… or the absence thereof.
I am going through one of my phases of despondency. Can’t get to write anything as our leaders are still spewing the same old swill over and over again. A leveraged EFSF?!
Anyway. What got me going today was this piece gleaned on the pages of Jesse’s Cross Roads Cafe written by Stiglitz, Nobel laureate that he is.
The online version of the article cannot be read in full but somehow Jesse’s got the entirety of the text. So, give it a read. The article is factual and rather good. But then at the end of the article Stiglitz drops the ball with this pearl:
“The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal.”
How a Noble laureate in economics cannot see or admit that government has been anything but grossly interventionist over the past thirty years beggars belief. The willful, arbitrary and unilateral manipulation of interest rates constitutes the greatest degree of intervention by the authorities – without mentioning that interest rates have largely always been manipulated in a manner contrary to market signals. The $700 Billion TARP was gross, blatant and deliberate intervention. All bailouts of banks, industry and sundry IS GROSS, BLATANT, DELIBERATE and very likely illegal intervention. The $1 Billion plowed into LTCM was then staggering intervention. Subsidies to industry and economic entities are intervention particularly if said subsidies never end. Government allowing regulators to unilaterally decide that banks can disregard accounting rules that apply to everyone else IS GROSS INTERVENTION. The Presidnet of the United States appointing to high office members of entities that have had a hand in bringing about the crisis IS GROSS INTERVENTION. Government taking on the risk of Fannie Mae and Freddy Mac IS GROSS INTERVENTION.
I’ve got to get me one of them Noble prizes at some point!
And through it all, the one thing that even Stiglitz does not, does not want to or cannot touch upon… is the monetary system… and so he loiters about in an environment of proximate causes blind (willfully?) to the ultimate driver of this current debacle.