'd love to hear from you.

Doug Pendleton

Rob in Tampa   March 31st, 2009 9:57 pm ET


I feel for everyone with renal failure.. but can you please cover other news worthy issues,,, like the government taking over the private sector and this socialistic pushes on our lives.

this topic is not national news worthy, not at a time like now.

tony   March 31st, 2009 10:00 pm ET

My wife was only 46 years old when she passed. she was an organ donor. Because of her strength and courage, during a difficult time, and her commitment to always thinking of others, her organs saved the lives of four others, who may have ran out of time waiting for donations.
I have, at least, gained comfort, knowing that my wonderful and beautiful wife, gave life to others.
God Bless You !!!!
Tony R

Rob in Tampa   March 31st, 2009 10:00 pm ET

Obama has not done one thing that should deserve praise....

has spent money that we don't have, has taken over private companies,
will raise taxes,,, he's driving this economy in the ground.... he hasn't run a coolaid stand and he's going to save the economy????

what gives him the authority to have fired the ceo of GM?????
i smell a dictator..

Allan Widlits   April 1st, 2009 6:49 pm ET

My compliments to the BBC! They actually interviewed a Protestor and allowed him to speak knowlingly about the problems generated by the Real Estate mortgage Derivatives that have leveled Wall Street and crippled the major US banks. It is only too bad that American Journalists are more concerned about Mrs. Obama's arms then the clay feet of Congress!

Terrence   May 13th, 2009 10:56 am ET

Americans have ruined there own reputation around the world. I wish that we as Americans would look in the mirror and start there to make the change. The president can not change each individual person with a simple policy change. Insurance has gotten out of hand because for the past few decades Americans have sued for millions for any and everything. Most of us are not millionaires so that money came from insurance companies so as business goes premiums have to rise. I am not advocating the insurance companies because I think that they have taken advantage of that situation as well and when they should be footing the bill they do not. It's a see saw effect. America and the economy will change when we as people change. This has even trickled down to our children that I call the hand out generation. Looking for some one to give it to them instead of earning it. Children learn what they see and all they are seeing is frivolous law suites, bank, and auto bail outs. If you need something just ask you do not have to work to get it. This is the example that we are teaching our kids which are our future leaders. We are in a front seat watching Americas demise simply from American greed.

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