laissez-faire free market conservative president is telling people to
go out and get jobs -- and there are no jobs, "This is going to be one
of the worst economic downturns since the Great Depression," mirroring
the 1930's
http://biz.yahoo.com/cnbc/080425/24311464.html
free markets have failed america and the world miserably. stiglitz is
just letting us know the obvious, its all in the demand side.
Nobel Winner Stiglitz: US Facing Long Recession
Friday April 25, 12:16 pm ET
The U.S. economy is already in recession -- and may echo the 1930s,
Nobel Laureate Joseph Stiglitz said Friday.
"The big question is: how will the government respond?" said Stiglitz,
in an interview with CNBC. Stiglitz, a Columbia University professor
and 2001 winner of the Nobel prize, detailed his bleak outlook for the
American economy.
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"This is going to be one of the worst economic downturns since the
Great Depression," said Stiglitz.
He explained that main cause of the current situation is historically
unique -- and thus is befuddling those charged with creating
solutions.
Other downturns were primarily caused by excesses in inventories or
inflation; but this slowdown is due to the condition of "badly
impaired" banks and financial entities, which are unwilling and/or
unable to lend capital -- stymieing the very borrowers who usually
drive the country back to vitality, Stiglitz said. And the Federal
Reserve may have used up its ammunition -- and the faith investors and
planners have put in it.
"[The Fed] will be between a rock and hard place. And we're not over-
worrying about credit. But [simultaneously], we need to start worrying
about the real sector," he said.
And if inflation wasn't the prime recession cause, it's still a
menace. The professor points to the two-pronged danger of high oil
prices joined by climbing food prices, harming businesses and scaring
consumers.
"Oil is particularly bad," as it means that more U.S. dollars "will be
going abroad," he said.
The housing downturn is an even worse economic factor than casual
observers realized, Stiglitz said. He explained that during the real
estate boom, Americans were able to withdraw billions of dollars from
their home equity.
"[But] with housing prices coming down, it's going to be difficult to
do that anymore," he said -- drying up a spending source. And within
that problem, still another complication: people typically spent the
money they drew off their home equity on consumption, rather than
investment -- garnering no return on the spending.
"The savings rate as we go into the recession is zero. Which means
[savings] will go up, " he said -- decreasing consumer spending and
weakening retail further.
What about the government stimulus package?
"The Bush Administration's response is too little, too late -- and
very badly designed," he declared. The amount ostensibly being infused
into the economy by tax rebate checks will be a "drop in the bucket"
compared to the money being held back and siphoned out by the factors
he mentioned.
"If you really wanted to stimulate the economy, increase unemployment
insurance," he suggested.
"The president is telling people to go out and get jobs -- and there
are no jobs for them," he said.
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