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| Dr. Stiglitz and veteran news personality Lorraine Hahn. Photo taken with my crappy cellphone camera which doesn't give Ms. Hahn's extraordinary beauty justice |
1. Everyone's spooked because China's growth in 2011 was just 8% to 9%.
2. All eyes on Asia.
3. What a 0% savings rate really means.
4. What is saved in Asia should stay in Asia.
5. What "savings glut"?
6. Breaking something that ain't broke.
7. A case of diversification making things worse.
8. The problem with too-big-to-fail banks is that they are too big to fail, and everyone knows it.
9. The reason why we still haven't achieved transparency for complex financial products like credit default swaps and other financial derivatives is that that is how these people make money from these things.
And now for the much awaited continuation of this special series...
10. Restoring confidence in the US economy is a matter of green shoots turning brown. Economic recovery cannot be achieved with just a speech--especially if the facts disagree with what you're saying. For example, one oft-cited statistic is how unemployment has gone down from 9-point-something to 8-point-something percent the last time someone counted. Experts have interpreted this "dent in unemployment" as a sure sign of US economic recovery. But if you take a closer look at the numbers, the main reason for the decrease in the metric is that some people gave up looking for a job, so technically they don't count as unemployed anymore. The sad reality is that one out of every six Americans who want a job cannot find one...
11. One way to bring about economic recovery in the US is to restructure the economy and focus on increasing real productivity. That is to use less resources for the same output, particularly in agriculture and manufacturing.
12. Debt should be the least of the US's worries, if only because interest on US debt is very low at almost zero for short term debt and 3% for long term debt.
13. Austerity is to the economy as "blood letting" is to a sick person in the middle ages (or in Westeros, just ask the Boltons - IJ); as blood is drawn from the sick person, he or she gets worse, and medieval doctors respond with, wait for it--more blood letting! In other words, "austerity" or slashing spending will only make things worse for the American economy. At least until the poor soul finally dies. What the US should do instead is take advantage of low interest rates and invest in more value-creating projects, which are often just right under everyone's noses. Also, raising taxes and increasing spending actually increases GDP more than any austerity plan--if only it weren't for some genius politicians...
14. The end of the euro? Maybe we should not be so surprised. When the Eurozone was formed, economists were skeptical of whether or not it will prosper. Why? There's actually some sort of checklist for when it's appropriate for a group of countries to adopt a single currency. Guess what? These Eurozone countries did not satisfy these criteria.
15. Ratings agencies only contribute to the woes of Europe and the rest of the world. It is their moral responsibility to ensure that complex financial products are as transparent as possible. Unfortunately for all of us, in this case the "less moral" has outbid the "more moral", as is almost always the case.
16. Asia is in a good position to play an important role in the drive for global economic recovery. We cannot insulate ourselves forever; fortunately, when there's a need, we are capable of responding with policy in a timely manner. Also, since there's still a vast, undertapped domestic market in many parts of the region, growth is still possible. It definitely won't be easy, and it would only work with constant vigilance.
17. Where's China in all of this? Domestic spending should increase, and savings go down. Not for households, though. With higher wages, they should be able to maintain an ample savings rate and spend more at the same time. The Chinese should not go overboard with consumption, though. If China follows the US's patter of consumption (recall: a whopping 110% of income spent), then we are all doomed.
18. The issue of income inequality is not the politics of envy, as what many right-wing politicians declare in their speeches. More and more Americans are getting worse off year after year. One would find income inequality on other parts of the world, yes, but different. China may have more inequality if one uses a measure like the GINI coefficient, but for many Chinese poverty has been greatly reduced--and that's a good thing. And this difference suggests that the "degree of inequality" may not be as important as the "equality of opportunity", which is very lacking in the US where there are now very few opportunities for a great majority of the population to move up in the world.
If only all economists were like Dr. Stiglitz... or, at least, if only world leaders listened to economists who think and reason as he does... We would be living in a very different world, where green shoots grow and bloom and don't turn brown very quickly--I think.