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8 of 10 people found the following review helpful
5.0 out of 5 stars A national real-estate crisis became a worldwide economic and social catastrophe
Those who know J. Stiglitz's work (compulsory reading) see his mighty stamp on this hard-hitting and all important report for the future of mankind.

Facts and figures
The 2007 crisis showed blatantly the interdependence of all (inter)national economies.
In the US, 1 out of 6 people has no full-time job; worldwide 200 million people were driven into...
Published on 10 July 2010 by Luc REYNAERT

versus
7 of 14 people found the following review helpful
3.0 out of 5 stars Different aproaches
I love to read Stiglitz: he is informative, committed, even passionate about his theme, he thinks forward and much of his criticism of the prevailing system is accurate and to the point.
Nevertheless, he is too committed. His main thesis is that the system is biased and has fundamental flaws that would always determine its ultimate failure. He flays alive his...
Published on 16 Nov 2010 by Joao MOTA de CAMPOS


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8 of 10 people found the following review helpful
5.0 out of 5 stars A national real-estate crisis became a worldwide economic and social catastrophe, 10 July 2010
By 
Luc REYNAERT (Beernem, Belgium) - See all my reviews
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This review is from: Stiglitz Report, The (Paperback)
Those who know J. Stiglitz's work (compulsory reading) see his mighty stamp on this hard-hitting and all important report for the future of mankind.

Facts and figures
The 2007 crisis showed blatantly the interdependence of all (inter)national economies.
In the US, 1 out of 6 people has no full-time job; worldwide 200 million people were driven into poverty by becoming unemployed. The havoc on pensions was also tremendous.
The crisis exposed deep flaws in the evangel of neoliberal free market fundamentalism. Markets are not stable, not self-regulating and not efficient (information asymmetries between seller and buyer).

Aim
For the authors, ethical and moral values should be decisive factors in economic decision making. In a world with huge unmet needs, a plague of massive unemployment is unacceptable.
The Report proposes to install, not only, a new global economic order based on stability and faster growth, but also, more democratic governances (those who suffer have no say, those responsible are not held accountable).

Macro-economic solutions
To tackle the huge problems of poverty, malnutrition, environmental pollution, climate change and social insecurity, the world economy needs more stability and growth of global aggregate demand: less volatile exchange rates and asset prices, a social insurance system, more income equality, no protectionism and no `too big to fail' institutions. The latter should function with less leverage and give easier access to their resources.

Regulation solutions
Financial deregulation was one of the main causes of the global crisis. The financial sector became an end, not a means of economic activity. But, it was not capable to manage risk, to allocate capital efficiently and to mobilize savings at the lowest possible cost.
In order to protect the consumer and avoid disastrous externalities (unemployment, poverty), the Report proposes the creation of a `New Central Bank' (instead of the do-wrongly's) and a `Financial Regulatory Authority". Together, those new institutions should impose transparency (no creative accounting), limit the size of financial institutions, regulate credit rating agencies, create a deposit insurance system, allow public alongside private banking and prohibit the use of tax havens.

International Institutions - solution
With its counter-productive policies, which undermined social protection, the IMF made crises worse than they were. Its policies should, on the contrary, support employment worldwide. In that case, its lending capacity could be enhanced. But in any case, its governance should be more democratic.
The first task of the WTO should be the implementation of anti-protectionist measures.
The Report proposes two new institutions, the `Global Economic Coordination Council' and an "International Panel of Experts' in order to coordinate economic policies worldwide.

Long-term reforms
A new global architecture is needed to manage the global good.
The global reserve system should be improved by the creation of a supranational international new currency (e.g., the SDRs of the IMF).
An `International Debt Restructuring Council' should be installed for the management of sovereign debt defaults.
The risk between lenders and borrowers could eventually be managed with GDP- and commodity-linked bonds.
Also, novel financial mechanisms, like `solidarity levies', should be imposed in order to diminish living standard inequalities.

This report is a must read for all those interested in the future of mankind.
One minor remark: the report has no index.

It is evident, that all the world's problems cannot be solved by economic measures.
There are also pure ethical or moral problems, like the world's demographic explosion.
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5.0 out of 5 stars Excellent survey of finance capital's successes and failures, 16 Oct 2013
By 
William Podmore (London United Kingdom) - See all my reviews
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This review is from: Stiglitz Report, The (Paperback)
In 2008, the President of the UN General Assembly, Miguel d'Escoto Brockmann, convened an international committee of 20 financial experts, chaired by Joseph Stiglitz, to address the crisis and its impact on development. This is valuable because the General Assembly, the one inclusive international body, is far more democratic and representative than the G20 or the G8.

The Commission forecast, "those who have benefited from existing arrangements will resist fundamental reforms." As Stiglitz notes in his January 2010 preface, "In most countries, the financial sector has successfully beaten back attempts at key regulatory and institutional reforms. The financial sector is more concentrated; the problems of moral hazard are worse. Global imbalances remain unabated." Many financial institutions are still `too big to fail'. As the Commission observes, "In many countries, the financial system had grown too large; it had ceased to be a means to an end and had become an end in itself."

