Joseph Stiglitz: Nationalized Banks Are "Only Answer"Friday 06 February 2009
Nationalized banks are the "only answer," economist Stiglitz says. In an interview with Deutsche Welle, Nobel-winning economist Joseph Stiglitz talks about nationalizing banks, the outlook for developing countries, and the need for an international financial regulator.
DW-WORLD: Many experts fear that while things are bad now, we haven't seen the worst of the crisis yet. Do you share the belief that we are facing a long decline that could rival the Great Depression?
Joseph Stiglitz: We live in a very different world than during the Great Depression. Then, we had a manufacturing economy. Now we have a service-sector economy. Many people in the in the United States are already working part time because they can't get full-time jobs. People are talking more about the "comprehensive" measures of unemployment, and these show unemployment at very high levels, around 15 percent. So it clearly is a serious downturn.
Another big difference between now and the Great Depression is then we didn't have a safety net. Now we have unemployment insurance.
Economists Nouriel Roubini and Nassim Taleb, who predicted the global economic downturn, have called for a nationalization of banks in order to stop the financial meltdown. Do you agree?
The fact of the matter is, the banks are in very bad shape. The U.S. government has poured in hundreds of billions of dollars to very little effect. It is very clear that the banks have failed. American citizens have become majority owners in a very large number of the major banks. But they have no control. Any system where there is a separation of ownership and control is a recipe for disaster.
Nationalization is the only answer. These banks are effectively bankrupt.
The Institute of International Finance estimates that the private flow of capital to developing countries will shrink by about two-thirds. Are we facing a situation where we could see a total collapse of many developing countries?
I think many governments of emerging nations actually have a much better central banking system than the United States. They realized the risks of excessive leverage, excessive dependance on real estate lending and so they took much more prudent actions. Many developing countries also built up large reserves and are in a better position to meet this crisis than they were a decade ago.'
Lees verder: http://www.truthout.org/020609R
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