AMY GOODMAN's RADIO SHOW ON PBS had Joseph Stiglitz of the World Bank as a guest. He's a Professor of Economics at Columbia U. in NYC, he's Nobel prize winner for Economics. You have to take him seriously. NO BAIL OUTS!
Over the air waves of Public Radio, we heard what you WILL NEVER hear on ABC NEWS. Stiglitz said that it is important that all these crashed resuscitated banks start lending fast but they didn't so we need entirely new institutions, and we need them fast. We do NOT need a meaningless bail out to guys who flunked math and ethics! Bad move. Once they've replaced the torn meat over their ribs, they aren't going to loan it out! AND THEY WILL DO CASINO BANKING over and over as they keep getting MOMMY to kiss their hurties.
HERE IS THE TEXT: WE DON'T NEED NO STEENKING BAIL OUT! NO STEENKING
TARP PLAN EITHER!
by
Joseph Stiglitz, winner of the 2001 Nobel Prize in Economics. He is
a
professor at Columbia University and the former chief economist at
the
World Bank. He is the co-author of The Three Trillion Dollar War: The
True
Cost of the Iraq Conflict.
AMY GOODMAN: To talk more about President Obama?s speech, Tuesday, I?m
joined in the firehouse studio by Nobel Prize-winning economist Joseph
Stiglitz, professor at Columbia University, former chief economist
at the
World Bank, and co-author of The Three Trillion Dollar War: The True
Cost
of the Iraq Conflict" and many articles found here: http://www.nytimes.com/topic/person/joseph-e-stiglitz
Welcome to Democracy Now!
JOSEPH STIGLITZ: Nice to be here.
AMY GOODMAN: Your first assessment of the speech last night?
JOSEPH STIGLITZ: Oh, I thought it was a brilliant speech. I thought
he did
an excellent job of wending his way through the fine line of trying
to
say?give confidence about where we?re going, and yet the reality of
our
economy?country facing a very severe economic downturn. I thought he
was
good in also giving a vision and saying while we?re doing the short
run,
here are three very fundamental long-run problems that we have to deal.
The critical question that many Americans are obviously concerned about
is
the question of what do we do with the banks. And on that, he again
was
very clear that he recognized the anger that Americans have about the
way
the banks have taken our taxpayer money and misspent it, but he didn?t
give
a clear view of what he was going to do.
AMY GOODMAN: Let?s go to the clip last night. During his speech, President
Obama acknowledged more bailouts of the nation?s banks would be needed,
but
didn?t directly say, as Joe Stiglitz was saying, whether the government
would move to nationalize Citigroup and Bank of America.
PRESIDENT BARACK OBAMA: We will act with
the full force of the
federal government to ensure that the major banks that Americans depend
on
have enough confidence and enough money to lend even in more difficult
times. And when we learn that a major bank has serious problems, we
will
hold accountable those responsible; force the necessary adjustments;
provide the support to clean up their balance sheets; and assure the
continuity of a strong, viable institution that can serve our people
and
our economy.
Now, I understand that on any given day
Wall Street may be more
comforted by an approach that gives bank bailouts with no strings attached
and that holds nobody accountable for their reckless decisions. But
such an
approach won?t solve the problem. And our goal is to quicken the day
when
we restart lending to the American people and American business and
end
this crisis once and for all. And I intend to hold these banks fully
accountable for the assistance they receive, and this time they will
have
to clearly demonstrate how taxpayer dollars result in more lending
for the
American taxpayer.
AMY GOODMAN: President Obama on Tuesday night. Joe Stiglitz, is he holding
the banks accountable?
JOSEPH STIGLITZ: Well, so far, it hasn?t happened. I think the more
fundamental issues are the following. He says what we need is to get
lending restarted. If he had taken the $700 billion that we gave, levered
it ten-to-one, created some new institution guaranteed?provide partial
guarantees going for, that would have generated $7 trillion of new
lending.
So, if he hadn?t looked at the past, tried to bail out the banks, bail
out
the shareholders, bail out the other?the bankers? retirement fund,
we would
have easily been able to generate the lending that he says we need.
So the question isn?t just whether we hold them accountable; the question
is: what do we get in return for the money that we?re giving them?
At the
end of his speech, he spent a lot of time talking about the deficit.
And
yet, if we don?t do things right?and we haven?t been doing them right?the
deficit will be much larger. You know, whether you spend money well
in the
stimulus bill or whether you?re spending money well in the bank
recapitalization, it?s important in everything that we do that we get
the
bang for the buck. And the fact is, the bank recovery bill, the way
we?ve
been spending the money on the bank recovery, has not been giving bang
for
the buck. We haven?t gotten anything out.
What we got in terms of preferred shares, relative to what we gave them,
a
congressional oversight panel calculated, was only sixty-seven cents
on the
dollar. And the preferred shares that we got have diminished in value
since
then. So we got cheated, to put it bluntly. What we don?t know is
that?whether we will continue to get cheated. And that?s really at
the core
of much of what we?re talking about. Are we going to continue to get
cheated?
Now, why that?s so important is, one way of thinking about this?end
of the
speech, he starts talking about a need of reforms in Social Security,
put
it?you know, there?s a deficit in Social Security. Well, a few years
ago,
when President Bush came to the American people and said there was
a hole
in Social Security, the size of the hole was $560 billion approximately.
