imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Calendar Publish RSS
latest news
best of news




A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List


IMC Network:

Original Cities africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech

Surviving Cities africa: canada: quebec east asia: japan europe: athens barcelona belgium bristol brussels cyprus germany grenoble ireland istanbul lille linksunten nantes netherlands norway portugal united kingdom latin america: argentina cmi brasil rosario oceania: aotearoa united states: austin big muddy binghamton boston chicago columbus la michigan nyc portland rochester saint louis san diego san francisco bay area santa cruz, ca tennessee urbana-champaign worcester west asia: palestine process: fbi/legal updates process & imc docs projects: radio satellite tv
printable version - js reader version - view hidden posts - tags and related articles

The Philosophies of Deregulation and Neoliberalism are Dead in the West

by Joseph Stiglitz Saturday, Oct. 18, 2008 at 1:35 AM

"The patient suffers massive internal bleeding and is given a blood transfusion. The banks lent money and accepted inflated assets as security. This bubble burst..Those who pocketed profits for years want to pin the losses on the taxpayers."


Interview with Joseph Stiglitz

[This interview published in: Berliner Zeitung, October 9, 2008, is translated from the German on the World Wide Web, Joseph Stiglitz is one of the leading economic experts of the world. The winner of the Nobel Prize for economics, is a former chief economist of the World Bank and advised US president Bill Clinton from 1997.]

Q: Professor Stiglitz, are you afraid?

J. Stiglitz: I am not afraid but rather alarmed because of the financial crisis. A high degree of insecurity prevails. These are extremely risky times. For me, it is a kind of Deja-vu. It reminds me of my time at the World Bank ten years ago, when the Asian crisis broke out. The difference is only that people in Thailand and Indonesia were stricken at that time. Today Americans and Europeans are affected. Today’s crisis is four times greater than ten years ago.

Q: How long will all this last?

J. Stiglitz: No one knows. We also do not know how bad it will be. What calms me a little is the fact that we can deal better with these crises today than in the time of the Great Depression in the 1930s. We have the knowledge and the tools today to defy a crisis. I also know we can deal wrongly with this crisis, as for example in the Asian crisis when the International Monetary Fund and the US government managed the crisis very wrongly. This led to terrible consequences for the impacted countries. Now we have a US president who has proven his incompetence many times – think of the Iraq war or the current crisis. In truth, the US government with the Federal Reserve and the Treasury department first created the financial crisis. Will this triumvirate help us in a real mess? I have my doubts about the 0 billion bailout plan.

Q: What is wrong here?

J. Stiglitz: The bailout plan is wrong. While better than nothing, there were wiser alternatives. The plan is based on the assumption that the enormous sums thrown at Wall Street will “trickle down” somehow on the overall economy. Something may trickle down. Still this isn’t very efficient, is it? The patient suffers massive internal bleeding and is given a blood transfusion. The banks lent money and accepted inflated assets as security. This bubble burst; the securities are worth nothing or very little.

Q: There are now ten million too many houses or apartments.

J. Stiglitz: This is an extreme problem and greatly burdens the national economy. What people like US Treasury secretary Henry Paulson and Federal Reserve chairman Ben Bernanke do not understand is the fact that this is more than merely a temporary crisis of trust. Real mistakes were made in awarding credits. Now there is excess on the housing market. By the way the most unbridled awarding of credits first happened in 2006. This is like embezzlement. No one noticed when only a few embezzled. Then more and more fraud s occurred until things exploded. Banks have three core tasks: stimulating saving, managing risk and allocating capital efficiently by awarding credits. Our banks have failed in every regard: the savings rate in the US is zero, there was poor risk management and capital was completely misdirected. Now there is disaster.

Q: What will happen now?

J. Stiglitz: The question is who will pay the costs. The banks propose taxpayers bear the costs. Those who pocketed profits for years want to pin the losses on the taxpayer. This is sheer redistribution from bottom to the top. On top of everything, the banks claim the government will even make a profit at the end with this bailout plan. If this were true, why don’t they sell these worthless papers to each other? Why do they so vehemently refuse that losses in the future be offset with profits if there will supposedly only be profits at the end? They fear such regulation as the devil fears holy water. The plan does not impose any obligations for transparent accounting. This is an invitation or free rein for corruption. The banks simply want to be compensated at the expense of taxpayers. But this plan is better than nothing.

