Joseph Stiglitz (Nobel Prize winner) on the banks
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John Carson wrote:
Stiglitz filled economic journals for decades with innovative work on the economics of information and incentives
Aren't you the guy who dismissed Stan because he was talking about books written 15 years ago? Though I have far less knowledge of the man's career, it is obvious from the list of his publications and their dates, that his heyday was a quarter of a century ago.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
Oakman wrote:
Aren't you the guy who dismissed Stan because he was talking about books written 15 years ago?
15 years ago on a different subject. Stan was just looking for an ideologically congenial quote and hunted around for one wherever he could find it.
Oakman wrote:
Though I have far less knowledge of the man's career, it is obvious from the list of his publications and their dates, that his heyday was a quarter of a century ago.
I don't know about a quarter of a century, but as an economic theorist doing pathbreaking work, his best years are certainly behind him. Creativity declines with age, most dramatically with pure mathematicians who are "old" at age 30. However, knowledge, judgement and wisdom can improve until late in life (I'm getting better all the time :) ). That is why many people follow the path of being theorists in their youth and policy analysts and administrators in later life.
John Carson
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John Carson wrote:
The current financial crisis is because the banks have had the wrong "marching orders".
You've never said anything I agreed with more. And since they received those orders via Fannie Mae and Freddie Mac, you'll forgive me for not understanding why you think the same people being in charge in both the public and private sectors (Geitner helped cause the problem, for pete's sake. For that matter Stiglitz was part of the government when it was determined that people who had their cars repo'd deserved to be able to buy a house. Maher doesn't need to tell the people they are part of the government; he needs to tell the aristocrats in government that they are just people. He's right when he says that Park Rangers work for the government - but please ask Nancy Pelosi why the people are supposed to work to pay for her government supplied jumbo-jet that she uses to fly home every weekend.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
Oakman wrote:
And since they received those orders via Fannie Mae and Freddie Mac
The problems were system wide.
Oakman wrote:
you'll forgive me for not understanding why you think the same people being in charge in both the public and private sectors (Geitner helped cause the problem, for pete's sake. For that matter Stiglitz was part of the government when it was determined that people who had their cars repo'd deserved to be able to buy a house.
It is silly to hold everyone in the government accountable for everything that the government did. But I agree that there are people in government that bear some responsibility for what went wrong, and that appears to include both Geitner and Summers (for example, Summers, I believe, supported the erasing of the distinction between investment banks and regular banks, which promoted high risk behaviour). But I don't see it principally as a government vs private sector issue. I see it principally as a sensible people in government vs not-so-sensible people in government issue. I think that the tepid policies from Geitner and Sumners are a continuation of the deregulatory mindset they have carried all along and which is at the heart of the problem. Fundamentally, the banking system is in diabolical trouble and I want the government to act decisively to fix it. Whatever screwups have taken place in the past, I want people to step up and acknowledge the full extent of the mess created and take decisive action to set the economy on the path to recovery. I think that, absent that, things could get very bad.
John Carson
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Oakman wrote:
Aren't you the guy who dismissed Stan because he was talking about books written 15 years ago?
15 years ago on a different subject. Stan was just looking for an ideologically congenial quote and hunted around for one wherever he could find it.
Oakman wrote:
Though I have far less knowledge of the man's career, it is obvious from the list of his publications and their dates, that his heyday was a quarter of a century ago.
I don't know about a quarter of a century, but as an economic theorist doing pathbreaking work, his best years are certainly behind him. Creativity declines with age, most dramatically with pure mathematicians who are "old" at age 30. However, knowledge, judgement and wisdom can improve until late in life (I'm getting better all the time :) ). That is why many people follow the path of being theorists in their youth and policy analysts and administrators in later life.
John Carson
John Carson wrote:
Stan was just looking for an ideologically congenial quote and hunted around for one wherever he could find it.
Possibly. But I, too, was looking at other examples of his work to get a handle on his point-of-view. There are very few sciences where that is more important a consideration than in economics.