That meant that if we spent that amount of money, we would have guaranteed
the?put on sound financial basis our Social Security system. We wouldn?t
have to talk about all these issues. We would have provided security
for
retirement for hundreds of millions of Americans over the next seventy-five
years. That?s less money than we spent in the bailouts of the banks,
for
which we have not been able to see any outcome. So it?s that kind of
tradeoff that seems to me that we ought to begin to talk about.
AMY GOODMAN: So, you say Obama, too, has confused saving the banks with
saving the bankers.
JOSEPH STIGLITZ: Exactly.
AMY GOODMAN: Should they all have been fired?
JOSEPH STIGLITZ: Well, I think one has to look at it on a bank-by-bank
basis. Clearly, the banks that have not been managed very well, we
need to
not only fire them, we have to change their incentive structure. And
it?s
not just the level of pay; it?s the form of the pay. Their incentive
structures encourage excessive risk taking, shortsighted behavior.
And in a
way, it?s a vindication of economic theory. They behaved in the
irresponsible way that their incentive structures would have led them
to
behave.
AMY GOODMAN: Explain that.
JOSEPH STIGLITZ: Well, if you get an incentive structure where you say
you
get huge pay if things go well, but you don?t pay any consequences
if
things go badly, and you?re going to look at it only in terms of the
profits that you make this year, not the losses that you make next
year and
the year after, then of course you?re going to try to get a gamble,
because
if you gamble and you win, you walk off with the money; if you lose,
somebody else picks up the losses.
So what happened was, the banks gambled. They gambled very big. They
had
big profits for four years. But in the fifth year, the losses were
greater
than all the profits that they had in the first four years. But meanwhile,
they walk off with the bonuses based on the four-year performance,
and
then, the fifth year, they don?t?I mean, it was quite remarkable, they
didn?t even?they even got big bonuses for the record losses. Then that?s
what, of course, has gotten Americans angry, so that the bonuses were
described as incentive pay. But that was all a charade.
But the basic thing is, you know, our bankers are?many of them, not
all of
them?are, you might say, ethically challenged. But even were not they
ethically challenged, the fact is they had incentive structures that
led
them to behave in the way they did.
AMY GOODMAN: Should the banks be nationalized?
JOSEPH STIGLITZ: Many of the banks clearly should be put into, you might
say, conservatorship. Americans don?t like to use the word
?nationalization.? We do it all the time. We do it every week.
AMY GOODMAN: Explain.
JOSEPH STIGLITZ: Well, if banks don?t have enough capital so that they
can
meet the commitments they?ve made to the depositors, at the end of
every
week the FDIC looks at the balance sheet, and it says, ?You don?t have
enough capital. You?re not allowed to continue.? And then what they
do is
they either find some other bank to take it over and fill in the hole,
or
they take it into government control?it sounds terrible, to take it
into
government control?and then sell it.
And that?s what other countries have done when they faced this kind
of
problem?the countries that have done it well. One of the important
lessons
is this is the kind of thing can be done well, could be done badly.
And the
countries that have done badly have wound up paying to restructure
the bank
20, 30, 40 percent, even 50 percent of GDP. We?re on our way to that
kind
of debacle. But that shows you how bad things can be, how costly it
can be,
if you don?t do it well.
AMY GOODMAN: We?re talking to Joe Stiglitz. He won the Nobel Prize in
Economics in 2001, professor at Columbia University, former chief economist
at the World Bank. We?ll be back with him in a minute.
[break]
AMY GOODMAN: Joe Stiglitz, our guest, he?s the Nobel Prize-winning
economist from Columbia University and co-author of The Three Trillion
Dollar War: The True Cost of the Iraq Conflict.
So, you?re saying small and big banks are being treated differently.
JOSEPH STIGLITZ: Very much so. The small banks were shut down. The big
banks?Citibank, Bank of America?we?re giving huge bailouts.
Most interesting case is actually AIG, not even a bank, and we poured
in
$150 billion. Originally, they said they only needed $20 billion. And
then,
every few hours, every few days, the losses got bigger, [inaudible]
another
$60 billion. Now, that fact, the fact that we keep getting bad news
and
have to pour money in, should make us really worried. The question
is, why
did we bail out AIG? What they said is, the reason we bailed it out
is if
we didn?t bail it out, there would be consequences somewhere else.
They
didn?t tell us where.
It would make much more sense if we looked at where the consequences
were
and deal with the problems as they turn out. Just for instance, some
of
the, quote, ?insurance policy derivatives? were not in the United States.
The people that would have problems may be gamblers, may be other
institutions abroad. Do American taxpayers want to be bailing out
institutions abroad? That?s a question we ought to be debating. There
may
be pension funds that may be hurt. Well, some of the pension funds
may be
able to withstand it; other pension funds will need to have assistance.
But
let?s get the money going to where we think it ought to go, rather
than
this trickle-down approach that we?ve been using with AIG.
AMY GOODMAN: Very quickly, which countries do you think did things well,
and which didn?t?
