| TheTip.org |
| Polls | Members | Refer | Forums | Write for TheTip! | Home | Impeach Bush |
Impeach George Bush
The Economy is UP UP UP
The highest GNP since who knows when. That's what we'll be hearing for a while. I don't want to be a nay-sayer, but, until this economy starts producing jobs, and a lot of them, I'm skeptical.
Source: The TIP, The Guardian, 2003-10-30
Candidate: The FED
We're finally in recovery, according to the Federal Government.
The Commerce Department cited increased corporate spending as one cause. As companies see their bottom lines getting better and better, they're able to invest more money into their future. We're right in the middle of earnings season, so we're getting a good chance to see which companies are struggling and which are improving.
Unfortunately, the 3 million families of the 3 million Americans who have lost their jobs are still struggling regardless what the economy is doing.
I still hope the economy will turn around. But I'm not ready to throw a party just yet.
Joseph Stiglitz is sure there'll be no big economic recovery, and blames Bush and Greenspan. It would be dangerous to ignore his pessimistic forecasts.
Profile
Name Joseph Stiglitz
Born 9 February 1943
Education: Amherst College; MIT PhD
Career: Economics professor at Princeton, Stanford and MIT; Chairman of President Clinton's ecoSunday October 12, 2003
The Observer
There are two Joseph Stiglitzes. In May the academic came to Oxford University to give landmark lectures on updating the work of John Maynard Keynes with 21st-century 'micro-foundations'. And that has nothing to do with make-up.
This month the Nobel prize-winning economist returned to Britain as an acidic economic polemicist, with a more direct message about the US economy. There will not be a robust recovery, and the fault can be traced to Federal Reserve chairman Alan Greenspan's actions during the Nineties, and the policy failures of President Bush.
'More jobs have been lost under Bush than since Herbert Hoover and the Great Depression,' he said in an interview. 'In the private sector more money has been wasted through misallocation of capital in the stock-market bubble than the government could ever manage.'
In a week in which US stock markets hit 16-month highs, surely there is some room for optimism? Stiglitz was having none of nomic council, 1995-9; chief economist and senior vice-president, World Bank, 1997-2000
What they say
'Stiglitz undid the conventional wisdom that dominated policy-making at the World Bank, the IMF and the US Treasury'
Ha-Joon Chang, economist, Cambridge University
'As an academic, he is a towering genius. As a policymaker he was just a bit less impressive'
Ken Rogoff, former chief economist of the International Monetary Fundit. 'The huge tax cut in the US was very badly designed to stimulate the economy. And there has been a huge increase in mainly military spending. Yet what is remarkable is how little stimulus has been given. The US economy is still in a precarious state,' he said.
Rarely does the dismal science become so Prozac-inducing. But his pessimism arises from the fact that he is no believer in market infallibility. As a theorist, his work concentrated on labour market imperfections arising out of access to information. He is now extending this analysis to capital markets. Indeed his new book, Roaring Nineties, sets out what he sees as the multiple policy errors that sowed the 'seeds of destruction' in the American economy.
But surely 'destruction' is a little strong? 'Dealing with the deficit will absorb the US political economy for years to come. We're back to the Reagan era. The trade deficit has the underlying problem of what will happen when foreigners decide to stop funding the US deficit. On the private side there is a huge gap in private pension funds. Any other economy would be under water.'
The scandals over conflicts of interest in accounting and banking were predictable fruits of 'market fundamentalism', he says. 'The image is Adam Smith. The reality is Enron.' But the really bad news is to come, he argues. 'What is likely to happen is more of a languishing malaise, with very weak job recovery. China has joined the WTO and is now the manufacturing engine of the world. Manufacturing is now down to 14 per cent of the economy. Those last few per cent are going to be very painful.'
That transition is the unavoidable result of globalisation, the subject of his first polemic, Globalisation and its Discontents. In that book, Stiglitz presented himself as the straight thinker thrust into the heart of World Bank policymak ing. His shock at the incompetence of the technocratic class led him to expose where the skeletons are buried at the International Monetary Fund. In Roaring Nineties, he repeats the trick, using the experience as chairman of President Clinton's Council of Economic Advisers to turn his fire on the economic establishment - chiefly Greenspan.
'It's his art form that he gives his message in such an oblique way. But to a large extent the Federal Reserve's powers are overstated by the markets. It is able to do more damage than good,' argues Stiglitz. He said he has sympathy for a friend's analogy of the Fed as the driver pretending to steer a car on an amusement park merry-go-round.
There have been two recessions on his watch and Greenspan failed to stop both. An entire chapter in Roaring Nineties is devoted to 'The All-Powerful Fed and Its Role in Inflating the Bubble'.
Stiglitz says: '[Greenspan] had instruments available. He could have increased margin requirements, but he didn't want to spoil the party.' In 1996 the Fed discussed using this policy lever, which effectively requires investors to put down more money to buy a stock rather than borrow it from a broker. 'I guarantee you that if you want to get rid of the bubble ... [raising margin requirements] will do it,' Greenspan said in September 1996.
Stiglitz believes Greenspan, having expressed concern with his 'irrational exuberance' speech, could have simply avoided talking up the new economy. Instead he became a cheerleader. 'He should have pricked the bubble rather than end up feeding it,' says Stiglitz. Greenspan should have opposed the capital gains tax cut, which meant people 'could make more money speculating in the market than working for a living'.