John Carson wrote:
I'm getting better all the time
Me, too. ;)
John Carson wrote:
That is why many people follow the path of being theorists in their youth and policy analysts and administrators in later life.
Besides, it pays better. Management always votes itself a raise before considering those who actually work for a living.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
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Oakman wrote:
And since they received those orders via Fannie Mae and Freddie Mac
The problems were system wide.
Oakman wrote:
you'll forgive me for not understanding why you think the same people being in charge in both the public and private sectors (Geitner helped cause the problem, for pete's sake. For that matter Stiglitz was part of the government when it was determined that people who had their cars repo'd deserved to be able to buy a house.
It is silly to hold everyone in the government accountable for everything that the government did. But I agree that there are people in government that bear some responsibility for what went wrong, and that appears to include both Geitner and Summers (for example, Summers, I believe, supported the erasing of the distinction between investment banks and regular banks, which promoted high risk behaviour). But I don't see it principally as a government vs private sector issue. I see it principally as a sensible people in government vs not-so-sensible people in government issue. I think that the tepid policies from Geitner and Sumners are a continuation of the deregulatory mindset they have carried all along and which is at the heart of the problem. Fundamentally, the banking system is in diabolical trouble and I want the government to act decisively to fix it. Whatever screwups have taken place in the past, I want people to step up and acknowledge the full extent of the mess created and take decisive action to set the economy on the path to recovery. I think that, absent that, things could get very bad.
John Carson
John Carson wrote:
The problems were system wide.
Granted. But Fannie and Freddie, those quasi-governmental organizations, were in the forefront and leading by example.
John Carson wrote:
It is silly to hold everyone in the government accountable for everything that the government did.
Of course it is. Just as silly as it is to give Nancy Pelosi credit because some Park Ranger scares off a pedophile, as Maher did.
John Carson wrote:
I see it principally as a sensible people in government vs not-so-sensible people in government issue.
Of course and my experience suggests that there are some of each in every branch of goevrenment. However, in the bureacracy, it appears that a fair amount of promotion by attrition goes on. It doesn't matter if you are barely competent, those better qualified for your job are likely to go elsewhere leaving your career path clear of obstacles. This is true, to some extent, in any large company where responsibilities are blurred, but it seems especially true in the government.
John Carson wrote:
Whatever screwups have taken place in the past, I want people to step up and acknowledge the full extent of the mess created and take decisive action to set the economy on the path to recovery.
Me, too. I am sick and tired of both the left and the right jockying for position or having ideological food fights. But I think there needs to be a plan for what should be done, with easily quantifiable goals, milestones, and a clear path to a defined outcome. To the best of my knowledge, no-one has come up with that. "Throw money on the fire until we smother it" is no more a plan than "do a raindance and hope." Yet these seem to be the choices most often embraced by those whom we would hope have the country's best interest at heart.
John Carson wrote:
I think that, absent that, things could get very bad.
I suppose, it ultimates comes to - is there anything that can be done?
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
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Stan Shannon wrote:
Frankly, I don't believe for one minute that you have a clue what this guy is even saying, John.
I tremble in fear before your assessment of people's economic understanding.
Stan Shannon wrote:
All you hear is 'bank nationalization' which you support because to control the banks is to control the economy and to control the economy is to control the social agenda. And its the social agenda that you care about.
Actually, I care more about the economic agenda than the social agenda. I'm old fashioned. I was economically left wing long before I developed any sympathy for the left wing social agenda.
Stan Shannon wrote:
Second, if bank nationalization does not break constitutional ground, than we are in the midst of the greatest constitutional crisis in American history. The federal government of the United States of America does not have the actual legal authority to nationalize anything.
What Stiglitz is proposing is just a variation on normal bankruptcy proceedings and one that has occurred before. Read the first few paragraphs of page 3 again. For the government to take over failed companies is nothing new.
John Carson
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Stan Shannon wrote:
Frankly, I don't believe for one minute that you have a clue what this guy is even saying, John.
I tremble in fear before your assessment of people's economic understanding.
