Stiglitz: The Fall of Wall Street Is to Market Fundamentalism What the Fall of the Berlin Wall Was to Communism

Joseph Stiglitz was awarded the Nobel Prize for Economics in 2001. I spoke with him Tuesday about the Wall Street meltdown.

Nathan Gardels: Barack Obama has said the Wall Street meltdown is the greatest financial crisis since the Great Depression. John McCain says the economy is threatened, but fundamentally strong. Which is it?

Joseph Stiglitz: Obama is much closer to the mark. Yes, America has talented people, great universities and a good hi-tech sector. But the financial markets have played a very important role, accounting for 30 percent of corporate profits in the last few years.
Those who run the financial markets have garnered those profits on the argument they were helping manage risk and efficiently allocating capital, which is why, they said, they "deserved" those high returns.

That's been shown to be not true. They've managed it all badly. Now it has come back to bite them and now the rest of the economy will pay as the wheels of commerce slow because of the credit crunch. No modern economy can function well without a vibrant financial sector.

So, Obama's diagnosis that our financial sector is in desperate shape is correct. And if it is in desperate shape, that means our economy is in desperate shape.

Even if we weren't looking at the financial turmoil, but at the level of household, national and federal debt there is a major problem. We are drowning. If we look at inequality, which is the greatest since the Great Depression, there is a major problem. If we look at stagnating wages, there is a major problem.

Most of the economic growth we've had in the past five years was based on the housing bubble, which has now burst. And the fruits of that growth have not been shared widely. In short, the fundamentals are not strong.

....

This is from an interview of Joseph Stiglitz by Nathan Gardels fo the Huffington Post.

In short, the fundamentals are not strong.

When i was a POW, you couldn't put the fundamentals on the table...BECAUSE THERE WASN'T A TABLE....and that's why i am an expert on fixing the economy.

Since my bro' got me the below market loan and cut me a deal on the property, I know how to fix the economy. I'll get working on it as soon as bro' gets out of whitey's jail. I bet 'den my bitch will be 'proudt of america'.

Obama

Why has the economy gotten so back over the last two years. Instead of chasing Rove and Cheney, shouldn't the DEMS have focused on the economy? After all, they control the SEC. This is the fault of the DEM lead congress!

Since my bro' got me the below market loan and cut me a deal on the property, I know how to fix the economy. I'll get working on it as soon as bro' gets out of whitey's jail. I bet 'den my bitch will be 'proudt of america'.

Obama

#5 | Posted by midtowncowboy

You remind me of that idiot 'retnluvnt' (or somthing like that). What ever happened to that POS?

After all, they control the SEC. This is the fault of the DEM lead congress!

#6 | Posted by midtowncowboy

The SEC is a Federal Agency. Like FEMA. Idiot.

"You remind me of that idiot 'retnluvnt' (or somthing like that). What ever happened to that POS?"

Posted by DARTHCHENEY

His retirement fund went belly up.

The SEC is a Federal Agency.
And congress passes the laws that are enforced by the SEC? Why didn't congress do anything to prevent this financial disaster? Why did they waste so much time on global warming and chasing Rove and Cheney?

#10 | Posted by midtowncowboy

so your thinking is, 'whoever is in power at the time is to blame'. by your logic, i wonder why the repubs didn't fix it in the previous 6 years?

in fact, one of the biggest problems is out of control government spending, of which the repubs are the champions. look at the numbers.

#11 | Posted by goblinsrreal2

Don't feed the grumpy old troll...goblinsrreal2.

Another great article on the subject.

"And congress passes the laws that are enforced by the SEC? Why didn't congress do anything to prevent this financial disaster?"

First they would have been filibustered or vetoed if they had but secondly, by the time they were elected the majority of the damage had already occurred. Most of the mortgages defaulting today were written before 2006. Nice attempt to deflect the blame though but sorry, doesn't work, it still falls on those who were in charge during the time that Glass Steagal was repealed.

It's not about glass stegal danni it's about siv's and cdo's. Regulation would not have prevented this, which is stupidity at the core of wall street institutional investors.

Next fear is that this blows up over leveraged municipalities

Thie will kill John "Mr. Deregulation" McCain

The lies, distortions, and sudden reversals of almost every stance of the McCain-Palin ticket is now being shown for the sugar coated bullshit cookie their ticket is.

McCain MET with Regulators calling them off during the S&L crisis. No one's been a bigger backer of 'hands off' by the Fed of just the industries now failing for lack of oversight and GOP legislation allowing them what had not been allowed since the Great Depression - mixing investment and commercial banks with the mortgage industry.

Some at these corporations didn't even understand what they were trading in such exotic trading vehicles as 'debt derivatives'. They kept them off the books so few even realized how much risky debt was piled up like a mountain ready to crash down.

