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Stiglitz Says Banking Problems Are Now Bigger Than Pre-lehman

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http://www.bloomberg.com/apps/news?pid=new...id=a7UTn7JFw1qk

" Sept. 14 (Bloomberg) -- Joseph Stiglitz, the Nobel Prize- winning economist, said the U.S. has failed to fix the underlying problems of its banking system after the credit crunch and the collapse of Lehman Brothers Holdings Inc.

“In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,†Stiglitz said in an interview yesterday in Paris. “The problems are worse than they were in 2007 before the crisis.â€

“It’s an outrage,†especially “in the U.S. where we poured so much money into the banks,†Stiglitz said. “The administration seems very reluctant to do what is necessary. Yes they’ll do something, the question is: Will they do as much as required?â€

It seems the banking crisis is again making news, with the 1st Anniversary of Lehmans.

And bank shares going down so far today.

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It is breathtaking how so many people (most in government and the media) have missed the fact that the 'bailout' was a temporary measure, required in order to give some breathing space to allow structural changes. In the UK, I can see some logic - an upcoming election - in creating the illusion of a recovery on the back of a bigger crunch coming down the line in 18-24 months, but in the US?... :blink:

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Im sure banks are not valuing there AAA MBS assets at 28c on the dollar, or their AA MBS assets at 4c on the dollar either.

AAA should be those that fail to perform once every 10 million years by the way....and yet, within 15 years of their invention they have collapsed.

silly quants

Edited by Bloo Loo

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The sh!ttier, the better. We have seend it before. In 2007 (build-up to the crunch and NR bust: complacent and rallying stock market despite really bad news) and 2008 (Bear Sterns rescued in spring and euphoria up until the lehman swan...). Anyone else having a deja vu feeling?

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It is breathtaking how so many people (most in government and the media) have missed the fact that the 'bailout' was a temporary measure, required in order to give some breathing space to allow structural changes. In the UK, I can see some logic - an upcoming election - in creating the illusion of a recovery on the back of a bigger crunch coming down the line in 18-24 months, but in the US?... :blink:

I think Geithner gets it.

Not sure that will make much difference though.

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The sh!ttier, the better. We have seend it before. In 2007 (build-up to the crunch and NR bust: complacent and rallying stock market despite really bad news) and 2008 (Bear Sterns rescued in spring and euphoria up until the lehman swan...). Anyone else having a deja vu feeling?

A deja vu is usually a glitch in the Matrix. It happens when they change something

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In the U.S. and many other countries, the too-big-to-fail banks have become even bigger

It certainly does seem that the political elite have decided to try and put out the fire by throwing petrol on it and adding firewood.

We have banks too big to fail so obviously the thing to do is make them even bigger, like GS, JP Morgan etc... all took over competitors immediately after Lehman, so they got even bigger.

It certainly does appear that the entire economic system is slowly failing under its own contradictions.

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Stiglitz gave the interview before presenting a report to French President Nicolas Sarkozy that urged world leaders to drop an obsession for focusing on gross domestic product in favor of broader measures of prosperity.

GDP’s Shortcomings

“GDP has increasingly become used as a measure of societal well being and changes in the structure of the economy and our society have made it increasingly poor one,†Stiglitz said.

Assessing government’s contribution to economic output, which ranges from 39 percent in the U.S. to 48 percent in France, is one of the shortcomings of the GDP model, as is its difficulty in estimating improvements in quality of products such as cars instead of just quantity, Stiglitz said.

Similarly, increased household debt may drive up output numbers, even though that doesn’t amount to a real increase in wealth, he added.

While Stiglitz doesn’t recommend dropping GDP altogether, he wants governments to consider such matters, along with issues of environmental sustainability, in policy making.

“Most governments make a fetish out of it. If you take one message out of our report, make it avoid GDP fetishism,†he said. “The message is to encourage political leaders away from that.â€

Part of the problem is that GDP measures transactions not production, so economists think that it measures wealth and prosperity or economic output. It only measures transactions and is not properly adjusted for inflation so it always goes up when extra money is printed or the Government increases borrowing.

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IMF's Strauss-KAhn last week, Stiglitz this week.....

