Streams

Freefall

Monday, January 18, 2010

Nobel Prize winner Joseph Stiglitz discusses the current financial crisis—and the coming global economic order. In Freefall: America, World Markets, and the Sinking of the World Economy, he draws on his academic expertise, his years shaping policy in the Clinton administration and at the World Bank, and his role as head of a UN commission charged with reforming the global financial system to outline a way forward.

Event: Joseph Stiglitz will be speaking with Matthew Bishop
Tuesday, January 19, at 8:00 pm
92nd Street Y
Lexington Avenue at 92nd Street
Tickets: $27.00
More information and tickets here.

Guests:

Joseph Stiglitz
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Comments [24]

jd

cajones, man, leadership, ideas. whining is so 2006.

Jan. 18 2010 10:34 PM
asdf

certainly would have enjoyed hearing more of the theme as described in the prof's bio, above...will thereb a recording of that 92nd st y talk?

Jan. 18 2010 01:23 PM
Phil Henshaw from NY

The real structural problems are the hardest to see, because they're deep misconceptions in the design of the institutions we most trust.

The problem not yet being addressed is how the regulatory system is designed for the purpose of assuring the stability of markets in which you can get a reliable return on investment. When you combine that with letting the biggest winners keep adding their winnings to their bets it results in a type of natural Ponzi scheme.

There's a way to correct it, several ways actually, but requires fundamental rethinking. I do some of that. Need help. www.synapse9.com

Jan. 18 2010 01:02 PM
Frank from Brooklyn

Let's dispense with the ambiguities. The banking industry was scamming the world. When their scam began to crumble around them, the federal government covered them with taxpayers' money (those whom they had indeed scammed) and gave the banks the means to continue scamming with that money. Make no mistake; these people knew what they were/are doing; they don't want you to know what they're doing. Meanwhile the banking lobby is BRIBING congress with millions upon millions of dollars.

Jan. 18 2010 12:56 PM
jen from manhattan

Look, housing was the key driver of the economy over the past ten years. At the moment we don't have anything to replace the role that housing played in the economy. Is there really a stomach for reform here, given that we don't have anything that could replace the role that housing/construction played? If they had tightened their practises, wouldn't gnp have come to a halt?

Jan. 18 2010 12:50 PM
Enrique from Elizabeth, NJ

JUST ANOTHER -OVER THE SURFACE- NONE POINT DISCUSSION. THANKS A LOT... HE/YOU SAID NOTHING.

THINGS THAT BRIGHT PPL ALREADY KNOW, AND THAT FOOLS DON'T CARE TO KNOW.

Jan. 18 2010 12:44 PM
Enrique from Elizabeth, NJ

...say it like it is please: the 'bail out' was nothing more than the biggest transfer of public funds, to the private financial sector and, a boost to their modus operandi.

Correct yourself. It was THE PRIVATIZATION OF THE WEALTH, AND THE SOCIALIZATION OF THE LOSES.

Jan. 18 2010 12:42 PM
eCAHNomics

Listener@13
All of the incentives are against a biz economist forecasting a large change in the system, like the bursting of a bubble. Bubbles get much bigger and last a lot longer than you think, so those who might forecast the "burst" might be wrong for a year or two, before being spectacularly right. Of course, by that time, they've lost their job.

Jan. 18 2010 12:40 PM
superf88@gmail.com

GROWTH -- simply an economic driver, or truly the Holy Grail? Is there an example of an economy that flourishes because of balance rather than imbalance?

Jan. 18 2010 12:36 PM
Alex from Brooklyn

The party is back on in WALL STREET....

There is no recession there...

Thank you for taking off your pant TAX payers

Jan. 18 2010 12:33 PM
Ted

Why isn't Obama listening to you, Paul Krugman, Naomi Klein etc.. Why is he listening to the status quo that got us into these problems to begin with?

Jan. 18 2010 12:33 PM
A listener

Your guest is telling us that economists are predicting that unemployment won't begin to drop in 2010 or 2011. So the obvious question is, did these same economists predict any of the current crises in housing, employment or banking?

Jan. 18 2010 12:33 PM
eCAHNomics

What probability would Stiglitz put on a double-dip?

