Joseph Stiglitz: Common Sense, Not Austerity, in 2011. New Year’s Hope against Hope

[Better Believe It]

New Year’s Hope against Hope
Joseph E. Stiglitz
Joseph E. Stiglitz is University Professor at Columbia University and a Nobel laureate in Economics.
January 2, 2011

.... 2010 was a nightmare. The crises in Ireland and Greece called into question the euro’s viability and raised the prospect of a debt default. On both sides of the Atlantic, unemployment remained stubbornly high, at around 10%. Even though 10% of US households with mortgages had already lost their homes, the pace of foreclosures appeared to be increasing – or would have, were it not for legal snafus that raised doubts about America’s vaunted “rule of law.”

Unfortunately, the New Year’s resolutions made in Europe and America were the wrong ones. The response to the private-sector failures and profligacy that had caused the crisis was to demand public-sector austerity! The consequence will almost surely be a slower recovery and an even longer delay before unemployment falls to acceptable levels.

It has become fashionable among politicians to preach the virtues of pain and suffering, no doubt because those bearing the brunt of it are those with little voice – the poor and future generations. To get the economy going, some people will, in fact, have to bear some pain, but the increasingly skewed income distribution gives clear guidance to whom this should be: Approximately a quarter of all income in the US now goes to the top 1%, while most Americans’ income is lower today than it was a dozen years ago. Simply put, most Americans didn’t share in what many called the Great Moderation, but was really the Mother of All Bubbles. So, should innocent victims and those who gained nothing from fake prosperity really be made to pay even more?

So this is my hope for the New Year: we stop paying attention to the so-called financial wizards who got us into this mess – and who are now calling for austerity and delayed restructuring – and start using a little common sense. If there is pain to be borne, the brunt of it should be felt by those responsible for the crisis, and those who benefited most from the bubble that preceded it.

Please read the full article at:

http://www.project-syndicate.org/commentary/stiglitz134/English

[Major Hogwash]

1. "the Mother of All Bubbles."

Mama mia, I have to remember that one.
That's one for the books.

[Javaman]

2. In the 2020's the term "You Mother Bubble" will replace the current popular insult. nt

[bvar22]

3. "...unemployment remained stubbornly high "

No,
Unemployment remained predictably high.
Jobless Recovery is what you get with Tax Break "stimulus"
and Trickle Down "Free Trade" Economics.
.
.
.
but "they" already know that.
We've Been There/Done That several times over the last 30 years.
The results is always the same.