Thanks John McCain and Phil Gramm.

AU-Now McSame is a big fan of regulation. Like everything else, he's done a 180 degree spin to try and be on the correct side of reality.

But, as a former POW, he can do that. According to him.

Bush and the Republicans and their thugs on Wall Street wanted deregulation, they wanted all the federal rules and regulations to be voluntary, and now they have put our entire country on the verge of economic disaster.

Anyone who would vote for McCain after economic disaster this last month hates our country. McCain bragged about how "I'm a deregulator guy" and his main man for economic advisor was the chief crook Republican Senator Phil Graham who gutted all the finance rules and regulations and deregulated the banks and finance industry.

Did you know the U.S. owes the rest of the world $7 TRILLION ! That was stated in a finance report given on Dobbs show today.

I went to the SEC web page and it looks like they were created by congress in 34 and they answer to congress.

It would seem to me that congress has to take the fall for the SEC conduct or lack of.

If I'm wrong, I'm sure doc will straighten me out.

Would you like to blame the national debt on the Dems as well? Since 1946 when the Republicans gained control of congress, their presidents have outborrowed and spent the Democrats by 3-1. The Republicans are now calling for even more tax cuts and military spending. Just when and how are we going to address the deficit with such recklessness on their part? Ronald Reagan lucked out, he had no on-going war to pay for.

chris,

Start buying American made.

"Start buying American made."

If you try to do that, you'll be surprised how hard it is. To take just one example, try clothing yourself with "Made in the U.S.A" stuff. You'll be busted for indecent exposure if you don't compromise in a hurry.

08

Does it count if it's "assembled in North America"?

Or if it's an American brand name that's actually based in Bermuda, but made in Asia somewhere?

First they would have been filibustered or vetoed if they had but secondly, by the time they were elected the majority of the damage had already occurred.

#14 | Posted by danni at 2008-09-16 10:46 PM | Reply

That all may be true. But, let's be honest, this has been a do-nothing Congress. It's not like they have been overly confrontational with the Republicans over important things. Pelosi and Reid are worthless.

It would seem to me that congress has to take the fall for the SEC conduct or lack of.

If I'm wrong, I'm sure doc will straighten me out.

#19 | Posted by Sniper at 2008-09-17 08:17 PM | Reply

You're not wrong, so far as it goes. But, the White House also could have proposed certain legislation to the Congress to be passed to forestall these economic catastrophes. Did they do that? No, gosh, they didn't. Go figure.

Thanks John McCain and Phil Gramm.

You've got that right. Enron, housing, and credit crisis... all tied to these two. Chairman of Senate Commerce, chairman of Senate Banking.

Change? These two have wielded massive power, and it hasn't been for the positive.

chris,
Start buying American made.
#21 | Posted by 08r4ever at 2008-09-17 09:00

You mean, like Walmart? That's all-American, isn't it? I mean, except for the >90% made in China.

Stiglitz was the puppy for Clinton, stood in the rain or snow and explained away everything ever done by the Zipperless one!

If you took the product made in China out of Wal-mart, replaced with stuff made in America, the store would STILL be 85% empty, what's the point? It's a job, when many are going away, it's just a job, definitely NOT a profession!

The White house DID propose legislation, AND supported the bill introduced by Hagel, and McCain in 2005 to tighten the regulations concerning Fannie and Freddie along with other lending entities, identifying almost exactly what the problem TODAY was, way back then!

Held up in the Senate by Dems and watered down in the house by Repubs, never went anywhere, who knew? Guess to many people in the pocket like Dodd, Obama, a total of 374 including a lot of Republicans!

Not bad, 374 out of a total of 535 sitting members, House and Senate, definitely a VETO proof majority!)

(McCain took individual contributions from employees - not the management)

McCain took Fannie Lobbiest for his campaign:
Two lobbyists are McCain's congressional liaison, John Green, and national finance Co-chairman Wayne Berman. They both lobbied for Fannie Mae.

And here are the other 5 lobbiest:
One: Campaign manager Rick Davis is a major telecommunications lobbyist.
Two: Senior foreign policy adviser Randy Scheunemann recently faced scrutiny over his foreign lobbying on behalf of the Republic of Georgia, which has been embroiled in a military conflict with Russia.
Three: Senior adviser Charlie Black was a foreign lobbyist for dictators in Zaire and Angola in the 1980s, fodder for the liberal group MoveOn.org.
Four: Frank Donatelli, the Republican National Committee's liaison to the McCain campaign, has had clients including Exxon Mobil.
Five: Economic adviser Nancy Pfotenhauer has lobbied for corporate giants like Koch Industries.

