≡ Menu

Hope springs eternal

Krugman is excited about Janet Yellen:

Everyone else floated for the job has, one way or another, been close to Wall Street — even Larry Summers, who has a formidable record as a research economist but also a formidable record of making money consulting for financial firms. And while you can make the case in normal times that knowing finance, the markets, and all that is good, there are two fundamental truths here: Wall Street is largely responsible for the mess we’re in, and financial types have been consistently wrong — not just failing to see the risks before the crisis, but in diagnosing what would come next. Above all, they took the position that bailing out the banks would pave the way to recovery more broadly, and it hasn’t.

He fails to realize that she will soon be very close to Wall Street. I will be very surprised if she makes any difference in how the Fed treats the banks.