Joseph Stiglitz on Prime Time

wjc

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If anyone did not see Mark Little's interview with Prof. Joseph Stiglitz on Prime Time tonight I would urge them to view it on the RTE player. He confirms what most of us already know about NAMA, that it is a bailout for bank, shareholders and bondholders. This guy has a Nobel Prize in economics while the people putting us into debt slavery for the rest of our lives can't even add their expenses properly. This Nama being the only show in town is just not true.
http://www.rte.ie/player/#
 
Well, unless you can come up with alternative that ticks all the boxes it definitely is true.

:)

ONQ.
 
The professor preaches that capitalism should be allowed run its course, the banks should be allowed go belly up. Sorry, not even FG or Labour are arguing that, good academic stuff I'm sure but we live in the real world.

He also argues that NAMA getting its money back in 10 years is really a loss because of time value, he is ignoring that NAMA washes its face in between, I presume he has not read the detail.

Finally, when he goes on about polluting our most precious asset, the air, I become convinced that this is yet another crank academic.
 
The professor preaches that capitalism should be allowed run its course, the banks should be allowed go belly up. Sorry, not even FG or Labour are arguing that, good academic stuff I'm sure but we live in the real world.

He also argues that NAMA getting its money back in 10 years is really a loss because of time value, he is ignoring that NAMA washes its face in between, I presume he has not read the detail.

Finally, when he goes on about polluting our most precious asset, the air, I become convinced that this is yet another crank academic.


umm, i am no economist but i think what he means is that the 55billion or so that the government is borrowing to pay for nama could instead be invested over 10 years to achieve a significant return (after paying the interest due on the loan). NAMA washing its face just means that it can cover the interest on the loan (not guaranteed that it can do this either if the performing loans stop performing). What the nobel prize winning guy and former chief economist of world bank means is that properly invested, 55 billion should generate a significant return over 10 years and which would provide the upside for borrowing such a large amount of money. In contrast, the best we can hope for from nama is that we dont lose money and the worst is that we lose a lot of money.
 
While a good understanding of economics is very important for a senior politician an academic qualification in the field is no guarantee that they will be any good at running the economy. Garret Fitzgerald, a man I like and admire, was in his day an economics lecturer in UCD. He holds a doctorate in the field. He was also utterly useless at running the economy. Ray MacSharry had a basic education and worked in the hauliage business. He was perhaps the best finance minister of the last 30 years. The other really good finance minister we had in the last few decades was Ruairi Quinn, an architect.
 
The dismissive responses lack credibility to be honest as is the comparison with Garrett Fitzgerald.

A Nobel prize is a little bit more of an achievement than being an economics lecturer in UCD.

This guy was head economist for Clinton as well as running the World Bank.

The "real world" gibe is also silly. In the real world banks are liquidated all the time - I think they've reached a 100 in the US so far this year alone.

Claiming that NAMA will "wash it's face" is disingenuous. If this were even vaguely probable, there would be no need for NAMA.

Quite a few commentators outside of Ireland have either directly or diplomatically criticised the NAMA strategy including the likes of Bo Lungdren (the guy who steered Sweden out of their mess).
 
Okay, darag, so you think he's right, capitalism should be allowed run its course, all our banks should be allowed go bust, we should accept the disaster that theoretical capitalism decrees for out of the armagedon we will rise with superb credit ratings, albeit in complete economic chaos
 
I found the main thrust of his arguement was based on the fact that in the US you can strategically default on a mortgage with no consequence other than the loss of your home. The same rules do not apply here.
 
How about this for an idea, Duke. Try arguing the simple point I made (that this guy has credibility and that your glib "head in the clouds/academic" dismissal is ignorant) instead of telling me what I believe.
 
Just an aside. I bought some Bank of Ireland shares 11 months ago. Since then they have had to write down billions of losses and would be bankrupt only for NAMA. Today my shares are worth 30% more than I paid for them. How can this be fair? NAMA is a transfer of wealth from the taxpayer to bank shareholders and bondholders. On another point, Arthur Cox solicitors are acting as legal advisors to the Government , Bank of Ireland and NAMA. Same old croneyism is still rife. The NAMA write down was probably decided on the 17th fairway of the K Club! Wake up Taxpayers before it is too late!!
 
