On the Money

If you want a good summary of our overall economic challenge, read this interview.

It comes from CNNMoney.com, a David Futrelle interview of Columbia University, Nobel Prize winning economics professor Joseph Stiglitz. Here are some highlights.

... the bailouts didn't do what they were intended to do. For one thing, we put no conditions on the banks, and so much of the money was squandered. It went to dividends and bonuses. They didn't do more lending.

... it's likely that we will lose hundreds of billions of dollars. AIG is almost certainly not going to pay back the $180 billion taxpayers put in. Even if we get back nominally what we put in, we won't be compensated for the risk we took. Moreover, since we bailed out big banks, while letting smaller banks fail, the problem of "too big to fail" has gotten worse.

Unemployment remains very high. The pace of home foreclosures is likely to increase this year over last. A quarter of all homeowners are underwater on their mortgages, and problems are starting to hit commercial real estate as well.

I would say that the likelihood that we have a strong recovery before the middle of the decade may be a rosy scenario.

Worrying excessively about deficits during a crisis is counterproductive. The International Monetary Fund went into Argentina during its crisis a decade ago, crying about deficits, deficits, deficits, and pushed that economy over the cliff.

For a fraction of the amount we're talking about -- either the cost of the wars, or the cost of the bailouts, or the cost of the financial sector's mismanagement -- we could have put Social Security on firm financial ground for the next 100 years.

Just one thing: the introduction to the interview (actually, it is highlights, too, of a longer interview) puts Stiglitz to the left of the Obama Administration. The editors are doing their job, and they probably defined his place on the political spectrum correctly. But it is my contention (and if I can continue this blog I will pound away at this point again and again) that the labels of left and right are being  used only to divide us. It is an intentional act (though probably not for this interview).

Yes, focus on the most contentious issues and we seem to be a divided country. Take the list of what all Americans believe in as a whole, and we are as united as any group of 300,000,000 plus people can be. Everybody who is unemployed wants a job, and that is not left, right or center.

Work is part of what makes us civilized human beings.