Q: What went wrong with US banking oversight?

J. Stiglitz: On one hand, there was this widespread attitude of market fundamentalism that the market will always lead to the best result and that deregulation is necessary since the state only stands in the way of the market. On the other hand, the regulators themselves are persons at the top of the state authority. With Alan Greenspan, we had a central banker who championed deregulation and did not use those tools available to him.

Q: What will be the consequences of the crisis for American society?

J. Stiglitz: What enrages most Americans in the current situation is that those who earned spectacular incomes and bonuses through reckless conduct in the last three years – the financial sector garnered around thirty-percent of business profits – now seek a rain of money at the expense of taxpayers. The justification for the high incomes and bonuses was always that these people ensured an efficient functioning of the economy. They did not do this, as people now see. This striking disproportion between private advantage and the consequences of their actions rightly infuriates many. Inequality has soared in the last eight years. Most people in the US have a harder time today than eight years ago.

Q: Is the bailout plan part of a greater “New Deal,” as under President Roosevelt in the 1930s?

J. Stiglitz: No, not at all! If we had a president Roosevelt, things would look very different. Roosevelt would tackle the core of the problem and try to help millions of people who lose their homes. How can these persons be helped? Not by supporting the rich who can deduct the interest payments for their credits from their taxes. If these tax cuts were changed into tax credits for low wage earners, many would be helped. Instead of crafting a stimulation package, president Bush declared he would veto any bill improving the system of unemployment benefits. The US has the worst unemployment support in the western world. An unemployed person is out after 26 weeks. Finally, a “New Deal” would do something for the communities suffering under an enormous shortfall of tax revenues. Their infrastructure is stagnating.

Q: Would you say we are at a turning point with the end of finance alchemy?

J. Stiglitz: This is certainly a decisive moment. One thing is certain: the philosophy of deregulation is dead. Americans say: okay, if we rescue the banks and the financial system, we will have a chance this will not happen in the future. But remember, this has now happened repeatedly every few years. Think of the crisis of savings accounts at the end of the 1980s, the stock bubble of the 1990s, Enron, Long Term Capital Management and so on. These people put a pistol to our heads every time. This is simply extortion. Demands are made on taxpayers and that’s the end of that. But now I hear these people whispering to Congress not to over-react. Innovation must be possible in the future so they can continue as in the past. For a long time, the banks will be more conservative and award credits in a less unbridled way. A new generation of bankers will arise who will be “more dynamic” and strive for higher profits. Then everything will begin again from the beginning.

Q: Is this the end of neoliberalism, as you suggested in a recent article? The British journal “The Economist” wrote recently the US government nationalized banks faster than one can say the name Hugo Chavez.

J. Stiglitz: Neoliberalism like the Washington Consensus is dead in most western countries. See the debates in South America or other countries. The US has lost its role as the model for others. Everyone only laughs when US technocrats give lectures in other countries and say: “Do as we do, liberalize your financial markets!” In America, there are all kinds of explanations for what is now happening. Some say, the government is responsible. The government encouraged awarding credits to the poor population. Financial institutions that took excessive risks are responsible for the misery. These repressed risks were repackaged and resold. Now they try to claim innocence and put the blame on others.

Q: What will be the consequences of the crisis in the US?

J. Stiglitz: In the short-term, the crisis will intensify the people’s frustration because they see the economic system obviously exists for a few, above all for Republicans and their economic philosophy, not for all Americans. They say free market and mean only the well being of several corporations or conglomerates. Instead of competition, they rely on the instrument of direct no-bid contracts, as for example for all military suppliers for the Iraq war. Americans now face an economic collapse, which will probably help Barack Obama in the presidential election.

Q: What does the crisis mean in the long run?

J. Stiglitz: The crisis divides society. A few months ago the president vetoed a law mandating health insurance for poor children. That would have cost a few billion. The president said that was too expensive. Now the government raises several hundred billion overnight to save the banks.