Just an aside. I bought some Bank of Ireland shares 11 months ago. Since then they have had to write down billions of losses and would be bankrupt only for NAMA. Today my shares are worth 30% more than I paid for them. How can this be fair? NAMA is a transfer of wealth from the taxpayer to bank shareholders and bondholders. On another point, Arthur Cox solicitors are acting as legal advisors to the Government , Bank of Ireland and NAMA. Same old croneyism is still rife. The NAMA write down was probably decided on the 17th fairway of the K Club! Wake up Taxpayers before it is too late!!

Where to begin! You should read up on how the stock market works. Just because your shares have gone up by 30% doesnt mean that money have somehow magically flowed out of the Governements pockets and into yours.
 
Where to begin! You should read up on how the stock market works. Just because your shares have gone up by 30% doesnt mean that money have somehow magically flowed out of the Governements pockets and into yours.
Where to begin? Yes it does.

PS It's you pocket and my pocket...
 
I've read this guy's book on globalisation and its an excellent balanced read in which he foresaw a lot of our current global problems.

NAMA is very risky but we have to move forward.

Anyway realistically our government have no stomach for anything else - it is there way of shoving the problem aside and burying mistakes for now - so that there cosy existence isn't too upset.
 
Try arguing the simple point I made that this guy has credibility...
Remember LTCM? The greatest misjudgement in financial markets' history. The genius behind that had a Nobel Prize in economics. Stig is about 9 months behind the current state of play in the Irish debate. I don't think any political parties are still arguing to let the banks go bust.
 
Do not have to let banks go burst. Can nationalise them or "pre-privatise" if that sounds better. "pre-privatise" might sit better with the "haircut" and "nama will wash its face" people. All stiglitz said was that shareholders should be wiped out and that bondholders would receive equity in a debt for equity swap.
 
Remember LTCM? The greatest misjudgement in financial markets' history. The genius behind that had a Nobel Prize in economics. Stig is about 9 months behind the current state of play in the Irish debate. I don't think any political parties are still arguing to let the banks go bust.

duke, have you read the finegal alternative to nama - reads very like what the stigmeister was proposing. i am not affiliated to any party just pointing out the stigman seems to be supporting the finegael model (finegeal are ven advertising this fact on their website)

duchess of jam
 
Rusty, I don't want to get caught up in this bondholder debate again, but Fine Gael are now accepting that the amount involved is small (only the subbies). It may satisfy stiggy's theological devotion to capitalism but toasting the shareholders and subholders (more than they already have) does not actually amount to a whole hill of beans.
 
Rusty, I don't want to get caught up in this bondholder debate again, but Fine Gael are now accepting that the amount involved is small (only the subbies). It may satisfy stiggy's theological devotion to capitalism but toasting the shareholders and subholders (more than they already have) does not actually amount to a whole hill of beans.
okey dokey dukey. not being an expert, it just looks like a number of people are lining up against nama, stiggy, macwilliams etc.
privatising the gains and socialising the losses were stiggys evaluation of nama.. probably more complicated than that but it looks that way to my non-expert eye.
rusty
 
While we're on the subject of capitalist, isn't that where if you invest in a business and you make a bad decision you go bust, except in Ireland where you get rewarded for really really big 'investment' decisions that turn sour.

In relation to shares in BofI going up, as I'm rather naive I thought the share increase was directly as a result of taxpayers money being transferred to shareholders but then I'm no economist or expert, only a mere ignorant taxpayer.
 
I think the main problem is that the media are being disingenuous to NAMA in implying the government are saying this is the perfect answer. What they're actually saying is this is the best solution out of a bad lot. It's not perfect, but it's the one that has the potential to have less negatives for Ireland than other models.

Mind I do like Stiglitz, I think he talks sense especially in terms of regulation of a free market. He gets protrayed as a Socialist for showing how historically lack of regulation (and enforcement) has led to major collapses.

Though if we are to get behind his views on NAMA, as the left seem to, I wonder if they've actually read any of his stuff beyond his CV and the Nobel Prize? Because they'd see that he has written a very good and very convincing piece on how in recession wages must fall. In fact it is the lack of willingness on behalf of employees to accept wages, combined with the employer's concerns at facing possible industrial action, that causes greater unemployment in recessions.

However, it's nice to cherry pick esteemed economists when it suits a particular agenda.
 
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