JOSEPH STIGLITZ: Well, Sweden and Norway did things very well back in
the
end of the ?80s, beginning of the ?90s.
The UK, I think, has been doing it much better than the United States.
Its
problems are bigger? we have to realize that?because its banking sector
was
a more important part of the economy, and one of the banks actually
had
liabilities greater than the GDP of the UK. So it?s going to be facing
a
very difficult time. But the fact of the matter is, the way Gordon
Brown
did it, replacing the heads of the banks?it was real sense of
accountability there. Government got control and shares commensurate
with
the money that it was paying in?it wasn?t a giveaway?and now trying
to make
sure that they start lending, forward-looking. So it?s clearly?they
have a
much clearer concept of what is needed.
AMY GOODMAN: Why is Obama saving these bankers?
JOSEPH STIGLITZ: Well, we could all guess about the politics. We know
one
of the problems about American politics is the role of campaign
contributions, and that?s plagued every one of our major problems.
Under
the Bush administration, we couldn?t deal with a large number problems,
like the oil industry, like the pharmaceutical, the healthcare, because
of
the influence of campaign contributions. Now, my view is, one of the
problems is that whether it?s because of that or not, it lends an aura
of
suspicion. The fact that there was so much campaign contributions from
the
financial sector at least raises the concern.
Now, there is one other legitimate concern, that Wall Street has done
a
very good job of fear mongering. They say, ?If you don?t save us, the
whole
system will go down.? But, you know, when these banks that I talked
about
before, when they go down, there?s not even a ripple. The fact is,
you
change ownership. It happens on airlines all the time. An airline goes
bankrupt, a new ownership, financial reorganization?not a big deal.
What
they?ve succeeded in doing is instilling a sense of fear, so that it?s
a
kind of paralysis that hangs over what we?re doing. And you could
understand a politician. He?s been told if you do one thing, the whole
system?the sky is falling, it?s going to fall. That induces political
leaders to try to do the smallest incremental step, and that?s what
got
Japan in trouble.
AMY GOODMAN: And your thoughts on Geithner and Summers? Can they handle
this? What do you think of them as the economics team?
JOSEPH STIGLITZ: Well, the question is, are they willing to take the
bold
measures that are necessary? Everybody keeps saying we need to take
bold
measures, inaction is not a possibility. That?s not the issue on the
table.
Action will be taken. The question is, which action? Is the action
pouring
more money into the banks without any effect on lending, increasing
the
deficit, which the President talked about, or the actions which could
be
taken, starting on new banks, looking forward rather than looking to
the
past, significant financial restructuring?
Are we going to bail out the shareholders, bail out the bankers, rather
than focusing on saving the systemically important parts of these
institutions? There are some important parts of these institutions
that
we?ll have to save. The question is, are you going to go do it like
with a
bludgeon, throw money at it, or are you going to try to do it more
surgically and save the parts that need to be saved? And one of the
things
that went wrong is when we went?let Lehman Brothers go. It caused this
enormous trauma. And that?s increased the fear about?but that?s an
example
of doing things wrong. We didn?t ask the question. There was a systemically
important part of Lehman Brothers.
AMY GOODMAN: Which was?
JOSEPH STIGLITZ: Which were the commercial paper that was part of the
money
market funds that were?people were using like banks, like part of our
basic
payment mechanism. We could have saved that part and let the gambling
part
of Lehman Brothers, which is not part of the payment mechanism, go
down.
And because we took this blunt approach, we failed. And what the financial
markets are doing are saying, ?You have to save everything, if you?re
going
to save anything.? And that?s just wrong.
AMY GOODMAN: Tomorrow, President Obama is going to announce plans to
cut
the deficit in half. Do you think that?s the right way to go?
JOSEPH STIGLITZ: What we have to remember is we are in for almost like?most
likely a long and extended downturn. Now, we will eventually recover.
That?s not a question. But in 2011, 2012, will we be in a sharp recovery
or
in a more slow recovery?
One of the lessons from Japan was that in 1997, when they were in the
beginning of their recovery, they increased taxes because they wanted
to
get rid of their deficit, and the economy sank down back into a downturn.
The way to look at it is the following. Right now, in 2009, 2010, we?re
talking about, per year, something like a stimulus bill of $350 billion
per
year. To cut the deficit in half, with a deficit as we go into?without
the
stimulus is one-and-a-half trillion dollars, so we?re talking about
pulling
out $600, $700, $750 billion. That?s the reverse of an expenditure,
taking
out the stimulus and cutting back expenditures by another $600
billion?we?re talking about a turnaround of a trillion dollars. Do
you
really believe that by 2010, by 2011, 2012, our economic recovery will
be
so strong that it can withstand that kind of taking out of expenditure?
I
don?t think so. And so, if you went ahead and did that, we will go
back
into a downturn.
AMY GOODMAN: Joe Stiglitz, you co-wrote The Three Trillion Dollar War:
The
True Cost of the Iraq Conflict. Talk about the effect of war on the
economic crisis. And now we?re not only talking about Iraq. But your
thoughts on increasing the number of troops, intensifying the war in
Afghanistan?