Stan Shannon wrote:
All you hear is 'bank nationalization' which you support because to control the banks is to control the economy and to control the economy is to control the social agenda. And its the social agenda that you care about.
Actually, I care more about the economic agenda than the social agenda. I'm old fashioned. I was economically left wing long before I developed any sympathy for the left wing social agenda.
Stan Shannon wrote:
Second, if bank nationalization does not break constitutional ground, than we are in the midst of the greatest constitutional crisis in American history. The federal government of the United States of America does not have the actual legal authority to nationalize anything.
What Stiglitz is proposing is just a variation on normal bankruptcy proceedings and one that has occurred before. Read the first few paragraphs of page 3 again. For the government to take over failed companies is nothing new.
John Carson
John Carson wrote:
What Stiglitz is proposing is just a variation on normal bankruptcy proceedings and one that has occurred before. Read the first few paragraphs of page 3 again. For the government to take over failed companies is nothing new.
Taking over the bulk of the banking industry is hardly the same as taking over some arbitrary failed company, which in and of itself is of questionable constitutional validity. Frankly, I think a if serious coalition of states and/or citizens were to sue on the basis of being required to pay taxes for any such activity they would probably win. There is nothing in the constituion that empowers the federal government to force me to pay for someone else's failed business. It ain't there - judicial review or no judicial review.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
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John Carson wrote:
What Stiglitz is proposing is just a variation on normal bankruptcy proceedings and one that has occurred before. Read the first few paragraphs of page 3 again. For the government to take over failed companies is nothing new.
Taking over the bulk of the banking industry is hardly the same as taking over some arbitrary failed company, which in and of itself is of questionable constitutional validity. Frankly, I think a if serious coalition of states and/or citizens were to sue on the basis of being required to pay taxes for any such activity they would probably win. There is nothing in the constituion that empowers the federal government to force me to pay for someone else's failed business. It ain't there - judicial review or no judicial review.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
There is nothing in the constituion
Is there anything in your constitution that defines how the Federal Government needs to act in some National Emergency? Consider this, this crisis could be considered in the same light as a National Emergency. After all if the banks were allowed to fail, how many multi-nationals, nationwide businesses, independent businesses and private individual funds (savings, 401K's, insurances of all kinds etc) would also vanish, let alone the processing of safe as well as unsound mortgages. And if the banking system as it does now exists then did not exist, how would the Federal Government distribute the fail-safe compensation for such savers. So causing the banks to be saved, even part/full Nationalized (albeit howsoever temporary) is a price that has to be paid especially when national and international interests depends so much on it. A judicial review as well as any criminal investigations can indeed take place, but I would have thought the best time for that would be when things have normalized and thus quiet.
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John Carson wrote:
I was economically left wing
Alright, I'm interested in what that means?
led mike wrote:
Alright, I'm interested in what that means?
I'm now 50. When I was 20, I was gung ho for full blown socialism --- government ownership of all major industry. These days my views are complicated and more pragmatic. I favour redistributive taxation and believe in effective government regulation. I also reject the view that the government always does things worse than the private sector. On the other hand, I am sensitive to the fact that government regulations often don't achieve what is claimed for them, either because those promoting them don't understand economics or because those promoting them have a real agenda different from their claimed agenda. Moreover (and this was true even when I was 20), I think that just handing over welfare and demanding nothing in return is damaging both economically and morally. I am more concerned with outcomes than with ideological purity.
John Carson
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led mike wrote:
Alright, I'm interested in what that means?
I'm now 50. When I was 20, I was gung ho for full blown socialism --- government ownership of all major industry. These days my views are complicated and more pragmatic. I favour redistributive taxation and believe in effective government regulation. I also reject the view that the government always does things worse than the private sector. On the other hand, I am sensitive to the fact that government regulations often don't achieve what is claimed for them, either because those promoting them don't understand economics or because those promoting them have a real agenda different from their claimed agenda. Moreover (and this was true even when I was 20), I think that just handing over welfare and demanding nothing in return is damaging both economically and morally. I am more concerned with outcomes than with ideological purity.