Jan. 18 2010 12:32 PM
Ralph from New York

The "free market" economy is widely blamed for the housing and financial crisis.
Yet: The Fed sets interests rates very low by fiat; banks are encouraged by regulators to make higher-risk loans (the Community Reinvestment Act and the later use of such measurements to allow or deny bank mergers); wider home ownership (i.e., to a higher-risk pool of buyers) is explicitly advocated by the Federal Gov't over decades, promoted by Fannie, Freddie, etc., in the face of mounting losses, and "implicitly" guaranteed against loss; bank deposits (and formerly FSLICs) are guaranteed against risk.
Every one of these actions encourages risky investing by market players ("losses are socialized") and/or inappropriately high levels of short-term spending (vs. saving) and long-term investing (including home over-building).
Every one of these interventions creates incentives for market players in our only partly-free market economy. More importantly, every one of them is *not* a characteristic of a free market -- in which interest rates would be set by buyers and sellers actiong in their own perceived interests, and losses would not be guaranteed.
Argue for more regulation if you wish, but please don't attribute the above actions to the operation of an overly "free" market.

Jan. 18 2010 12:31 PM
eCAHNomics

Bernanke said in his comfirmation hearings (last month) that he never saw the housing situation as a bubble. A man that stoopid should be constrained to manual labor.

Jan. 18 2010 12:26 PM
Rick

I am a Chartered Financial Analyst Level 2 candidate and one of the things I have to know for the exam is CAPM, which is a formula to help you determine the cost of Equity Capital. One of the modifications to this formula is by Eugene Fama of the Fama-French CAPM.

I had no idea who this guy was until I started reading Justin Fox's book "The Myth of the Rational Market."

I did not know he was part of the Chicago School and that he thinks that the markets are fine etc.

Am I learning a useless theory? I thought the Chicago school was rendered invalid due to this crisis.

Jan. 18 2010 12:26 PM
Sher from New York City

For Mr. Stiglitz and/or Mr Sorkin:
The major problem with the incentives for banks that produced the crisis was that BANKS were able to SELL OFF THE RISK THEY INCURRED, in bundles of securitized mortgages. Banks must be required to retain a portion of the rick they incur to set their incentives to insure responsibility!

Jan. 18 2010 12:25 PM
Alex from Brooklyn

the buck stops with OBAMA at this point and he is a smart dummy,, that listens to everyone and fails to take decisive action...

Jan. 18 2010 12:25 PM
Alex from Brooklyn

I like the way your guest politely said that they banks PURCHASED or LEASED our public official...

VERY FUNNY

Jan. 18 2010 12:21 PM
eCAHNomics

You could argue that the financial innovations were a net negative for the economy, as it grew less rapidly over the last decade than previously. Futhermore, a greater share of the economy went to fin-corp profits, meaning that the rest of the economy was even worse off.

Jan. 18 2010 12:14 PM
Hugh Sansom from Brooklyn NY

For something like 20 years, housing prices -- like health care prices -- rose much faster than wages. SIMPLE MATH dictates that such increases were unsustainable without an artificial system of supporting excessive prices. The only variation from place to place across the nation was in the specifics of artificial sustenance. Universally, the federal government kept Fed rates low. But in places like New York, we've also had people like Bloomberg to engineer boondoggles for developers.

Jan. 18 2010 12:11 PM
jen from manhattan

It just seems to be that there are many many people who had an interest in keeping the housing bubble going--homeowners, real estate agents, construction companies, etc.--and that we are collectively disavowing any responsibility in the matter and simply blaming the "big banks". Maybe the banks were making bad lending decisions but I personally know a number of people who personally benefitted from these decisions, either by selling their homes at higher prices or by buying homes they could otherwise not have gotten mortgates for.

Do you think the American public is ever going to engage in any self-examination on this point?

Jan. 18 2010 12:11 PM
Enrique from Elizabeth, NJ

Can he elaborate on "Neo-Liberalism" honestly? How the "free-market" is neither free, nor a market...

We're having a perfect example now in Argentina, where Neo-Liberalism is being exposed -again-, with the president of the nation's central bank refusing to leave the entity after being removed by governmental decree.

He (another Harvard Financial Graduate, like all central banks' presidents all over the world), refuses to release payment for the external debt of the country, in a clear move to demonstrate -among w/ the local political opposition- that, central banks are independent entities... from the governments. And just another U.S. tool, to destabilize its patio...

So... "exporting bad economic ideas": would u please elaborate on the topic honestly, for once..? Would u?

Jan. 18 2010 10:19 AM
David Jeremiah from Petaling Jaya, Malaysia.

It is about time this topic is openly discussed. A 21st Century Global Village should not be allowed to be hijacked by a shadow supranational sovereignity. www.buyerbeaware.blogspot.com

Jan. 18 2010 06:28 AM

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