JOSEPH STIGLITZ: Well, first, let me say, one of?the President did have
two
things that I really welcome. And several of the suggestions that we
made
in our book, he has adopted. For instance, in the past, under the Bush
administration, the war was totally funded by?or almost totally funded
by
emergency appropriations. It was as if every year was a surprise. And
he
said he?s going to put that on the books so that we can evaluate it,
make
sure their money is going in the best possible way.
A second thing in our book that was, you know, really?was really, I
found,
very moving was the way we treat our veterans is terrible. And he said,
you
know, they fought for us; we have to fully fund the Veterans
Administration. So those were really important moves in the right
direction.
But on the other side, the move into Afghanistan is going to be very
expensive. Things are not going very well. Our European?those who?NATO
partners are getting disillusioned with the war. I talked to a lot
of the
people in Europe, and they really feel this is a quagmire, we?re going
into
another quagmire. And one of the things that we do talk about in our
book
is that if you keep a residual force in Iraq, it?s going to be very
expensive. That?s the experience that Britain has had. They?ve kept
a
relatively few troops, and the result of that is the savings that they
had
hoped weren?t materialized. So that goes back to the part that he talked
about at the end of his speech: the deficit. If you?re going to be
spending
all this money in Afghanistan and in Iraq, that deficit is just going
to be
that much greater.
AMY GOODMAN: So you think Obama is wrong on Afghanistan?
JOSEPH STIGLITZ: I think so.
AMY GOODMAN: Have you told him? Have you been talking to him?
JOSEPH STIGLITZ: Not on that issue.
AMY GOODMAN: You?ve been talking to him, though?
JOSEPH STIGLITZ: During the primary and the period afterwards in some
discussions about what to do with the banks. There were discussions.
The?
AMY GOODMAN: Meaning you talked to him?
JOSEPH STIGLITZ: Yeah.
AMY GOODMAN: ?on the telephone.
JOSEPH STIGLITZ: Yeah.
AMY GOODMAN: I wanted to get your response?after President Obama spoke,
the
Louisiana Governor Bobby Jindal gave the Republican Party?s official
response. He blasted President Obama?s stimulus bill as an irresponsible
piece of legislation.
GOV. BOBBY JINDAL: Democratic leaders
in Washington, they place their
hope in the federal government. We place our hope in you, the American
people. In the end, it comes down to an honest and fundamental disagreement
about the proper role of government. We oppose the national Democratic
view
that says the way to strengthen our country is to increase dependence
on
government. We believe the way to strengthen our country is to restrain
spending in Washington, to empower individuals and small businesses
to grow
our economy and to create jobs.
AMY GOODMAN: Louisiana Governor Jindal. Your response, Joe Stiglitz?
JOSEPH STIGLITZ: I wish he had taken an economics course. The fact is
that
when the economy is weak, as it is, you need to stimulate aggregate
demand.
If you don?t do that, the economy gets weaker. And what?s good about
most
of Obama?s plan is that it?s creating assets. So, while the liabilities
go
up?we?re going to have to borrow?we also are creating assets. If we
had
spent a few billion dollars under the beginning of the Bush administration
on the levees in New Orleans, we would not have had to spend so much
money
in the cleanup, in dealing with the devastation that it brought. That
would
have been money that would have had an enormous return. $5 billion
would
have saved $150 billion. And so, that?s an example where there are
certain
kinds of investments?investments in technology, investments in people?that
the private sector can?t do and the government can do in ways that
give us
a very high return.
AMY GOODMAN: Joe Stiglitz, very briefly, the whole issue of
globalization?we?re in the tenth anniversary of the mass protests in
Seattle, the Battle of Seattle. What about the questions raised in
corporate-led globalization?
JOSEPH STIGLITZ: Well, I think two very important issues. One of them
is
the model that was behind much of the impetus for that globalization
was a
model based on free unfettered markets. And we know that model,
deregulation, has failed. That was the kind of thinking that led into
the
problems the United States is in today.
The second point is that while we talk about free and open markets,
what
the United States has been doing has destroyed a level playing field
and
will have profound implications for the evolution of globalization
going
forward.
AMY GOODMAN: And for developing countries?
JOSEPH STIGLITZ: And for developing countries, it?s having a devastating
effect. I mean, just a couple days ago, the other American banks were
complaining about the huge subsidies that were given to Citibank. They
say,
?How can we compete when the government is subsidizing Citibank to
that
extent?? Now, if you think these other American banks that have gotten
massive subsidies are complaining, you can imagine the kind of feelings
that people have in developing countries that say, ?We can?t afford
those
mega-subsidies. How can we compete against Washington being able to
write a
check any time anything goes wrong??
AMY GOODMAN: And healthcare? He?s called for universal healthcare, but
he
does not call for single-payer healthcare.
JOSEPH STIGLITZ: I think that there are some fundamental problems in
the
efficiency of our healthcare system. And what we?ve seen is that the
private healthcare insurers do not know how to deliver an efficient
way.
AMY GOODMAN: Do you support single-payer healthcare?
JOSEPH STIGLITZ: I think I?ve reluctantly come to the view that it?s
the
only alternative. You know, we?ve tried a lot of other things. And
we?ve
been?you know, I was in the Clinton administration, and we debated
a lot of
alternatives, and I?ve watched things as they?ve emerged and, you know,
evolved over the last twelve, sixteen years, and I think there?s a
growing
consensus that the private market exclusion is not going to work.
