Posted on 03/11/2010 10:54:32 AM PST by frogjerk
By Ellen Freilich
NEW YORK (Reuters) - Two years ago, a poisonous brew of bad economics, lax regulation, and egregious behavior boiled over, scalding the financial system and pitching the United States into its steepest downturn since the Great Depression.
The antidotes to the crisis, concocted by many of the players who stirred the original toxic brew, have pulled the U.S. economy back from the brink.
But those remedies won't prevent future crises, Joseph Stiglitz, winner of the 2001 Nobel Prize for Economics, writes in "Freefall: America, Free Markets, and the Sinking of the World Economy" (Norton, $27.95).
In contrast to the regulations that emerged from the Great Depression, which promoted growth and stability, the response to this crisis has led to a less-competitive financial system dominated by banks that are too big to fail, he writes.
Stiglitz, former chief economist at The World Bank and now a professor at Columbia University in New York, focuses on banks' failure to assess and manage risk, especially when risk is disguised by complex financial instruments. Such "modern alchemy" transformed risky sub-prime mortgages into A-rated products dubbed safe enough to be held by pension funds, he says.
America's financial markets also failed to allocate capital productively, he says. "At their peak in 2007, the bloated financial sector absorbed 41 percent of profits in the corporate sector," Stiglitz writes.
(Excerpt) Read more at finance.yahoo.com ...
Step away from the crack pipe!
“Joseph Stiglitz”
Did anyone else misread that as Joseph Stalin? When will these idiots stop wasting bandwidth?
That about sums up the entire article.
The solution to that problem [of employer-paid health insurance] would be to move to a single payer system that recognizes health as a social cost, not an employment cost, Stiglitz said.But the biggest risk to the economic recovery is the "very, very strong political risk" posed by those who argue for deficit reduction, he said.
One or two things he says are factually correct....but the rest is complete nonsense. And it’s amazing how he’s ignored the huge, massive role of government in this mess.
Congress writes idiotic regulations, honest business nearly goes bankrupt trying to comply, lazy bureaucrats sit on their butts while dishonest companies skate, and progressives claim this proves that congress needs to pass MORE idiotic regulations.
Stiglitz is an apparatchik.
Your sum up goes in to more painful detail than my brain is able to handle today. Stiglitz is way far left of Keynes.
1) a tax code that punishes success and reward failure
2) absolute idiotic regulations on small businesses
3) a federal government that spends WAAYY too much time promoting and determining FAIRNESS in economic outcomes
4) a government that soaks up too much capital in the form of yet produces NOTHING of economic value(Indian Affairs)
5) a federal government that is much too involved in issues that individual states should be responsible(Health Care)
6) a government that owns too much property that could best used efficiently by private industry.(Western Colorado,Southern Wyoming)
I could go on all day about how the federal government IS the problem but all of us on this web site are already aware.
He may be FOS but it looks as though he's a good capitalist.
shhhhh.....you aren’t supposed to start chanting the “Capitalism Has Failed” mantra until you get the hi sign from Obama
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