Friday, December 3, 2010

Stiglitz on the Economist: The U.S. Is Entering A Japanese Malaise; New Normal is Very Inadequate

The Economist interviewed Joseph Stiglitz yesterday.

He says we are a long way from being normal, and a new normal that is very inadequate. It is unlikely that unemployment will come down, it is an astronomical level. Growth will not be strong enough to create jobs. It is  a version of Japanese style malaise.

Banks are not working, they are awash in excess reserves. Giving them more reserves will not cause them to lend (Q: so is the Fed's policy just to make the bank more profits?). The violations have been massive and they are undermining the rule of law in America, bad mortgages still fester.

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