The blogosphere is having a field day with the news that Willem Buiter, the caustic London School of Economics professor who has delighted in launching blog posts like grenades throughout the course of the global financial crisis, has been named Citigroup's Chief Economist.
A staunch critic of bailouts, Buiter has been especially vicious towards Citigroup; in April he called the financial institution "a conglomeration of worst-practice from across the financial spectrum" and in June he described the decision by U.K. finance minister Alistair Darling to appoint former Citigroup CEO "Win" Bischoff to "to co-chair the writing of a report on UK international financial services" as "the most ridiculous appointment since Caligula appointed his favorite horse a consul."
I'd like to suggest my own contribution from the Buiter archives. In September 2007, Buiter took issue with what he characterized as then-Financial Times columnist Larry Summers' "never seen a potential bail out he did not like" predilection in a blog post titled "Support Markets, Not Banks."
I cannot think of a single financial institution that is too big to fail, in the sense that it would damage some systemically important social institution.... I recognize the upside of bail-outs for those who arrange them: they look like movers and shakers, making and shaping events. It's heroic, in an industry where heroism can be rarely displayed. But in all of the examples mentioned above, the bail-out did more harm than good.
So now Buiter will be taking a paycheck from one of the very biggest of the bailed-out too-big-to-fail institutions. Which means, whether he likes it or not, Buiter is being bankrolled with the support of the American taxpayer... and implicit backing of Larry Summers. If Citigroup hadn't been bailed out, would Buiter have gotten this job?
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