AMY GOODMAN: Joe Stiglitz, I want to thank you for being with us, the
Nobel
Prize-winning economist, professor at Columbia University, co-author
of The
Three Trillion Dollar War: The True Cost of the Iraq Conflict.
THE MELTDOWN http://www.masterjules.net/meltdownwebpage.htm
THE FIX http://www.masterjules.net/fixindex.htm
TO LISTEN TO IT ON RADIO, go to DEMOCRACY NOW ORG listen on MP3
JOSEPH STIGLITZ said similar things a few days earlier. Nationalized Banks are "Only Answer" (meaning take the control away from these bankers who had five years of SNOOKERING CLIENTS, writing up bad mortgages, stuffing them into derivatives which they sold to EUROPEAN investors, full knowing they'd go down in smoke, virtually STEALING --selling tainted merchandise, giving them huge profits, who then took HUGE BONUSES leaving EUROPE in the crapper. THE MIGHTY MOUSE, Alan Greenspan, in fact admitted this very thing to the ENGLISH BANKS when he was there for a very private conference.
In earlier interview, Stiglitz said that "Nationalized banks are the only answer." Obama hasn't a clue or his handlers aren't telling him. Here is interview where Stiglitz discusses nationalizing banks, the outlook for developing countries, and the need for an international financial regulators.
DW-WORLD: (i.e. the INTERVIEWER) Many experts fear that while things
are bad now, we haven't seen the worst of the crisis yet. Do you share
the
belief that we are facing a long decline that could rival the Great
Depression?
Joseph Stiglitz: We live in a very different world than during
the
Great Depression. Then, we had a manufacturing economy. Now we have
a
service-sector economy. Many people in the in the United States are
already
working part time because they can't get full-time jobs. People are
talking
more about the "comprehensive" measures of unemployment, and these
show
unemployment at very high levels, around 15 percent. So it clearly
is a
serious downturn.
Another big difference between now and the Great Depression is then
we
didn't have a safety net. Now we have unemployment insurance.
Economists Nouriel Roubini and Nassim Taleb, who predicted the global
economic downturn, have called for a nationalization of banks in order
to
stop the financial meltdown. Do you agree?
The fact of the matter is, the banks are in very bad shape. The U.S.
government has poured in hundreds of billions of dollars to very little
effect. It is very clear that the banks have failed. American citizens
have
become majority owners in a very large number of the major banks. But
they
have no control. Any system where there is a separation of ownership
and
control is a recipe for disaster. Nationalization is the only answer.
These
banks are effectively bankrupt.
The Institute of International Finance estimates that the private flow
of capital to developing countries will shrink by about two-thirds.
Are we
facing a situation where we could see a total collapse of many developing
countries?
I think many governments of emerging nations actually have a much
better central banking system than the United States. They realized
the
risks of excessive leverage, excessive dependance on real estate lending
and so they took much more prudent actions. Many developing countries
also
built up large reserves and are in a better position to meet this crisis
than they were a decade ago.
But some will face very difficult times, potentially defaults. Some
of
these countries are suffering from having paid too much attention to
what
has gone on in the United States.
Should steps be taken to help these developing countries?
Very definitely. I think it is absolutely imperative not just for the
interest of these countries, not just from a humanitarian perspective,
but
from the perspective of global stability. It is not possible to have
a
strong global economy when there are large pockets of economic turmoil.
The World Bank has called for advanced industrial countries as they
are
bailing out their own industries and provide subsidies, to set aside
some
amounts for the developing countries, who can't compete on this uneven
playing field.
US President Obama blasted banks for paying out billions in bonuses
to
executives while still on brink of collapse. Do you agree with him
that
their behavior is "shameful" and "irresponsible"?
Yes, it is shameful and irresponsible. But it is not a surprise ...
for
years the executives of American firms have defended their outrageous
compensation, saying it's important as an incentive scheme. How in
the
world can you give bonuses of billions of dollars when your firm has
had
record losses of billions of dollars? Unless you're rewarding people
for
failure you shouldn't be getting bonuses, you should be getting penalties.
In her speech at the World Economic Forum, German Chancellor Merkel
warned the U.S. of protectionism and criticized subsidies for American
auto
companies. Is she correct? Do you see a danger that the U.S. will resort
to
protectionist measures?
Yes, very clearly. We have always been aware that protectionism takes
two forms: Tariffs and subsidies. Subsidies distort the playing field
just
like tariffs do. Subsidies are even more unfair and even more distorting,
because while developed countries can give subsidies, poor countries
can't
afford to do so. Rich countries are distorting the level playing field
by
giving huge subsidies, not necessarily in the intention of protection,
but
with the consequence of protection.
Merkel recently called for an international financial oversight body,
and concensus on the issue is growing. How realistic do you think it
is
that governments and companies would give up sovereignty to an
international entity?
Merkel's idea is a very important one, which I have long supported.
You
need to have coordination of global economic policy that goes beyond
the
IMF, which has failed, and the World Bank. You cannot say that we have
open
borders without global regulation. It is inconceiveable as we go forward
that we would allow financial products that are risky, manufactured
in
countries with inadequate regulation, to come without regulation into
the
United States and vice versa. International companies that are committed
to
gobalization should be at the forefront of calling for international
regulation.
