Joseph Stiglitz, a Nobel-prize winning former World Bank economist, said the U.S. economy risks tumbling into recession because of the subprime crisis and a ``mess'' left by former Federal Reserve Chairman Alan Greenspan. ``I'm very pessimistic,'' Stiglitz said in an interview in London today. ``It's not just the housing sector. Over the last five to six years our economy has been bolstered by the real estate sector. ``Americans have been taking money out of their houses to finance a consumption binge,'' Stiglitz said. ``Last year alone mortgage equity withdrawal was between $850 billion to $950 billion. That game is over.'' Stiglitz said that the U.S. faces ``a very major slowdown, maybe recession.'' ``Alan Greenspan really made a mess of all this,'' Stiglitz said. ``He pushed out too much liquidity at the wrong time. He supported the tax cut in 2001, which is the beginning of these problems. He encouraged people to take out variable rate mortgages. That helped create the subprime crisis.'' http://www.bloomberg.com/apps/news?pid=20601087&sid=aqZxFlbToZZA&refer=home
"""``He pushed out too much liquidity at the wrong time. He supported the tax cut in 2001, which is the beginning of these problems""" 2001 was 911, what other options were available to move the economy? I'm sure the govt didn't want the consumer to stand down in the wake of 911.
Personally I think the Powers are scared to death of a recession. Americans are so heavily loaded with debt that a "cleansing" recession could be devastating... large numbers of people unable to service their debts. However the push to "inflate the Hell out of everything" will buy them some time but ultimately be catastrophic.
The US needs a recession, however this is politically catastrophic. In Australia in the early 90's the then government 'engineered' a recession which in the LONG TERM allowed Australia to prosper economically.
it should of been a time for politics,and the market should of adjusted it self. These overpaid decision makers should of seen it coming down the line, but its too late for that. Now we pay the price for their mistakes
Exactly. 90% of traders in 2001-2002 thought that by 2004 people would be selling apples on street corners. The combo of low rates and lower taxes along with a Keynesian pump in Iraq kept this indebted mess chugging right along. People don't realize how important this lower dollar has been for sustained growth. P.S. Stiglitz is socialist scum. I just love when guy's who are on the public dole argue for higher taxes.
They also don't realize how DEVASTATING the weak Dollar will be to our lifestyle... once the Dollar gets "weak enough", we will curse what we've done to ourselves.... sort of like the junkie who one day realizes, "the dope felt good at the time, but it ended up killing me."
Gnome the huge decreases in the dollars purchasing power occurred before half this board was born. As for today? If Bush had tried to argue market wise that the dollar should remain artificially high we would have seen an economic collapse. American's need to face the bitter truth. In the future an hour of our productivity will buy no more access to global goods and services than an hour's work by some guy in New Delhi.
True about the "huge decrease", however over time we can cope with losing 95% of the Dollar's buying power through inflation. However, at some point [like maybe soon], the decline goes parabolic and nobody can keep up. It has happened over and over throughout history. ALWAYS has ended the same... will be no different this time. I don't necessarily believe the dollar is "artificially high"... politicos have argued that for their own short term, short sighted, greedy personal gain. I doubt we would have seen "collapse"... recession probably. NECESSARY recession. With the present money-pump escalation, economic collapse gets ever closer to "virtually assured"... just postponed.
Don't worry about business bro, our astute asshole commander in chief made sure to protect business from this by the change in bankruptcy laws. hail to the chief he's a fuckhead and an imbecile. They knew what they were building ( a mountain of debt).