Спасать банки можно было по-другому

Sep 17, 2018 Rob Johnson , George Soros

НЬЮ-ЙОРК – Недавний публичный обмен мнениями между Джо Стиглицем и Ларри Саммерсом по поводу «вековой стагнации» и её связи с вялым восстановлением экономики после финансового кризиса 2008-2009 годов крайне важен. История не повторяется, а рифмуется, якобы сказал однажды Марк Твен. Но в свете нашей новейшей экономической истории выясняется, что, перефразируя Боба Дилана, история не рифмуется, она грубо ругается.

Стиглиц и Саммерс явно согласны, что проводившаяся политика оказалась неадекватна для устранения структурных проблем, которые обнажил и усилил этот кризис. Их дискуссия коснулась размеров бюджетных стимулов, роли финансового регулирования и важности распределения доходов. Но есть ещё несколько дополнительных вопросов, которые следует тщательно рассмотреть.

Мы считаем, что была упущена важнейшая возможность в тот момент, когда принятые в ответ на кризис действия привели к перекладыванию основного бремени коррекции на плечи должников, а не кредиторов. Это способствовало той затяжной стагнации, которая последовала за кризисом. Долгосрочные социальные и политические последствия того факта, что данная возможность была упущена, оказались весьма глубокими.

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Rob Johnson

Writing for PS since 2016
3 Commentaries

Rob Johnson is President of the Institute for New Economic Thinking and a senior fellow and Director of the Global Finance Project for the Franklin and Eleanor Roosevelt Institute.

George Soros

Writing for PS since 1997
118 Commentaries

George Soros is Chairman of Soros Fund Management and the Open Society Foundations. A pioneer of the hedge-fund industry, he is the author of many books, including The Alchemy of Finance, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means, and The Tragedy of the European Union: Disintegration or Revival? His most recent book is In Defense of Open Society (Public Affairs, 2019).

Debate: Stiglitz vs. Summers on Secular Stagnation The Big Picture

Debate: Stiglitz vs. Summers on Secular Stagnation

With the tenth anniversary of the collapse of Lehman Brothers approaching, the unresolved controversy surrounding the causes of, and responses to, the 2008 financial crisis has returned to the fore. Joseph Stiglitz and Lawrence Summers differ on whether the slow recovery was a strictly economic phenomenon, or evidence of a larger political failure; and Roger E.A. Farmer offers another way to think about the issue going forward.

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Eva Porras Sep 25, 2018

The problem could have been solved by making available additional affordable funds to perspective homeowners so that these could have accessed cheaper funds to help downsize the pool of available real estate assets.
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Gordon Shedd Sep 23, 2018

It is doubtful that there will be any further response to the elements of the financial crisis (other than conservative rollbacks of regulations intended to prevent another such event). However, that doesn't mean that there isn't another national economic crisis bubbling just beneath the surface. It is talked about, and acknowledged. It causes the suppression of household consumption, and even household formation, by the younger half of the US workforce. And yet we do nothing to address it. It is student debt.
Business-school graduates have taken over and shifted the emphasis of our university systems from educating citizens to maximizing revenues. The MBA/administrators identified 18-year-old children with unlimited borrowing power as a resource to be cultivated and harvested. Whether the child graduates or not, gets a job or not, succeeds or not, the university realizes their revenue up front, before, or at worst, simultaneously with, the delivery of their "product."
The university systems we know today will eventually crumble under the inadequacy of their ROI, as some top-tier universities decide to deliver lectures leading to credentials via online classes. The end cannot come soon enough for our economy.
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Paul Friesen Sep 19, 2018

There was a need to bail out the banks, but absolutely no need to bail out the bankers. Simply allowing the institutions to fail would have removed a huge amount of money from the system. Many people would have lost all their savings and unemployment would have been far worse than it was. But those who created the crisis should have lost their jobs. The government should have taken over those institutions, put in whatever money was required, and run them under interim management (possibly including people from farther down the hierarchy, but none of the top decision-makers.) When healthy again, they could have been sold off.

As it was, those who created the crisis were rewarded handsomely.
- brian kuszmar Sep 19, 2018
  
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brian kuszmar Sep 17, 2018

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Petey Bee Sep 17, 2018

Trump may be a national embarrasment, or worse, but there are some things Democrats and Republicans agree on. One of them is that political debate should be stripped of any serious intention to restore the balance between the "haves" and "have-nots", in terms of wealth and income.

Unlike almost everything else Trump promised, his administration has followed this implicit agreement (to leave the unequal distribution of wealth and income unthreatened) better than anyone else - tax cuts passed in Congress with only token "resistance", deregulation via executive authority, and cementing the future of the judicial branch with conservatives, whose ideology is anchored on "property rights".

The only real hope here is that Democratic party's leadership is allowed to evolve, through primaries, and the leadership of the past 20-30 years is allowed to transition gracefully into history. There are some hopeful signs that electoral turnout in primaries is starting to increase, and disillusionment with both parties is starting to channel into avenues with a potentially positive outcome (as opposed to simply more Trump's).

