Sunday, October 28, 2012

Joseph Stiglitz: Paulson, Bernanke and Geithner Adopted the Bankers' Rescue Plan - Which Saved the Bankers

Joseph Stiglitz, one of the most distinguished economists in the USA, is unique in his profession. He is uncompromised, principled, and vocal about the terrible policy decisions following the crisis.  A few notes:
  • There is no excuse in terms of how the rescue was handled.  Whomever designed it was either in the pocket of the banks or incompetent.
  • Even though Volcker had tamed inflation and was a very effective Fed Chairman, Reagan did not reappoint him. Reagan was looking for an ideologue. And he found one. 
  • Fannie & Freddie were latecomers to the problems and were a sideshow. It was the private banks that brought it on.

h/t Barry Ritholtz

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