---------
Michael Knigge interviewed Joseph Stiglitz.
Joseph Stiglitz was awarded the Nobel Prize in economics in 2001. Under
US President Bill Clinton he served as chairman of the Council of Economic
Advisers from 1995- 1997. He was chief economist of the World Bank
from
1997-2000 and was a lead author of the 1995 Report of the Intergovernmental
Panel on Climate Change, which shared the 2007 Nobel Peace Prize. He
is
currently a professor at Columbia University in New York.
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Comments
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Some commentors here are confused. Insolvent, large banks would be
nationalized, not ALL banks large and small.
What fools, we? Banks were fine until we went from a savings to a credit
economy. the problem isn't that banks make no money, the problem is
how
that money is administered. Loki is right.
Nightwriter is typically
republican. He wants to blame old Clinton for everything distasteful.
I
challenge any Republican to explain what went wrong with them. I have
never
heard a one of them own up to a mistake. Image sucks brains! Please,
no
more 5th grade graphs! Reagan is dead people, get over it already!
Reynard Loki
What Stiglitz doesn't realize is that nationalizing the banks is basically
giving a subsidy to the bank. It's economic nationalism. Instead of
public
money subsidizing the automakers because they made bad decisions, it's
public money subsidizing the banks because they made bad decisions.
We’re
still throwing public money at the problem. It's the same thing. You
can’t
be pro-nationalist and anti-protectionist at the same time. He’s
contradicting himself. Ultimately, there are only three tools that
can be
used to bail out the American financial system: the taxpayers, foreign
money and the US Treasury printing press. The ideal solution should
probably involve a mix of these three. Nationalizing banks can't be
the
only answer. The entire world -- all nations great and small -- are
experiencing several crises simultaneously and together: the food crisis,
the economic meltdown, the energy crisis and climate change. The actors
and
the plots are intertwined. So should the solution be.
Note! An academic player,
Mon, 02/09/2009 - 03:32 — nightwriter (not verified)
Note! An academic player, winner of the Nobel Prize in Economics in
2001,
takes no responsibility for his complicity in creating this financial
mess.
As a Clintonista, Chair of the Council of Economic Advisors 1995-1997,
he
was involved in the deregulatory fervor on that administration's
neo-liberal agenda. Note carefully his non-answer to the first question
of
the interview concerning the very real possibility, "that we are facing
a
long anridecline that could rival the Great Depression. Classic denial
symptomatology. Hey, his gamemanship got him a nobel prize. But you
don't
have to have ethics for that, just carefully planned mendacity. He
won! The
Republic lost. So what does that make him?
Nationalization of banks is NUTS
Sun, 02/08/2009 - 22:45 — Anonymous (not verified)
Nationalization of banks is NUTS. The small communities being served
by
responsible community banks who do not play the greedy games of the
big
banks would get hit hard and I mean hard. Not all banks are the same.
The
community banking system is very strong and has not made irresponsible
investments that the big banks have made. They serve their communities
with
many services. The big banks are like the oil companies, screw 'em
and
leave them be.
Yes, nationalize the banks,
Sun, 02/08/2009 - 19:22 — dagnew (not verified)
Yes, nationalize the banks, and then the oil companies (oil's a national
resource after all - one which the oil companies have negotiated for
by
providing hookers to neocon-appointed regulators). Dunno what Isaiah
(or
other melinnia-old myths) have to do with it, 'tho.
Glass-Steagall needs to BE PUT BAC.
Sun, 02/08/2009 - 17:34 — L.D. Freitas (not verified)
Glass-Steagall needs to return. That would be a big help in creating
that
firewall that kept insurance companies, investment banks, and commercial
banks from doing each others business, as has been the case for eight
years
now. Nationalizing banks is an interesting concept to me. Will there
be one
bank then, or many? Will these CEOs be out of a job, or become civil
servants making step1 federal job wages?
According to leading
Sun, 02/08/2009 - 11:27 — Anonymous (not verified)
According to leading thinkers Globilization is akin to murder. The
modus
operandi/ demonic brainwashed psychic motivation of globilization pushers
&
companies which stand to make billions of loot .... appears to be similar
thinking/ intent as the Banking/financial scammmers/wall street scammers
forced onto the populace by all those profiting(including regulators)
in
the pack of cards system. Suggest Banks of each country start their
own
Bank.....a national bank for the good of the country. But need to have
tough regualtions on Banksters. But stop Globilsation of Industries
&
business's......as they say that's leading to mass murder.
Wouldn't nationalizing the ---
Sun, 02/08/2009 - 03:19 — K_for_Kansas (not verified)
Wouldn't nationalizing the banks, then using the bailout money to wipe
out
consumer debt make more sense in terms of stimulating the economy?
Give the
American people some relief from their debts and some spending money
and
you've got some serious economic recovery working fast.
The banks are already ---
Sat, 02/07/2009 - 21:21 — Darren (not verified)
The banks are already de facto nationalized. It is this govt controlled
monetary & financial system that has failed. The answer is not
more of the
same, it is to go over to a system of gold backed privately issued
money &
free banking, i.e. on Fed.