The Commission remarks, "At the global level, some international institutions continue to recommend policies, such as financial sector deregulation and capital market liberalization, that are now recognized as having contributed to the creation and rapid diffusion of the crisis."

Too many governments are still wedded to market fundamentalism, even though "cutbacks in investments in infrastructure, education, and technology will slow growth." As the Commission points out, "the EU is imposing pro-cyclical policies on the enlargement countries, including wage and expenditure reductions in the public sector."

The Commission notes that the present system of flexible exchange rates "has proven to be unstable, incompatible with global full employment, and inequitable." "Developing countries are, in effect, lending to developed countries large amounts at low interest rates - $3.7 trillion in 2007" - far more than the aid they get back.

It observes, "in some countries, there has been excessive focus on saving bankers, bank shareholders, and bondholders instead of on protecting taxpayers and greater focus on saving financial institutions than on resuming credit flows." This has caused "a massive redistribution of wealth from ordinary taxpayers to those bailed out."

As the Commission notes, "Unregulated market forces have provided incentives not only for under-production of innovative financial products that support social goals but also for the creation of an abundance of financial products with little relevance to meeting social goals." But regulation is not a sufficient remedy. As the Commission points out, "The incentives faced by public officials, regulators, and elected officials, and the role of money in politics are important antidotes to romantic notions of the efficacy of regulation to correct for market failures."

The Commission rejects market fundamentalism, that the market is the solution to every problem, rather than the problem to every solution. Yet the Commission itself is still in thrall to all too many market dogmas. For example, it writes, "Had the financial sector in richer countries, such as the U.S., performed their critical function of allocating the ample supply of low cost funds to productive uses, the world economy might now be facing a boom rather than today's economic crisis." No, financial firms' `critical function' is to maximise their shareholders' profits, not to steer investment into production.

Again, the Commission refers to `the pervasive and persistent failure of financial institutions', and to `market imperfections' and `market failures'. But the market worked: it made shareholders richer, as it is designed solely to do, so it succeeded.

The Commission points out that "in financial markets, private incentives, both at the level of the organization and the individual decision-maker, are often not aligned with social returns." Why should private incentives be `aligned with social returns'? The market does not exist to serve society but to maximise private profit, whatever the social effects.
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4.0 out of 5 stars The Stiglitz Report, 2010., 13 Feb 2013
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This review is from: Stiglitz Report, The (Paperback)
Required reading for those wanting to catch up on his output of other than generally held opinion, reasonably priced at €11.76.
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7 of 14 people found the following review helpful
3.0 out of 5 stars Different aproaches, 16 Nov 2010
By 
Joao MOTA de CAMPOS (Lisboa, Portugal) - See all my reviews
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This review is from: Stiglitz Report, The (Paperback)
I love to read Stiglitz: he is informative, committed, even passionate about his theme, he thinks forward and much of his criticism of the prevailing system is accurate and to the point.
Nevertheless, he is too committed. His main thesis is that the system is biased and has fundamental flaws that would always determine its ultimate failure. He flays alive his opponents ascertaining to them a complete lack of understanding of the fundamentals of modern economics, imputing to them a complete belief in the market and its self correcting forces, whereas, he postulates, such things do not exist and the role of the State as a regulator has been bypassed, that being the cause of our present problems.
That is the thesis he develops in «Freefall», his book about the root causes of the crisis. Although Mr. Stiglitz acknowledges in the preface that the growth in the west was based on a mountain of debt and that there is something fundamentally wrong when one part of the world consumes without producing and the other produces without consuming, he does not withdraw the consequences of this.
As a matter of fact, his enmity towards the «system», what he calls the Washington Consensus, or his «receipt for disaster», blinds him to the fact of the fundamental shift in economic paradigm that occurred in the last two decades when several regions of the world fuelled by huge rates of savings, like Japan in the sixties and seventies, started to accede to enough technology to develop a good enough industry to export «en force», profiting from very low human resource costs and almost no social entitlements. In the meanwhile, the western hemisphere entered an economy of services of high added value but disconnected from the needs and education of its populations. Also, more and more entitlements put more and more pressure in Governments to cope with rising demands of social coverage.
That was the «receipt for disaster» of which Mr. Stiglitz says nothing of consequence.
As a matter of fact, there might be a lot of things quite wrong with the prevailing system, but the fundamental one about the present crisis, something that will endure in the future and is only getting worse, is that this is the «crisis of debt» both private, caused by an unsustainable model of growth based on ever growing debt due to the lack of savings, and public, caused by ever rising demands on Government to cover every aspect of people's life.
Anyone looking at the last ten years will see a glaring fact: that for long the trend of growth in the West is much lower then in emerging economies, breaking a previous long trend of higher growth in developed countries; and, that also breaking with the previous secular trend, the West became a importer of capital, instead of exporting it.
That is globalization in reverse and we are now coping with its long reaching consequences.
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