Must be feeding time again for the deflationary bankster monster

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“if workers do not have income, it’s very hard to see how the U.S. will generate the demand that the world economy needs.â€

Do they do Nobel prizes for stating the bleedin obvious?

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IMF's Strauss-KAhn last week, Stiglitz this week.....

Must be feeding time again for the deflationary bankster monster

We are overdue another taxpayer bailout, plus the stimulus money is about to run out.

The parasite needs feeding.

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It is breathtaking how so many people (most in government and the media) have missed the fact that the 'bailout' was a temporary measure, required in order to give some breathing space to allow structural changes. In the UK, I can see some logic - an upcoming election - in creating the illusion of a recovery on the back of a bigger crunch coming down the line in 18-24 months, but in the US?... :blink:

Obama has missed his chance - he had a mandate for some radical changes and a clean slate when he got in but he has not lived up to his 'Change - yes we can' mantra.

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We are overdue another taxpayer bailout, plus the stimulus money is about to run out.

The parasite needs feeding.

Pffft. You fick or sumpfink? It's not a taxpayer bailout any more, they've got a shiny new printer to replace all that.

Do keep up at the back!

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Pffft. You fick or sumpfink? It's not a taxpayer bailout any more, they've got a shiny new printer to replace all that.

Do keep up at the back!

Clearly there is something wrong, can't it print fast enough? Perhaps they should have got 2 or 3 to keep up?

I still think they'll have to have another bailout.

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Clearly there is something wrong, can't it print fast enough? Perhaps they should have got 2 or 3 to keep up?

I still think they'll have to have another bailout.

Are we being softened up for the news that the bailouts and QE haven't worked and were are in the same position as this time last year but with a substantially bigger overdraft?

As you old sig used to say "If DEBT is the problem REPAYMENT is the solution".

p-o-p

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Are we being softened up for the news that the bailouts and QE haven't worked and were are in the same position as this time last year but with a substantially bigger overdraft?

As you old sig used to say "If DEBT is the problem REPAYMENT is the solution".

p-o-p

Printy printy.

And lies.

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Are we being softened up for the news that the bailouts and QE haven't worked and were are in the same position as this time last year but with a substantially bigger overdraft?

As you old sig used to say "If DEBT is the problem REPAYMENT is the solution".

p-o-p

It's getting quite frightening, they have spent all this money, printed money out of thin air and still it appears that the sh1t is hurtling towards the fan.

Until we have hindsight vision it's hard to tell how bad it really is, but currently I don't feel positive that we are having any meaningful recovery and we are still covered in sh1t with more on the way.

In fact I would say we are having a sh1t recovery.

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Good to see GDP being highlighted as a poor measurement. Currently it's like - if GDP is low, borrow to get it positive and then claim the end of recession. Clearly, this is flawed if there are structural issues which need addressing (like credit saturation of the population). It's a bit like laying new track to stop the train hitting the buffers, when the train is travelling faster than you can create the track - it's a temporary solution.

In many ways, it looks like the last couple of bubbles are death throws of our broken monetary system. It's like a mortally wounded, flailing beast, trying to do anything to survive. Can we hook up another boom and last a bit longer? Perhaps, but I think it is unlikely, as we're collectively borrowed to the hilt. Regardless, it will only push judgement day off for a bit longer until the SHTF and can no longer be avoided.

Maybe we will have a long, drawn out, depression or maybe a massive collapse. Maybe we will have a spike of inflation. Maybe we will have a new currency issued, worth 4 to 1 or some such. Surely the need for monetary reform would be obvious through any route, except perhaps the first one... which makes me think why the banks will want that route, along with the government for an easy life! <_<

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It's getting quite frightening, they have spent all this money, printed money out of thin air and still it appears that the sh1t is hurtling towards the fan.

Until we have hindsight vision it's hard to tell how bad it really is, but currently I don't feel positive that we are having any meaningful recovery and we are still covered in sh1t with more on the way.

In fact I would say we are having a sh1t recovery.

An Andrex-less recovery?

p-o-p

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Softening us up for getting 'poorer' I think. i.e. Find something else to measure, preferably something that goes up and they can control 'cause they know GDP is in a protracted down trend.

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