Joseph Stiglitz didn't mince words when he kicked off the American Economic Association's annual meeting in Atlanta on Saturday. The Nobel laureate, who teaches at Columbia University, launched into a blistering attack on fellow economists for building models that rely on rational behavior when the financial crisis offers so much evidence of irrationality.

Wall Street also got a broadside. To Mr. Stiglitz, the purpose of a financial system is "to manage risk and allocate capital at low transaction costs." What actually happened? "They misallocated capital. They created risk. And they did it at enormous transaction costs."

As for the bonus culture, Mr Stiglitz called time on the myth that Wall Street is populated by the best and the brightest who deserve their big paydays. "When I look at the salaries some of our  'B' students got [on Wall Street], it doesn't correspond to their innate ability."