Can This Economic System Be Saved?

Tuesday, October 14, 2008

James Galbraith, professor of Government at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin, and the author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too (Free Press, 2008), talks about the financial crisis and what it means for American capitalism.


James K. Galbraith

Comments [28]

NWP from CT

ELITE Colleges????

Only go where you can afford to go!!!!

Oct. 15 2008 11:54 AM
Louis from Chatham, NJ

I was interested to listen to J. Galbraith interview, but I was disappointed that, as usual, there was no mention of the huge level of military spending in the Federal budget: close to $1 Trillion (with a "T") per year, according to various analysts, such as Robert Higgs of the Independent Institute, when adding the regular annual defense budget - about $515 Billions in 2009 - and the other military expenses, including the current wars in Iraq and Afghanistan.

These military expenditures, which represent about half of the total federal budget, which is unique in the whole world, and close to 4% of the US GDP, are about equivalent to the total military expenditures of the rest of the world.

Why is this situation not discussed, whereas it is obviously having extraordinary consequences on the US Federal budget? Isn't it time to review and challenge these policies, and to re-size the US military budget to a more realistic level, where the US will stop being the self appointed and self directed "policeman of the world", so as to be able to re-allocate significant financial resources in domains where the US is sorely lacking, such as education, healthcare or transit and transportation infrastructures?

In this presidential election year, it would be useful if WNYC and NPR would address this all important matter when interviewing economists and politicians.

Oct. 14 2008 06:57 PM
jaywalker alert alert from NY

dude, they're trying to save your friggin life. there's a right to buy an suicidal mortgage but i guess you still don't have the right to get hit by a bus.

Oct. 14 2008 11:16 AM
jaywalker alert alert from NY

dude, they're trying to save your friggin life. there's a right to buy an idiotic mortgage but i guess you still don't have the right to get hit by a bus.

Oct. 14 2008 11:15 AM
Dennis from Inwood Manhattan

Warning to listeners. Plainclothes police are giving summonses to subway riders that walk between cars at Times Square. I got one at 9:10 on number 7. Be careful.

Oct. 14 2008 10:45 AM
Joe Corrao from Brooklyn

Seth...amen brother.

Oct. 14 2008 10:35 AM
Joe Corrao from Brooklyn

Greed ain't going away people....

Oct. 14 2008 10:33 AM
Inquiring Minds

@16 jim

this is a crisis -- not of "confidence" as all the talking heads say -- of SOLVENCY.

(claims on assets exceed the value of those assets)

This is true for the consumer, for state and local governments, and for our Federal government.

it has just begun

Oct. 14 2008 10:28 AM
Matt from Mathattan

What about the rating agencies. These banks and their investments were all given "A" ratings ("AA" and triple-"A"). How is that possible?

Thanks, Matthew

(stop calling him John!)

Oct. 14 2008 10:27 AM

Everyone keeps talking about the Housing loan problem.

Isn't this REALLY a CDO / CDS (credit default swap) problem that created exponential debt based on the underlying debt?

Oct. 14 2008 10:27 AM
superf88 from NY


if the state already insures banks' activities, but no regulators are yet in place, this is a once in a lifetime moneymaking chance for some businesses, including banks.

On this note, which players should we watch?

Oct. 14 2008 10:26 AM
Alex from brooklyn

I understand why it is bad for banks when other banks won't loan them money.

But why can't people and businesses borrow money from the banks that DO have money? If my closest store is out of the cereal I like, I go to another store.

Oct. 14 2008 10:26 AM

Ken Livingston on "The Take Away" just said the dollar is overvalued by 30%
What do you think?

HOW is the government going to unwind Credit Default Swaps?

Why do they exist and how did these grow to $65 trillion dollars.

Why were these unregulated? Who profited, and who will pay? If they were unregulated why should the taxpayer bail out these people?

Oct. 14 2008 10:24 AM
seth from Long Island

Q: Can this economic system be saved?
A: No.

