Brown must spend more - Nobel winner
Filed under: Debt, Economy, Financial Crisis, Banking
An economics Nobel prize winner has advised Gordon Brown to ignore the critics and keep on spending. It's not advice David Cameron will be giving certainly. Talking to the Independent today, Stiglitz says that if the financial markets refuse to buy British government debt, the Bank of England could snap it up instead.
Teach'em a lesson
Stiglitz is also advising the Greek government. He claims that the international community should move to support Greece rather than let it be the victim of hedge funds and speculators. He's likened it to the Asian financial crisis of the late 1990s. Speculators are certainly watching: it's estimated that short positions against the single currency have risen to more than $7.5bn at the Chicago Mercantile Exchange recently.
However Stiglitz advocates that the international community should intervene and "teach speculators a lesson". The Nobel laureate is used to being unpopular. He's frustrated that Obama and Bush kept the US banks going while, he says, showing less interest in US voters who've seen the values of their properties crumble.
Market madness
The current crisis he says has seen governments take on the risk of last resort. "When the private markets were at the point of meltdown, all risk was shifted to the government. The safety net should focus on protecting individuals; but the safety net was extended to corporations."Stiglitz's short hand here is that so-called efficient, self-adjusting (not to mention self-regulating) markets have got it all wrong and government intervention is needed, and pronto.
We haven't heard this kind of anti-market talk in a long time. Could he start a trend perhaps?
Links (opens in new window)
How to fix a recession - Independent
Speculative attacks persist - BusinessWeek
Prospect of default absurd - Telegraph
