My comment: Unfortunately this issue is too serious to let it pass without any comment.
Besides what prof. Stiglitz told, and I agree. There is a deeper point that I want to point out. The overall perspective of economics and its projection into actual economic policies. Until prof. Friedman, economics had many legs (fiscal, labour, etc.) but two main legs in particular one is financials that cares on how financial means (money, credit, liquidity, etc.) move, rise or fall and the second one is economy itself or how, who, etc. real wealth is created. Since prof. Friedman and monetarism, financials took the driver seat in US government and some other governments around the world. Even, US universities taught that financials is enough to drive an economy, while who, how, what, etc. is decided by free market agents. In 2008 the world has realised that it is not true. But we still have a problem. Those who do not know anything but financials. I have to recap about this crisis. Despite the real crisis is rooted into the real economy (lack of savings in US economy that produced lack of fund into the banking system and mismatch between US production and global demand that bring foreign deficits), the symptoms were 1) banking crisis beacuse mortgage crash, 2) on top of the banking crisis, crisis of the whole financial system. Whisle the crisis was in the financial arena, most financials were able to predict, to handle, to advise, etc. it was their scope of knowledge. But since July-August 2008, it is not mainly a financial crisis, it is an economic crisis that has embeded a financial crisis, and deeper it has embedded a banking crisis. Very few American economists are skilled on economic policies, their skills are just financials. Unfortunately the current secretary of the treasure, Mr.Geithner, is one of them. Fortunately prof. Stiglitz knows how to walk with two legs, economy and financials. Financial solutions are waste of time and funds. This crisis will be fixed only through economic means. In that sense, the stimulous package that was anounced several months ago points at the right direction: to create wealth from the bottom. Although probably it needs more funds that the first budget. The bad bank policy points once again at the wrong direction, to withdraw funds from the real economy (what Americans call main street) to carry them to the banking system (what Americans call Wall Street), that withdrawal will hurt the stimulous policy. The banking system will not recover even if they put trillions and trillions into them. They will not leand money, because the only big real AAA customer is the Federal budget (and it is AAA because we want that it is), without lending they will not make profits, and without profits the system is not sustainable. The bad bank just means to start a new housing bubble from scratch, again. And again, a new crisis in the near future. Bet hard on the stimulous package, as hard as required, even harder than today if necesary. There is the true way out. Peace and best wishes. Xi http://www.bloomberg.com/apps/news?pid=20601087&sid=a.madyfHZeBs&refer=home --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