Oct. 14 2008 10:23 AM

I recommend that everyone listen to the This American Life podcasts titled "The Giant Pool of Money" and the more recent "Another Frightening Show About the Economy." Truly excellent reporting and explaining of the situation we are now in- better than anything I've read ANYWHERE and I actually like reading about economic issues.

Oct. 14 2008 10:22 AM
Inquiring Minds



There was a recent long interview with Buffet on Charlie Rose (or Bill Moyers); there was a moment when you could see this sparkle in Warren's eyes when he said something to the effect "i'd love to be the government's partner in all this"

There will be TENS OF BILLIONS skimmed out of this by the same people who got us here.

Oct. 14 2008 10:22 AM
Cathy Rowan from Bronx

Is there anything in the new US government's actions to address the lack of transparency and disclosure about the risks underlying the trading of derivatives, or in special purpose entities associated with these banks?

Oct. 14 2008 10:20 AM
Paul from NYC

How big an expansion of which bureaucracies will be needed to regulate these new federal financial initiatives?

Oct. 14 2008 10:20 AM
dc from brooklyn

can we at least fire the execs that allowed, and probably encouraged, that head the companies that are getting the money?

Oct. 14 2008 10:17 AM
stu in nyc

my wife and I bought a house that we could afford. we got a decent mortgage due to our good credit rating. the mortgage is paid on-time, and all our utility and credit card bills are paid on time. we both work more than full time jobs to pay for child care for our 2 pre-school children while we work. we're not rich, but we make sure our kids are fed and clothed. since our government comes to the rescue to those who cannot afford their sub-prime mortgage payments, and the government rescues the banks who gave out those sub-prime mortgages, etc etc etc, what is the government doing for those of us who play by the rules? the alternative minimum tax is gobbling up more from those in the middle class who cannot afford to pay it, since the AMT has never been adjusted for inflation in the almost 40 years since it was enacted, nor is it adjusted for geography (it costs more to live in NYC than in rural areas), yet the cost of living and the proverty line is constantly updated. our mortgage interest deduction (one of the benefits of owning a home) is dis-allowed. our child care credits go out the window. and in NY, our local taxes are dis-allowed. politicians have been discussing tax overhaul for years, but no substantial changes have been made, and we (and many others) are suffering now. Obama says he will have total troop withdrawal in 18 months (or whatever he says), but I've yet to hear substantial details and time frames for reforming the tax code. help..........

Oct. 14 2008 10:17 AM
Lane Trippe from New York

Please explain the significant difference between "British Plan" nationalizing banks, and "US Plan" infusing capital in exchange for NON-voting, preferred stock.

Oct. 14 2008 10:16 AM
James from brooklyn

brian keeps saying John

Oct. 14 2008 10:15 AM
PJBeee from Ridgewood NJ

Oh Goody. You will now see more, and similar, abuses to those we've seen in the past as banks (and others) discover what risky transactions they can conjure up that slip under the radar of regulation, yet still be guaranteed by the "government", meaning US.

I can see the vultures gathering already. This is another likely disaster. Adds insult to injury.

Hold on to your hats.

Oct. 14 2008 10:13 AM
Ana from Summit

I hate to be negative but...what if all of this doesn't work? What about the 63 trillion in credit default swaps out there?

Oct. 14 2008 10:09 AM
Inquiring Minds

"The last capitalist we hang shall be the one who sold us the rope." Karl Marx

Oct. 14 2008 09:54 AM

Amazon summarizes: "The real problems [...] will be solved only with planning."

We've seen how well that has worked in the 20th century.

Oct. 14 2008 09:43 AM
Inquiring Minds

"While democracy seeks equality in liberty, socialism seeks equality in restraint and servitude." F.A. Hayek, The Road to Serfdom (1944)

Oct. 14 2008 09:06 AM

Shouldn't interest rates be going up, not down? Wouldn't that make it more appealing for banks to lend money? If underpriced lending was responsible for getting us into this mess, wouldn't a correction in the price of lending help get us out?

Oct. 14 2008 06:54 AM

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