John Carson
Yes yes and
John Carson wrote:
I am more concerned with outcomes than with ideological purity.
Fracking right fracking on brother!!!!! Thanks for taking the time to respond. I found that a very enjoyable read. What you might find interesting is that I have arrived at the same place as you however my journey started at the other end of the spectrum, that being conservative. In the same vain as your somewhat summarized post I would say the following. When I was 20 I was a gung ho conservative -- government should stay out of everyone's business. I still believe that conservative logic is pragmatic, but not at the cost of not actually solving problems. Every problem that needs solving, needs to be solved as best we can and as fiscally conservative as we can (my definition of pragmatic). The lowest cost solution to the government is for private industry to solve the problem without any government funding. From there all other potential solutions elevate the cost to the government to varying degrees. So we always try to find a lowest cost solution, but not by sacrificing quality. Currently of course washington does not work anything like this. Changing the subject to your last post to stan. You suggest the current problem might be classified as an emergency. Many people seem to agree with that. That does cast things in a different light, however washington (the system) seems to be approaching this in the same old fashion with everyone getting in their own earmarks. During an emergency seems in very bad taste to put it mildly. I am interested to see what Stan's reply is.
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Yes yes and
John Carson wrote:
I am more concerned with outcomes than with ideological purity.
Fracking right fracking on brother!!!!! Thanks for taking the time to respond. I found that a very enjoyable read. What you might find interesting is that I have arrived at the same place as you however my journey started at the other end of the spectrum, that being conservative. In the same vain as your somewhat summarized post I would say the following. When I was 20 I was a gung ho conservative -- government should stay out of everyone's business. I still believe that conservative logic is pragmatic, but not at the cost of not actually solving problems. Every problem that needs solving, needs to be solved as best we can and as fiscally conservative as we can (my definition of pragmatic). The lowest cost solution to the government is for private industry to solve the problem without any government funding. From there all other potential solutions elevate the cost to the government to varying degrees. So we always try to find a lowest cost solution, but not by sacrificing quality. Currently of course washington does not work anything like this. Changing the subject to your last post to stan. You suggest the current problem might be classified as an emergency. Many people seem to agree with that. That does cast things in a different light, however washington (the system) seems to be approaching this in the same old fashion with everyone getting in their own earmarks. During an emergency seems in very bad taste to put it mildly. I am interested to see what Stan's reply is.
led mike wrote:
Changing the subject to your last post to stan. You suggest the current problem might be classified as an emergency. Many people seem to agree with that. That does cast things in a different light, however washington (the system) seems to be approaching this in the same old fashion with everyone getting in their own earmarks. During an emergency seems in very bad taste to put it mildly.
The thing about earmarks is that they represent 1 to 2% of spending. I agree that they give spending bills a bad look, but I think that making a huge deal out of them in the current climate is an even worse look. I very much believe that this is an emergency and that the rules change as a result. David Brooks, a pragmatic conservative, has an interesting article on ths whole thing. http://www.nytimes.com/2009/03/10/opinion/10brooks.html?_r=1[^]
John Carson
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led mike wrote:
Changing the subject to your last post to stan. You suggest the current problem might be classified as an emergency. Many people seem to agree with that. That does cast things in a different light, however washington (the system) seems to be approaching this in the same old fashion with everyone getting in their own earmarks. During an emergency seems in very bad taste to put it mildly.
The thing about earmarks is that they represent 1 to 2% of spending. I agree that they give spending bills a bad look, but I think that making a huge deal out of them in the current climate is an even worse look. I very much believe that this is an emergency and that the rules change as a result. David Brooks, a pragmatic conservative, has an interesting article on ths whole thing. http://www.nytimes.com/2009/03/10/opinion/10brooks.html?_r=1[^]
John Carson
John Carson wrote:
The thing about earmarks is that they represent 1 to 2% of spending.
Yep, knew that.
John Carson wrote:
I agree that they give spending bills a bad look
True of course but my point was not that, but rather what it says about the people that make sure they get theirs in. ;)