Report this post as:

Local News

Change Links 2018 July posted J09 1:27PM

More Pix: "Families Belong Together," Pasadena J02 12:16PM

"Families Belong Together" March, Pasadena J02 12:08PM

Short Report on the Families Belong Together Protest in Los Angeles J30 4:26PM

Summer 2018 National Immigrant Solidarity Network News Alert! J10 11:58PM

Watch the Debate: Excluded Candidates for Governor of California M30 10:20PM

Change Links June 2018 posted M28 12:41AM

The Montrose Peace Vigil at 12 Years M22 1:01PM

Unity Archive Project M21 2:42AM

Dianne Feinstein's Promotion of War, Secret Animal Abuse, Military Profiteering, Censorshi M17 3:22PM

CA Senate Bill 1303 would require an independent coroner rather than being part of police M10 2:08PM

Three years after OC snitch scandal, no charges filed against sheriffs deputies M10 1:57PM

California police agencies violate Brown Act (open meetings) M02 1:31PM

Insane Company Wants To Send Nuke Plant Waste To New Mexico A29 4:47PM

Change Links May 2018 A27 1:40AM

Worker-Owned Car Wash on Vermont Closed A26 10:37PM


lausd whistle blower A10 11:58PM

Website Upgrade A10 3:02AM

Help KCET and UCLA identify 60s-70s Chicano images A04 1:02PM

UCLA Luskin: Casting Youth Justice in a Different Light A02 11:58AM

Change Links April 2018 A01 11:27AM

Nuclear Shutdown News March 2018 M31 6:57PM

Join The Protest Rally in Glendale on April 10, 2018! M29 7:00PM

Spring 2018 National Immigrant Solidarity Network News Alert! M19 2:02PM

Anti-Eviction Mapping Project Shows Shocking Eviction Trends in L.A. M16 5:40PM

Steve Mnuchin video at UCLA released M15 12:34AM

Actress and Philanthropist Tanna Frederick Hosts Project Save Our Surf Beach Clean Ups M06 12:10PM

More Local News...

Other/Breaking News

14 Disturbing Facts About Scott Gottlieb, Trump's FDA Head J20 10:47PM

Behind the scenes at fbi National Academy J20 2:47PM

Treasury Takes Aim at Shell Companies J20 11:18AM

Paraphysique de l'intelligence J20 9:08AM

Oklahoma GOP Senator Jim Inhofe's Bloody Record J20 4:01AM

Globalization: hope on the horizon despite Fake Liberals. J20 3:41AM

Sorry President Trump,Ted Cruz Texas Judicial System,is Worse Than Many Shithole Countries J19 4:49PM

The Shortwave Report 07/20/18 Listen Globally! J19 4:33PM

The System Question as a Survival Question J18 8:54PM

Nation's Largest Voting Machine Co., ESS, Admits Lying Re Having Installed Remote Control J18 11:55AM

Du pain et des jeux J18 9:53AM

Paraphysique de martyrologie J17 8:00AM

Children Incorporated Earns 4-Star Rating on Charity Navigator J16 11:24AM

Democratic Socialists of America J14 4:57PM

Leonard Peltier Non Violent Native American Political Prisoner since 1970's J14 4:18PM

Paraphysique miscellanées de l'aggiornamento J14 12:54AM

FBI Investigated LA County Sheriff Baca,Why Not Hank Skinner's Persecution? J13 3:52PM

Updated Partial List Of Famous Vegetarians, Vegans, & Fruitarians J13 2:59PM

The Shortwave Report 07136/18 Listen Globally! J12 4:36PM

Social Policy as Social Infrastructure J12 3:38AM

Vol I: 84 Varieties Of GOP Election Fraud J12 1:50AM

Texas Can Call it An Execution,But It is A State Sponsored Murder of Hank Skinner.. J11 6:48PM

June 2018 Honduras coup update J11 3:35PM

Maria Estrada doubles down on racist support J11 1:40PM

New York Women in Film & Television Announces 2018 NYWIFT Ha Phuong Scholarship Recipients J11 10:14AM

Trapps de la domination, trapps de l'aliénation J11 1:31AM

Please Work For The Defeat Of Brett Kavanaugh And Why J09 8:54PM

Transinhumanisme ( transe inhumanisme ) J09 12:44PM

More Breaking News...
© 2000-2018 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy