Paul Krugman says ...

8 Words of Wisdom for Week Ending 4/17/2009 #1

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 ...

Indeed, these days America is looking like the Bernie Madoff of economies: for many years it was held in respect, even awe, but it turns out to have been a fraud all along.

It’s painful now to read a lecture that Mr. Summers gave in early 2000, as the economic crisis of the 1990s was winding down. Discussing the causes of that crisis, Mr. Summers pointed to things that the crisis countries lacked — and that, by implication, the United States had. These things included “well-capitalized and supervised banks” and reliable, transparent corporate accounting. Oh well.

The whole column should be read of course, but Krugman makes a wonderful point about our reputation ... our credibility. It's a given that most Americans recognize our loss of standing on the world stage on matters of foreign policy. George Bush and the war in Iraq robbed our nation of that. We lost the moral high ground through our use of torture. Still, we were the richest country in the world. We encouraged all the world to follow our economic lead. Now we find ourselves in the midst of the worst economic crisis since the Great Depression, and we no longer have our credibility on financial matters.

Perhaps it's good that we now have a President who is so thoroughly charismatic. If we can't get the entire world to take this crisis seriously, we will never solve the problem. It's an uphill battle for President Obama and just another example of the ultimate legacy of George W. Bush ... the fall of America as the world's moral and economic leader.

Source - The New York Times