Nobel Prize-winning economist Joseph Stiglitz...

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EDIT: Sorry no link Yahoo's URLs are a mess. If you go to their front page right now there is a link to Stiglitz' comments. Since Yahoo is going to be an ass, here is the article in its entirety:

More than a year after the global credit crisis, what's changed? Not much, says our guest, Nobel Prize-winning economist Joseph Stiglitz.

"In many ways, things are worse now than they were before," says Stiglitz. As outlined in his new book, "Freefall: America, Free Markets, and the Sinking of the World Economy," Stiglitz argues we're headed for another financial disaster without meaningful reform.

As Stiglitz tells Henry in the accompanying clip, we need to change the incentive structure that still rewards high risk and short-term decision making. One and a half years after the collapse of Lehman Brothers, banks are even bigger and there's less competition. The word on Wall Street remains -- bet the system and fail, taxpayers will pay for the mess, says Stiglitz, also a professor at Columbia University. As Stiglitz tells Henry in the accompanying clip, successful reform must include several key ingredients:

Stop the conflicts of interests: Stiglitz has long been a critic of the revolving door between Wall Street, the Treasury and back to Wall Street. He's also concerned about the links between White House advisers and Wall Street.

The Volcker rule: He's in favor of more regulation for banking and trading. Specifically, Stiglitz likes the Volcker rule that calls for eliminating proprietary trading by depository institutions. He's among a group of elder statesmen of trading and banking that supports the rule.

Click "more" to get Stiglitz's take on how financial history is likely to repeat itself without change now.

This I agree on and I strongly believe that this is one of Obama's greatest mistakes to date. He's been in office for over a year and there is no meaningful change to banking regulation and indeed he takes the blame because the buck stops with him. He recently gave lip service to this issue but nothing has been done. And as we've seen, actions (or lack thereof) speak a hell of a lot louder than words.

This complaint is not new but it's still every bit as valid as when first made. It's been two years now and no banking reform. What do we see, some new laws on credit cards? Whoop dee doo.

 

[Craig234]

See my sig for Stiglitz. I'm currently reading his book, 'Freefall'. Of course he's right. Fact is, Obama may not have the votes for reform, even if he wants it - that's the price of our political corruption warned about for years and ignored mostly by the right (including Democrats on the right). We sure weren't going to get it from the Republicans. The Dems might do themselves a favor by pushing the vote and showing who is for and against it - but the power of Wall Street Money has put a high price on that 'symbolic' gesture. They can't do much good if they are replaced by Wall Street Cronies.

One more reminder that what we need is more progressives elected, who will actually pass a finance reform bill.

 

[Hacp]

We need less regulation, not more. Corporate charters=government interference. New rule; banks are not allowed to get corporate charters. More risk for the CEO means less risk for the banks.

 

[PokerGuy]

So far, a lot of taxpayer money has been thrown at the problem, by both the previous and current administration, but very little has been done to actually fix the root causes. Wall street is still a mess waiting to blow up, but since the street is so cozy with the politicians and the fed, there's very little chance of anyone fixing anything.

 

[PokerGuy]

One more reminder that what we need is more progressives elected, who will actually pass a finance reform bill.

No, just another reminder that more such idiots should not be elected, we already have plenty of them. Instead of electing "progressives", lets elect someone intelligent and maybe the problem can be addressed.

 

[sandorski]

Obama recently talked about that particular reform, so he wants to get it done. Question is, how to do it with such a roadblock in the Senate?

I suspect the Republicans will refuse to do anything(literally on almost every issue) until 2012 in the hope of replacing Obama with a Republican. That President will probably initiate these exact reforms with the enthusiastic support of Republicans.

 

[PokerGuy]

Obama recently talked about that particular reform, so he wants to get it done. Question is, how to do it with such a roadblock in the Senate?

bwahahahahaha... You actually think that because he talked about something he actually wants to do something? Since when? Have you not watched the past year?

I suspect the Republicans will refuse to do anything(literally on almost every issue) until 2012 in the hope of replacing Obama with a Republican. That President will probably initiate these exact reforms with the enthusiastic support of Republicans.

Oh please, the republicans are no better and they won't initiate any such reform. They had the chance to do it for years and didn't. The dems had a filibuster-proof supermajority and did nothing to push all the supposed things they wanted, including reform. Wake up man, they are two sides of the same worthless coin.

 

[dainthomas]

I never realized that the psycho German killer from IB was named after an economist! Or is Stiglitz a common German name?

 

[sandorski]

bwahahahahaha... You actually think that because he talked about something he actually wants to do something? Since when? Have you not watched the past year?



Oh please, the republicans are no better and they won't initiate any such reform. They had the chance to do it for years and didn't. The dems had a filibuster-proof supermajority and did nothing to push all the supposed things they wanted, including reform. Wake up man, they are two sides of the same worthless coin.

Obama can't just Dictate Policy. It is obvious why his Proposals have not succeeded. It certainly is not 100% the fault of Republicans, some Democrats are to blame as well.

My Republican shenanigans scenario is based upon the Fact that certain Reforms are necessary. Everyone sees where the problems lie, now it's just a matter who gets credited with implementing them.

