My comment: Besides what he suggests between lines about White House ties to Wall Street and therefore the "conflicts of interests" that obviously I will not comment because it is not my country, his analysis about US economy situation, and in particular its financial system, is the best that I have read or listen from an American economist in many years.
More and more, the current policy of the US Treasury seems to be based on two strategies, to inflate financial system and to upgrade its protectionism. The ealy positive and promising action, its economic stimulus plan, seems to be losing ground. Therefore, we have more of the same Mr. Paulson´s policies. “The bank restructuring has been an absolute mess.” The return to taxpayers from the TARP is as low as 25 cents on the dollar, he said. In other words, real US economy wastes 75 cents per each dollar spent on banks. The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, he said. I would add more, to revive those dead institutions, US treasury and Fed should put into banks hundreds of billions every quarter. Because the real problem, the true source of US financial problem, is that the three healthy sources where banks get money anywhere, cannot put that funds into banks. First of all, householders cannot save because they struggle to survive and to meet its high life standards and consumption levels that they leant in the past. Secondly, mostly because high protectionism in USA that is gaining ground with the fresh "buy American" policy and low public social networks, corporations lose ground year after year aand their profits as percentage of total amount of US dollars, or as percentage of total liquidity, fall. And thirdly, because the bigger householder, the Federal government, does not save, des not cut deficits, rather it increases the size of the problem. Without inputs, banks produce less and less outputs. Their profits are fake, to be honest. In fact, as he said, “It’s a real redistribution and a tax on all American savers.” Again, since monetarism in the seventies, it means to disencourage savings. I must add from householders to bondholders and share holders. Even worse, a fake wealth wealth. And even much worse, according to him the rate of return of that fake wealth redistribution is just 1 on 4. A wrong step in the wrong direction. Even worse, the deeper problem in my opinion is as he says: “Even if there is no quid pro quo, that is not the issue. The issue is the mindset.” “America has had a revolving door. People go from Wall Street to Treasury and back to Wall Street,”. I must add that what Wall Street boys get from the Treasury is not true wealth, it is fake paper that looks like the ancient US dollars but its real value is just a fraction of it. To fix that mindset, the fake belief that problems can be fixed through financial means, will take probably one generation or longer, new programs in universities of economics in USA, new schools of business, fresh faces, new books, etc. And the second error from that mindset, although he does not cite it, to do not take into account the reaction from the rest of the world. I do not mean politics, I mean the natural reaction that economies and markets take disregarding human wishes. US economy is not decoupled from the world since years ago, for good and, in this case, for bad. Although damage is already done since many years ago, I deeply and honestly want that they realise it as soon as posible and change their policies. The sooner it starts, the shorter and lighter this decades- long crisis will be. Prof. Stiglitz is an authoritative voice and he could not speak clearer and louder. Peace and best wishes. Xi --~--~---------~--~----~------------~-------~--~----~ 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 -~----------~----~----~----~------~----~------~--~---