Oil too. The people should---
Sat, 02/07/2009 - 19:39 — Number Nine (not verified)
Oil too. The people should own the oil so lets give it to the banks
to back
them up. I'm looking for the day Isaiah 23:17-18 talked of where the
profits would not be stored or horded up but used for the people who
need
the trash/cash. Even if that takes throwing the kings (bankers) in
jail as
Isaiah 24:21-24 talks of. Then we can have that big party of Isaiah
25. We
could start at the 2% banks get from debit and credit card purchases
going
to pay our taxes, since we now own some of the banks.
If the bank's holding junk --
Sat, 02/07/2009 - 19:02 — CharlyAndy (not verified)
If the banks holding junk mortgages, or renegotiated them down to the
current market level, fewer homeowners would default and some of the
banks'
capital, leveraged by the fractional reserve rules, would be available
for
new loans. To leave it up to the banks to grant loans is apparently
an
exercise in futility however. Capitalizing banks would create a snowstorm
of money which would probably drown us in inflation if... if they would
make loans. I think the supply side thinking, as usual, is flawed.
Government should take the $1 trillion avalanche and just create jobs,
pay
it to workers. There's plenty of work to do and, as FDR showed, it
would
stimulate the economy. Up with demand-side thinking!
Banks serve the interests of
Sat, 02/07/2009 - 18:52 — CascadianPDX (not verified)
Banks serve the interests of those controlling them, so let's make
the
change. Then we can decide where to incentivize investment... things
such
as green infrastructure, efficiency products, weatherizing older homes
with
low interest refinancing, etc can be done with nationalized 'green
banks'.
If developers wants to bulldoze productive farmland for another redundant
stripmall, let them fina ance it at lending rates that are NOT encouraged
by low rates. I see this as a real opportunity for long overdue change.
Why not let failing banks ---
Sat, 02/07/2009 - 16:27 — dr wu--I'm just an ordinary guy. (not verified)
Why not let failing banks fail? There seem to be a number of solid banks
left. And do we really need banks?--the country began without them.
Hamilton was the banking guy;Jefferson was not. Dump Hamilton, Geithner,
Summers and the rest of the banking crowd, "Neither a lender nor borrower
be," as the immortal Shakespeare noted. sound advice still?
This discussion is losing--
Sat, 02/07/2009 - 15:01 — Worried taxpayer (not verified)
This discussion is losing sight of the fact that the banks are effectively
nationalized already via FDIC and the too-big-to-fail theory. We need
to
reinstate Glass Siegel to separate banking from the “financial-supermarket”
movement, recognizing that creating money is the main activity of banks
and
is a mixed governmental / private function. Where banks are in trouble
we
should be applying the Warren Buffet solution: relatively high-yield
preferred stock which restores solvency and allows the bank to retain
its
“toxic assets”, working them out over time rather than dumping them
now in
a fire sale. The difference is that Buffet can pick out the institutions
where a loss becomes highly unlikely; the taxpayer cannot because the
commitment is there already through FDIC. The Federal Reserve is probably
the entity which should be authorized to do the purchase, mainly because
if
the rescue is successful and stability comes back the Fed can sell
the new
preferred stock as part of its open-market operations - often at a
profit -
on its own initiative.
We absolutely should
Sat, 02/07/2009 - 13:05 — Anonymous (not verified)
We absolutely should nationalize the fed and the banks that are too
big to
fail and keep them nationalized permanently. Our government should
be the
sole issuer of money. It is idiotic that we pay taxes to pay the interest
on the US Debt to private banks. Fractionalized reserve banking should
be
prohibiited. For an easy course in how banks really work, google the
entertaining video, Money as Debt.
I find it ironic (to say the
Sat, 02/07/2009 - 13:01 — Anonymous (not verified)
I find it ironic (to say the least) that German Chancellor Merkel is
criticizing American subsidies for American car companies. I wonder
if she
spoke out about the "unfairness" of the $253 million incentive package
the
state of Alabama gave Mercedes Benz in the early 1990's to build a
plant
there? In addition to those incentives, the state trained the workers
at
the taxpayer's expense AND gave Mercedes the land the plant was built
on
(after clearing it for them). But God forbid America should give incentives
or subsidies to American car companies. Now that's just not fair.
stiglitz seems conflicted
Sat, 02/07/2009 - 10:58 — newsfrombelow (not verified)
stiglitz seems conflicted here. while noting that some of our biggest
banks
are totally bankrupt, he calls for their nationalization, when he knows
the
obama-wall street coalition will never do so, and obama's new sec of
treasury has just said as much. so the question becomes, what next
joe?
since this more or less progressive economist has decent leverage among
democrats, perhaps he could focus on what is progressively possible
politically with this president, this less than filibuster proof senate,
and a still rabidly free market fundamentalist mass media? down here
at the
grassroots in de-industrialized job security not urban america, most
of my
comrades in semi-poverty with bachelors and masters degrees would vote
for
life sentences for the top crooks in this ponzi scheme enterprise,
and i am
sure hank paulson and tim geitner's emails might help us identify where
the
worst abusers were and what they were doing. indeed, we might want
to begin
with the SEC's government regulators, and force them to name some names
in
exchange for shorter prison terms. imagine no criminal prosecutions
for all
this? the hell with nationalization, how about beginning with some
serious
jail terms. otherwise, this crap will happen again, soon enough.