The US electoral system makes this hard, with its distinctly anti-proportional representation, unlimited speech (spending) by anyone able to do a little paperwork, and generally discouraging popular participation and education of the electorate on issues. But that will not change. Nor will the problem go away if Trump is removed. The inadequacy of the 2-party system vs resoling fundamental economic / distributional issues will remain central.
- Paul Friesen Sep 21, 2018
  
  Inequality and unfairness are certainly the big problems we face. Growing automation will make this problem more severe. We need to implement a basic income or similar scheme to deal with this. But as you say, it is hard to do that in the face of all the well-funded propaganda of the elites.
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Peter Schaeffer Sep 17, 2018

This is lame. Supposedly, the British handled the bailout better than the Americans. However, the British also voted for Brexit. Hillary made six (seven?) figure speeches on Wall Street and then refused to release them. She was the candidate of Wall Street and the public knew it.

However, the truth is even darker. Like it or not, the modern Democratic party is the party of Wall Street and Big Corporations. A poll at the Harvard Business Schools showed they favored Hillary over Trump 85:3. Note that the same crowd also favored Obama over Romney (but “only” by 2:1).

The modern Democratic party is the product of a dismal alliance of radical left-wing identity politics and right-wing neoliberalism. That’s not going to change anytime soon.
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Bernhard Kopp Sep 17, 2018

I admit that I do not have the details on my fingertips to seriously respond to the authors. One point is however certain: a considerable percentage of the US homeowners did finance their house with a mortgage, but did not borrow against their equity. Obviously, they have lost the same in property value, their equity, as those who have more recently purchased, or borrowed on their equity. It might have been unconstitutional to write down mortgage debt in favor of borrowers and leave equity holders carry their losses.
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Jose Antonio Vanderhorst Silverio Sep 17, 2018

As the article concentrates on an EcoNoMic alternative to the "recent exchange between Joe Stiglitz and Larry Summers about 'secular stagnation’,” telling that “additional issues need to be explored in depth,” I understand those issues will also be limited to the following.

Except for at least one value, we propose that the “Mission & Values” of the “Open Society Foundations,” does not deal yet with the Updated Global Conceptual Model #MCGA of #TheWealthOfGlobalization aimed, for example, to minimize #FakeNews. The #MCGA makes obsolete the Simplistic Globalization Model #MSG of #TheWealthOfNations, that underlies, for example, Joseph E. Stiglitz new book, “Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump.” I suggest that said value that fits the #MCGA but not the #MSG is: “We believe in taking on controversial issues and supporting bold, innovative solutions that address root causes and advance systemic change.”

Having said that, I understand that this is the proposal of ROB JOHNSON and GEORGE SOROS "The Democrats must recognize these problems, not downplay them. This year’s midterm elections will be a plebiscite on Trump, but the Democratic presidential candidate in 2020 must have a program that many Americans find inspiring. The electorate has seen where the Republicans’ demagogic populism leads, and a majority should reject it in 2018.“

Larry Summers’ proposed debate was reframed into “Get a friend to RT & Like an #MCGA Secular Stagnation Generative Dialogue (
https://medium.com/@gmh_upsa/get-a-friend-to-rt-like-an-mcga-secular-stagnation-generative-dialogue-9048a5a67992 ).” In the meantime, we proposed that “The next and best #TIA_GD narrative opportunity is in the #USA (https://medium.com/@gmh_upsa/the-next-and-best-tia-gd-narrative-opportunity-is-in-the-usa-b5f2d4b54948 ).”

Based on my June 2011 post How to Cross the Thin Line from Arrogance to Leadership ( https://grupomillenium.blogspot.com/2011/06/how-to-cross-thin-line-from-arrogance.html )." as a sole systems architect stepping stone to the EcoIsOurs profession, we can reinterpret as a success that we don’t need the generative dialogue as no EcoNomist has responded to my innovative proposal since them.

I am able to say that based on what Roberto Verganti wrote his book Overcrowded: Designing Meaningful Products in a World Awash with Ideas" to support “This enlarged thought experiment is aimed to prove that the USA is the next and best nation for “There Is Alternative” #GlobalDebout #TIA_GD Narrative.”
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vivek iyer Sep 17, 2018

The US had greater power over its Banks and thus was able to force them into a program which yielded a 30 billion profit to the Treasury. The UK did not have as much power over its Banks and thus was differently placed.

Obama did try a 'New Deal' type fiscal boost centred on 'Green Energy' but it back-fired. That's why Keynesianism was off the table. There was no way to ensure that Govt. spending wouldn't be wasteful.

The authors seem to think that penalising savers and rewarding profligate borrowers would have been a good thing. It would not. It would have killed off the relevant financial market and worsened outcomes for everybody. It is a different matter that corrupt or negligent business practices were not properly addressed and that an example was not made of some of the worst offenders.

Soros appears to have made an entirely foolish proposal. Perhaps this explains the steep decline in his reputation over the last decade.

The Democratic party should not recognize and correct its past mistakes. Rather it should seek to induce amnesia, as opposed to somnolence, in voters and paint its period in office as a Golden Age. There are no prizes in politics for admitting you are stupid.
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M M Sep 17, 2018

Whilst the left are still playing the blame game, Trump is playing "the popular tunes" to people's ears. And despite what the authors have said in their essay, "History does repeat itself", and every time more forcefully. 2008 was an opportunity for change in many respects (and the US electorates expressed their dissatisfaction when they inflicted the greatest loss ever incurred by the Democratic Party in the 2010 mid term elections). A big shame such an opportunity was missed.
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stephan Edwards Sep 17, 2018

Except the Democrats don't get campaign contributions from the poor or the Middle Class. The Banks however do make political contributions...Big Ones... and offer nice cushy jobs has lobbyists or on the board of directors when our politicians leave office. And that is the bottom line for parties and all politicians. What's in it for me?
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