Paul Krugman: Remember when America was the finance role model?

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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. (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.

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