Stiglitz: Paulson Is ‘Wrong,’ Current Economic Crisis ‘Is A Failure Of Regulation’
Stiglitz: Paulson Is ‘Wrong,’ Current Economic Crisis ‘Is A Failure Of Regulation’
This week, Treasury Secretary Hank Paulson proposed a shake-up of financial regulations, a plan that had its “genesis in a yearlong effort to limit Washington’s role in the market.” The administration’s proposed new oversight, however, “would have a light touch, enabling the government to do little beyond collecting information — except in times of crisis,” the New York Times observed.
On Monday, Paulson stuck up for this hands-off regulatory approach:
I do not believe it is fair or accurate to blame our regulatory structure for the current turmoil. … I am not suggesting that more regulation is the answer.
In contrast, yesterday on CNN, Nobel Prize winning economist Joseph Stiglitz sharply disagreed with Paulson, stating that the regulatory failures were indeed to blame for our current situation: “He [Paulson] is wrong, it is a failure of regulation.” Noting the recent Bear Stearns bailout, Stiglitz made an analogy concerning the need for more effective regulation:
[T]hat’s why you have regulations. You just don’t build better hospitals. You try to stop the diseases before they lead you to be in the hospital.
Watch it:
Paulson’s plan does, however, expand power of the Federal Reserve. Stiglitz argued this decision is highly ironic considering the Fed’s actions until now:
One of the ironies of this whole discussion is they want to give more power to the Fed, the Fed which flooded the market with liquidity, which did not bring regulations until after the crisis. It’s like closing the barn door after the horse is out. And now, to reward them for their excellent job, they want to give them more power.
In response to Paulson’s proposal, Senate Banking Committee Chairman Chris Dodd (D-CT) argued it reflected misplaced priorities, a “failure to utilize the regulatory tools” such as the Home Owners Protection Act 1994 that could have prevented the current housing crisis.
The Wonk Room has more on the the Bush administration’s and conservatives’ failed laissez faire approach to regulation.
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Why did the people in this administration choose to be in government when they clearly have a blatant disregard for the mere idea of government. It’s as if they expect to have a position, title and salary yet do absolutely nothing. Ya know, like union mucky-mucks.
April 1st, 2008 at 6:57 pmThe regressives don’t want regulation, it only makes it a little harder to steal from the public.
April 1st, 2008 at 6:57 pmBy the way, has anyone ever seen Stiglitz and Mel Brooks side by side?
April 1st, 2008 at 6:58 pmWell, everyone knows Nobel Prizes have a left-wing bias.
/snark off
April 1st, 2008 at 7:01 pmDon’t forget that one of McCain’s economic advisors is Phil Gramm, who pushed for the deregulation that got us in the mess we’re in today.
April 1st, 2008 at 7:07 pmHank Paulson,yet another Nixon-era crook and bush chrony.
April 1st, 2008 at 7:14 pmJoseph Stiglitz,Nobel prize winner and among the ten most cited economists in the world.
Hmmm,who should I believe???
Hi optimus
April 1st, 2008 at 7:24 pmAs with the repeal of the Glass-Steagall act we see that deregualtion WAS the driving factor behind the current asset backed paper speculative disaster that fills balance sheets across the globe.
April 1st, 2008 at 7:31 pmOptimus Says:
April 1st, 2008 at 7:35 pm
Xisithrus,
How does deregulation in America cause a Global crisis? Please explain. As always, blame America.
You’ve already explained it, in your last sentence. Why do you hate America?
April 1st, 2008 at 7:39 pmOptimus lives in a vacuum.
April 1st, 2008 at 7:39 pmI see Trajan has YET another moniker
April 1st, 2008 at 7:52 pmHow does deregulation in America cause a Global crisis? Please explain. As always, blame America.
I am not blaming America, I am blaming greed.
April 1st, 2008 at 7:53 pmhttp://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html
Here, educate yourself.
April 1st, 2008 at 7:54 pmoff topic:
I’ve been banned at thinkprogresswatch :-)
April 1st, 2008 at 7:54 pmCorporate behavior is deregulated while more individuals are thrown into jail. Republikinks think people are meant to serve corporations, not the other way around. Meanwhile the race to privatize nearly everything under the sun seems to be another GOPig priority. Don’t forget to militarize the police….all sounds like Mussolini.
April 1st, 2008 at 7:56 pmBe careful with that Nobel Prize thing. Yeah, Stiglitz is cool, but Milton Friedman has also won a Nobel in economics, and that obviously didn’t make him a good economist. We can’t assume that just because Stiglitz won a Nobel, he knows what he’s talking about.
April 1st, 2008 at 7:56 pmI’ve been banned at thinkprogresswatch :-)
Those Stalinists!! Heh.
April 1st, 2008 at 7:56 pm7 Optimus, I think you are lost! The rebate discussion was on the other thread. Optimus…lost in the tubes of the internets and blaming the “Democrat”party. ;)
April 1st, 2008 at 7:59 pmAnd you are not fooling anyone, realimpressive!
April 1st, 2008 at 8:00 pmI didnt insult anyones mother Optimus. Not my style.
April 1st, 2008 at 8:02 pmAnd for being banned, I havent been back to your site in 3 or 4 days. So I dont know that I am, or care, really.
April 1st, 2008 at 8:03 pmBut I am rebuting your post here and now and havent seen a worthy rebuttal to my concern over the repeal of the glass-steagall act which has resulted in the debasement of the American dollar.
April 1st, 2008 at 8:05 pmmauro7inf Says:
April 1st, 2008 at 8:06 pmApril 1st, 2008 at 7:56 pm
“Be careful with that Nobel Prize thing. Yeah, Stiglitz is cool, but Milton Friedman has also won a Nobel in economics, and that obviously didn’t make him a good economist. We can’t assume that just because Stiglitz won a Nobel, he knows what he’s talking about”.
Agreed, but I’ll still give him more creedance than John Ehrlichman’s assistant from the crooked Nixon era.
Thanks for your correction Optimus.
April 1st, 2008 at 8:06 pmInvestment Banks took so called “NINJA Mortgages” (No INcome, Job, or Assets required),and repackaged them into AAA securities. AAA!! This worked fine as long as housing prices soared. When the housing bubble burst…voila’ Junk.
Regulators??? What Regulators???
April 1st, 2008 at 8:06 pmXisithrus,
I’m not an Economic Conservative. So on economics I agree with you.
Thanks, did you read the timeline I posted?
April 1st, 2008 at 8:13 pmOptimus,prime sock puppet is GONE!
April 1st, 2008 at 8:32 pm“Be careful with that Nobel Prize thing. Yeah, Stiglitz is cool, but Milton Friedman has also won a Nobel in economics, and that obviously didn’t make him a good economist. We can’t assume that just because Stiglitz won a Nobel, he knows what he’s talking about”.
October 15th, 2008 at 8:05 amAgreed, but I’ll still give acer batbl50l6 battery,acer aspire 5100 battery him more creedance than John Ehrlichman’s assistant from the crooked Nixon era.