McCain took Fannie Lobbiest for his campaign:
Two lobbyists are McCain's congressional liaison, John Green, and national finance Co-chairman Wayne Berman. They both lobbied for Fannie Mae.

#29 | Posted by Silence

The guy that ran the failed F company is obamas campaign advisor. I guess you want to overlook that little pearl. obama received over $500k from them and mccain hasn't even gotten half that. That mccain is in there pockets and the savior, obama isn't.

By the way, who is chairman of the banking comittee in congress? A little mouse told me it was that limp wristed barney f. Is that true?

Anyone who believes that it was the Democrats or the Republicans that caused this is a partisan hack. There is one thing that all politicians have in common is that they are crooks.

Both sides were fine with this crap as long as they were making profits. Now they want to blame each other.

Bush didnt do shit to prevent any of this and over the last two years the Deocrats in Congress didnt do shit either.

Yet awe are going to keep re-electing most of those idiots in Congress.

McCain is now talking about corporate greed and the need for government regulation.

Spoken like a tru rethug.

Despite controlling congress for 6 years of Bush's term and overturning by voting as a bloc and block in congress and subverting every regulatory agency we have you still continue to say:

It'a ain't my fault.

BULLSHIT!!

Sickoflibs

You never need to know what you are talking about do you. You don't seem to mind making a habit of talking out your ass for a lifetime. Have you ever investigated any thoughts that form in your "brain" or does it always just come out like some chunky diarrea?

nice bob

what happened to a little constructive critizism?

and this may surprise many of you
I am all for regulations of wall street.

and lets start with how much money fannie mae and the other were THROWING AT DEMS including a ton of money to barrywayne and hillary

regs mean for everyone and not just greedy rich republicans

and DONT EVEN go to mccain being against regs and all that
yesterday on CNN so it has to be true I saw the bill being signed into law for deregulation of some parts and it was being signed by a smiling president named bill clinton

BL2

Clinton signed it after months and months of a republican controlled congress beating him over the head for deregulation. I'm sure you were clamoring for government to "get out of the way" of business too. I bet you are still clamoring for that aren't you. Read something and you won't be so dumb.

There were regulations in place since the Depression that kept American financial institutions safe for 66 years until the republicans came along with their DEREGULATION mantra.

and lets start with how much money fannie mae and the other were THROWING AT DEMS including a ton of money to barrywayne and hillary

regs mean for everyone and not just greedy rich republicans

#37 | Posted by bushlovertwo at 2008-09-18 11:38 AM | Reply |

Let's talk about it. Post some links dummy. Don't you know how it's done?-----YET?----Are you that frakin slow you still just spew crap out without a link?

Then tell us what that has to do with the republicans forcing this through into law. It was veto proof legislation, so whether Clinton signed it or not--it would still have been signed.

I see you haven't talked about Gramm being McCains economic advisor----probably forgotten it already---or think it's a great idea.

I dont have to post links because I watch cnn and others and write it down. its a little thing I learned in school about things like this.
if you arent a nittwit then you will be able to recognize my opinions from facts.
the bill was signed in 1999 and he was smiling as he used the pen.
so he gets credit for EVERYTHING GOOD THAT happened but when this comes up....its the republican congress???

welfare reform as been credited to him ON THIS SITE and when we said it was the republican congress, the left here said bullshit...
and on others issues as well

you cant have it both ways where bad shit was because the republicans were majority and good shit was because it was clinton in the white house.

NO NO NO NO

have a good one

Bl2

As I said--facts mean absolutley nothing to you---reality is a figment of someone elses imagination. The bill passed congress 90-8-1 in the Senate, and 362-57-15 in the House.

That means it was veto proof.

That means it would have become law whether Clinton signed it or not.

That means it is the reponsiblity of congress.

When first introduced the bill was passed 54-44 along party lines with republican support in the Senate.

That means you are a party hack that puts Party above country.

Still haven't seen your response to having Gramm as McCains economic advisor. You remember Gramm--the former Dixiecrat that became a republican rather than support civil rights? Yeah--that's your guy.

RAYGUN started this shit with the "Too much Govt" mantra and degregulation followed. NOw all of our regulatory agencies have been gutted.

This is just the tip of the iceberg.

We have not evolved past "the greed of man."

Without regulation man will alway go overboard and this is not a gop or dem thing. this is a man thing.

"This is just the tip of the iceberg."

But, let's be honest, this has been a do-nothing Congress. It's not like they have been overly confrontational with the Republicans over important things. Pelosi and Reid are worthless. -- Anton

Isn't it stunning? The 2006 congressional elections were an anti-Bush mandate, and they've done nothing.

Congress has done quite a bit.. all of it neonazi shit too.

Bought and paid for. The lot.