Great article by Nobel-laureate economist Joesph Stiglitz in January's Vanity Fair. Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. Stiglitz, who co-authored The Three Trillion Dollar War, identifies five key mistakes under Reagan, Clinton, and Bush II.Here is just a brief recap of the five points:
No. 1: Firing the Chairman
"Greenspan presided over not one but two financial bubbles."
No. 2: Tearing Down the Walls
"The deregulation philosophy would pay unwelcome dividends for years to come. In November 1999, Congress repealed the Glass-Steagall Act—the culmination of a $300 million lobbying effort by the banking and financial-services industries, and spearheaded in Congress by Senator Phil Gramm."
No. 3: Applying the Leeches
"Then along came the Bush tax cuts"
No. 4: Faking the Numbers
"Meanwhile, on July 30, 2002, in the wake of a series of major scandals—notably the collapse of WorldCom and Enron—Congress passed the Sarbanes-Oxley Act. The scandals had involved every major American accounting firm, most of our banks, and some of our premier companies, and made it clear that we had serious problems with our accounting system."
No. 5: Letting It Bleed
"The final turning point came with the passage of a bailout package on October 3, 2008—that is, with the administration’s response to the crisis itself. We will be feeling the consequences for years to come."
Stiglitz sums it up:
"The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal".Republican capitalism is dead.
Source: Vanity Fair
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