This economic downturn is a
Sat, 02/07/2009 - 09:36 — D.McLeod (not verified)
This economic downturn is a blessing if it helps to save the planet
from
global warming. Let's get off fossil fuels and not repair the economy
until
we can do it with clean energy and in a sustainable fashion. Lets not
be
like Jack Benny who had to think about it. Let's choose life over money.
While we are bailing out
Sat, 02/07/2009 - 07:44 — Anonymous (not verified)
While we are bailing out banks that are "too big to fail" why do we
continue to allow huge mergers? No company should be allowed to grow
to the
size that it is "too big to fail." It's taxpayers who are left holding
the
bag, while the investment banks that profited - in the hundreds of
BILLIONS
of dollars - from these mergers, are now failed or failing. Where did
the
money go? Think about it.
Nationalize the Fed first!!!
Nationalize the Fed first and then the others. If you don't kill the
head,
the central banking system of debt and worthless money will continue.
A
government that does not print and manage it's money has no power,
something that has gone on since 1913, the year the Fed was created.
RE Frank: Governments in the
Sat, 02/07/2009 - 06:43 — Anonymous (not verified)
RE Frank: Governments in the past ( US colonial history) were actually
been
pretty good bankers. They may not be the best or ideal bankers now,
but
what nationalized banks have that private banks do not is taxpayer
oversight and a mandate to act for the good of the population. Private
banks act in their own best interest which as you can see from the
current
economic situation is not the same as your interest or mine.
How can you call yourself an
Sat, 02/07/2009 - 03:37 — Erik Stone (not verified)
How can you call yourself an economist, Joseph? You just sound like
a
Socialist. Marxist economies fail faster than Capitalist ones. It's
the
beliefs and actions of people like you who have given us what we have
now,
and it's people like you who will attempt to lead us down the road
to the
Greater Depression, just like FDR did in the 30's. People, please don't
believe guys like this just because they won a Nobel prize. It's the
Nobel
Peace Prize, not the Nobel Intelligence Prize. Go study Economics on
your
own. Decide for yourself whether it's better for a
king/president/banker/economist to control your economy, or you and
the
people in a free market.
FIX 'EM SELL 'EM OFF
Joe Stiglitz is right. Those banks in such deep trouble that they need
lots
of government financial support should be nationalised -- not just
given
large amounts of preferred capital and loans. Since many are insolvent
(if
their assets are market to market), the shareholders would end up with
nothing, which is the capitalist way. The nationalisation should not
be
forever -- Governments are NOT good bankers. But long enough to SELL
PARTS
of the nationalised banks to private shareholders. It is also for
consideration whether regulations should be introduced to ensure that
no
institution will grow "too large to fail."
STIGLITZ WRONG ON ONE THING
Does Stiglitz really think that the laughably inadequate unemployment
compensation in most states is a "safety net"?? How's the weather on
his
planet, anyway?
KEEP 'EM UNDER US UMBRELLA
Yes, exactly. And it would be wise to keep the banks nationalized,
too. No
re-privatizing either once the economy is recovers.
GOOD CORPS SHOULD BE NATIONALIZED, BAD ONES DISCARDED
The companies that rate bonds should be nationalized. The fact that
the
rating agencies were paid by their customers caused the rating agencies
to
compete for business by giving higher and higher ratings to bonds.
Let
the bad banks disappear.
THEY REWARDED FAILURE!
What Failure are they being rewarded for? Who profited? Follow the
money.
Nationalizing the banks seems like a good idea - if there are arrests.
Truthout recently ran the article: "Road to Ruin: Twenty-Five People
at the
Heart of the Meltdown" January 26th. If three reporters from the Guardian
UK can identify 25 people in the US who aided and abetted the greatest
theft in history then the Courts or the Congress can too. Depose these
25
under oath and hold them in prison until its sorted out.
Some people are saying that
Sat, 02/07/2009 - 02:29 — Anonymous (not verified)
Some people are saying that banks should be local, not national. Have
we
allowed banks to get too large? Is there merit in restricting the size
of
banks?
MAKE IT LIKE THE POST OFFICE!
Why not leave the banks alone and create a notional bank, just like
we have
a national post office. By loaning money directly to the consumer and
businesses, banks are forced to compete on service. FED-EX and others
do
quite well competing against the government This allows the government
to
directly control access to credit and to maintain some influence over
banks. as far as the current bank debt problems, let them fail. as
long as
the economy has access to credit, why are the banks any different from
any
other poorly run business.
FREE TRADE DID IT!
Globalization = Race to the Bottom
As we have seen for the past 20 years the
push towards Globalization has
removed the firewalls and driven us off a cliff.
Globalization benefits the
elite while reducing the middle class and eliminating the poor. It's
a race
to the bottom and right now America is gaining on the third world
countries. NO CONTROLS on local level mean guys with hands on the
whole UNIVERSE get to decide everything. DOES NOT BEHOOVE US.
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