Most controversially, he accuses the sage of global central banking over political partisanship in favour of his Republicans. 'In 1993 Greenspan held the elected US government at ransom, saying he'd refuse to cut interest rates if the budget deficit was not cut back. This raises serious questions about the nature of an independent central bank,' Stiglitz said.
When Clinton planned to spend more on social plans and anti-poverty initiatives, the Fed Chairman stopped him in his tracks because he so favoured deficit reduction. In 2001, however, he backed the tax cuts that led to the current huge deficits. Such actions 'betrayed Greenspan's dishonesty' and were 'very partisan economics,' Stiglitz says.
Stiglitz sparred with Greenspan on several occasions while he was defending Clinton's economic plans against attacks from the Fed. Indeed, from fending off the Fed to his attacks on Dubyanomics, his new tome reads like a decade-long chronicle of his attempts to resist resurgent Reaganomics.
He was not surprised that the Fed and its chairman were fallible. What surprised him was the reverence they inspired. This Greenspan-worship was, in part, a reflection of how little the worshippers knew of economics. Stiglitz is indispensable in this regard, as a world expert who has seen economics used - and abused - in the corridors of power.
We live in a world driven by economics. Liberal democracies use it as a theology to justify taxation policies, the ownership of the media, immigration policy and an unelected official's ability to overrule the manifesto of an elected President. It is a trend reflected in Britain, where the Treasury has power over unrelated spending departments.
'I had entered economics in the Sixties, the years of the civil rights and peace movements. I wanted, I suppose, to change the world, but I wasn't sure how,' Stiglitz says in his book's preface.
The lesson for anyone who shares that aspiration is that economics is now a far more powerful agent of change than politics. And that makes this dismal scientist a very dangerous man.
Add a comment to this Message in our Forums.
While you're at it, check out our forums too!
User Originated Comments:
From: Creditwrench
1999-11-30 00:00:00
if you labor under the delusion that the economy
is up and the future is now looking bright then
you need to learn the bitter truth about what is
really going on.
visit
http://creditwrench.blogspot.com
and learn
why the economy is looking so bright right now but
is getting ready to tank.
From: But employment is
1999-11-30 00:00:00
down down down.
what does this mean?
more money for the rich, less money for the
poor.
where have i heard that song
before?
From: Diane Pgh, PA
1999-11-30 00:00:00
maybe the u.s. can spend some of that new found
wealth on the poor souls who were shipped over to
iraq to fill those corporate
coffers.
see: “sick soldiers wait for
treatment”
at:
http://www.upi.com/view.cfm?storyid
=20031029-020609-6750r
From: Diane Pgh, PA
1999-11-30 00:00:00
i hope people carefully read this article,
especially the cheerleaders for the current state
of things, although from the looks of the writing
skills of a majority of them, and their lack of
desire, patience and attention span to read or
present any actual facts that go beyond five or
six words, it may be a futile wish.
yes
corporations are seeing enormous profits, i guess
they should after letting so many people go and
overworking the remainder of them. those same
corporations are also providing flimsier and
flimsier services and products and the consumer
appears to have no recompense because there are no
more watchdogs who are actually watching; they
have a blinking impediment.
warranties
for some $200 high tech products are only 90 days.
you have to spend 45 minutes on the phone to
speak with someone at the phone company. phone
company, get it? if you have a moving company
move your belongings cross country, you may never
see them again, or they may extort an extra couple
thousand out of you to deliver them. why, because
they can.
it's not those sacred and
elite stockholder's who are no longer taxed on
their dividends who have drizzled their
investments down to the corporations, it's at the
cost of millions of jobs lost; and the savings
made from providing garbage, that have upped the
companies coffers. that, to probably be embezzled
by ceos who have sick little birthday parties for
their wives where vodka is dispensed through the
human organ of a michelangelo statue (see
http://www.forbes.com/2003/09/29/cx_gl_0929facesam
.html )
the common folk of the us
should have known something stunk when it got so
easy to invest and everybody and their mother was
doing it. they should have known that their money
would go down a wormhole to some sacred and hidden
pockets, never to be seen again. you know kenny
boy (to us common folk – mr. kenneth lay) and
his ilk, have lifestyles to
maintain.
(by the way, linda and
robbie, what happened to the ‘repug’ piece
displayed earlier?
if i overstep the
boundaries of posting here please let me know, i
value your website and wouldn't want to do
anything unwittingly to get you har-ssed due to
the displaying of certain political data that
someone doesn't want the public to know about.
also, the last part of stiglitz’ ‘profile’
in the article above was accidently placed after
the second paragraph.)
Related News
| Greenspan Wants it Both Ways | |
| A Pattern of Lies Emerges | |
| Greenspan V. Bush | |
| Bankruptcy Reform - the Next Step in the Clinching America's Future | |
| Citigroup Signals Corporate Investment Weakness | |
| FOMC - Why are lending rates so low? | |
| Bank Loan Advisory Shows Increased Credit Risk at Highest Levels | |
| Bies Speaks | |
| Alan Greenspan Speaks |
|
|
|
||||||
|
|
|
||||||
|
|
|
|
|
|
|
||
|
|
|
||||||
|
|
|
||||||
owned by TheTIP.
[ Skip Next | Next | Random Site | List Sites |Previous ]
NEWS | ACTION | RESULTS | POLLS | MEMBERS | SEARCH