Nobel Prize Winning Economist: Crisis As Bad As Great Depression Or Worse
Former chief economist for the world bank says “you have to be in fantasy land to say that everything is fine”
Wednesday, Sept 17, 2008
Two time Nobel-prize winner and former chief economist of the World Bank, Joseph Stiglitz has warned that the current financial crisis will continue for at least another eighteen months and in many ways represents a worse situation than the one faced by Americans during the great depression of the 1930s.
“You can paper things over for a while but eventually you have to face reality.” Stiglitz told the nationally syndicated Alex Jones show yesterday.
“This is clearly the most serious problem since the great depression and in some ways worse in terms of the financial institutions.” Stiglitz commented, referring to the fact that lenders are unwilling to take risks to finance each other because they no longer have complete access to their own undertakings let alone those of other institutions.
“The reason, in part, is that while some of the same problems that occurred during the great depression and have occurred since, such as excessive leverage, pyramid schemes, bubbles, have happened before, the so called innovation of Wall Street, the financial innovations, that were supposed to manage risk, created a kind of non transparency that is now so great that no one knows exactly the magnitude of the risk they face.”
“It is particularly bad because our financial institutions are based on trust, you put the money in the bank and you trust that you can get your money out, so trust is absolutely essential for the functioning of our financial markets and the functioning of our economy.” he continued.
“The problem is that much of the news on what is going on in the financial markets comes from those who are making money out of the financial markets. So if you were one of the people involved with Lehman Brothers or AIG, you’re going to be talking up the economy. The head of Lehman Brothers was quoted last April as saying we have turned the corner, the economy is on the uptick. And the same thing goes for the president
Former chief economist for the world bank says “you have to be in fantasy land to say that everything is fine”
Wednesday, Sept 17, 2008
Two time Nobel-prize winner and former chief economist of the World Bank, Joseph Stiglitz has warned that the current financial crisis will continue for at least another eighteen months and in many ways represents a worse situation than the one faced by Americans during the great depression of the 1930s.
“You can paper things over for a while but eventually you have to face reality.” Stiglitz told the nationally syndicated Alex Jones show yesterday.
“This is clearly the most serious problem since the great depression and in some ways worse in terms of the financial institutions.” Stiglitz commented, referring to the fact that lenders are unwilling to take risks to finance each other because they no longer have complete access to their own undertakings let alone those of other institutions.
“The reason, in part, is that while some of the same problems that occurred during the great depression and have occurred since, such as excessive leverage, pyramid schemes, bubbles, have happened before, the so called innovation of Wall Street, the financial innovations, that were supposed to manage risk, created a kind of non transparency that is now so great that no one knows exactly the magnitude of the risk they face.”
“It is particularly bad because our financial institutions are based on trust, you put the money in the bank and you trust that you can get your money out, so trust is absolutely essential for the functioning of our financial markets and the functioning of our economy.” he continued.
“The problem is that much of the news on what is going on in the financial markets comes from those who are making money out of the financial markets. So if you were one of the people involved with Lehman Brothers or AIG, you’re going to be talking up the economy. The head of Lehman Brothers was quoted last April as saying we have turned the corner, the economy is on the uptick. And the same thing goes for the president
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