 

[theeedude]

We need less regulation, not more.

This sort of mentality brought us current disaster, and will keep bringing us more.

 

[MotF Bane]

This sort of mentality brought us current disaster, and will keep bringing us more.

You are being deliberately dishonest.

 

[werepossum]

I dunno, I'm pretty far right and I'm for restoring a lot of the regulations and separations put into place after the Great Depression. At the least I want to establish the precedent that if you are bailed out for being "too big to be allowed to fail", then you are also split into pieces that aren't "too big to be allowed to fail". Our current strategy of bail-outs just rewards companies for making risky (but potentially highly profitable) gambles.

As for why Obama and the Dems haven't restored these regulations, that doesn't surprise me. Although the Republicans railed out the Clinton-era HUD policies for the GSEs, Bush had six years with a Republican majority and never even tried to change them until 2004, when it was likely too late. (And even then the Pubbies let slobbering Barney Frank and the media browbeat them into dropping it.) Likewise the Democrats made no move toward restoring these regulations when they took Congress in 2006, even though they had railed against their removal. Both parties have a curious reticence toward removing policies their opponents put in place, preferring new policies - which might indicate that the two parties are closer than we would like to admit.

 

[Genx87]

Read "After The Fall:How to save capitalism from Washington and Wall Street" for another eye opener.

 

[fornax]

No, just another reminder that more such idiots should not be elected, we already have plenty of them. Instead of electing "progressives", lets elect someone intelligent and maybe the problem can be addressed.

You understand, of course, that "intelligent" has been a dirty word in the republicans' dictionary for quite some time now. Apparently, Palin is the intellectual model of vogue among them today. Besides, Obama is intelligent, but not a president's material. Too weak, indecisive, wants to be liked, and has shown poor judgment in selecting his team.

 

[PokerGuy]

You understand, of course, that "intelligent" has been a dirty word in the republicans' dictionary for quite some time now. Apparently, Palin is the intellectual model of vogue among them today. Besides, Obama is intelligent, but not a president's material. Too weak, indecisive, wants to be liked, and has shown poor judgment in selecting his team.

No, intelligent is not a dirty word in the republican dictionary, nor has it ever been. Elitist people who think they are more intelligent that the rest of us and should therefore be allowed to run everyone's lives are the problem.

Nobody has ever held up Palin as an example of great intelligence, that's just a left wing strawman. Someone does not have to be extremely intelligent to be a great leader anyway, some of the best leaders over the centuries were probably not all that intelligent, but rather adept at communicating, reading people and understanding them. Leadership is not the same as intelligence. Obama is very intelligent but not a leader.

 

[rudder]

This sort of mentality brought us current disaster, and will keep bringing us more.

Basing reforms on the notion that deregulation caused this economic crisis will only mean that history will repeat itself.

 

[Thump553]

Even with Chris Dodd (admittedly a former poster child for badboy clubbiness with Wall Street) seriously trying to make meaningful Wall Street reform his swan song legacy, and even though the Dodd bill is substantially through the preliminary stages in Congress, I have grave doubts about any meaningful reform.

A combination of too many politicians beholden to Wall Street money and the GOP's policy of opposing anything the Obama administration supports means no reform, not even a weak one, I'm afraid.

And I agree with Werepossum-our straying away from financial regulation (especially during the Clinton years) needs to be reversed. At least Paul Volker is on board with this, and Obama is listening to him now.

 

[rudder]

And I agree with Werepossum-our straying away from financial regulation (especially during the Clinton years) needs to be reversed. At least Paul Volker is on board with this, and Obama is listening to him now.

How so? Are you talking about the Gramm-Leach-Bliley Act? Look at two of the largest failures.... Lehman brothers and Bear Stearns. Had either of them had a large source of deposits they could have survived their liquidity problems and maybe rode it out. And Merrill Lynch survived because Bank of America was allowed to buy them.

And increased regulations led to banks using more derivatives.

 

[CLite]

How so? Are you talking about the Gramm-Leach-Bliley Act? Look at two of the largest failures.... Lehman brothers and Bear Stearns. Had either of them had a large source of deposits they could have survived their liquidity problems and maybe rode it out. And Merrill Lynch survived because Bank of America was allowed to buy them.

And increased regulations led to banks using more derivatives.

Lehman Brothers Bank, FSB (a shell in Delaware) had the 10th largest deposit total in the world, I wish I could find a link, a friend of mine who used to work at Lehman was describing it to me.

The problem is they over-leveraged massively, and despite having a large deposit total weren't able to ride it out. Part of the problem is of course mark to market imo, but you can't say they didn't have a significant source of deposits.

 

[Acanthus]

Lehman Brothers Bank, FSB (a shell in Delaware) had the 10th largest deposit total in the world, I wish I could find a link, a friend of mine who used to work at Lehman was describing it to me.

The problem is they over-leveraged massively, and despite having a large deposit total weren't able to ride it out. Part of the problem is of course mark to market imo, but you can't say they didn't have a significant source of deposits.

They were both leveraged in excess of 25:1. No amount of deposits could save them in a housing-heavy portfolio.

AIG was nearly 50:1 deep in derivatives.