“For every single member of Congress, the financial industry has five lobbyists. For the last few years, the industry has spent more than $5 billion in campaign contributions to members of Congress. So, it’s very clear they had incentive to eliminate regulation. The self-interest and greed of the bankers did not lead to economic efficiency.”
In the last economic crisis, a little over a decade ago, the U.S. “exported our way out of it,” says Columbia University Professor Joseph Stiglitz, who was awarded the 2001 Nobel Prize in economics.
“With robust exports, the downturn was relatively short. What’s unusual about this downturn … is that there is downturn in almost every other part of the world, and it’s very difficult for everyone to export their way out of the downturn.”
Stiglitz, who spoke at Mississippi State University, has been a critic of the way the current crisis — “a combination of an economic crisis and a financial crisis” —has been handled, but says, “I think there’s still opportunity to correct where we’ve been going.”
The crisis, he says, was caused by banks making loans based on little or no collateral and creation of a lot of esoteric hybrid financial instruments. “When these all went bad, particularly when the housing bubble broke, they discovered they were, in effect, bankrupt. And the government came in and rescued them.”
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