Too Good to Be True
QUOTE
Reviewed by David Maraniss
Sunday, November 23, 2003; Page BW03
THE ROARING NINETIES
A New History of the World's Most Prosperous Decade
By Joseph E. Stiglitz. Norton. 379 pp. $25.95
....
When the financial health of a nation shifts as dramatically as it did in the United States from 1996 to now, the recent past seems not so much gone as completely transformed. Comfortable government surpluses and millions of jobs have abruptly vanished almost as though they never existed. Supposed heroes of finance inevitably showed their fallibility, and new, new things have become old and stale. Hence the need for a reinterpretation, the \"new history\" of Stiglitz's subtitle.
....
Although he never said it publicly during his White House days, Stiglitz now asserts that the Clinton administration, in searching for its third way, tried to please the big boys of finance so much, and became so enthralled by the buzz of the new economy, that it lost its balance and sided too often with free-marketeers. \"What happened in the nineties was that a set of longstanding checks and balances -- between Wall Street, Main Street, and labor, old industry and new technology, government and the market -- was upset in some essential ways by the new ascendancy of Finance. Everyone deferred to its judgment,\" including, Stiglitz says, Clinton and many of his advisers, especially in Treasury and Commerce.
As the decade progressed and Wall Street boomed, economic policy became beholden to what Stiglitz now sees as a series of myths: that deregulation and self-regulated markets were the key to sustained prosperity; that economic success came only by \"subjecting oneself to the discipline of the financial markets\"; that economic problems resulted from big government; that \"American-style globalization will inevitably lead to global prosperity\"; and that deficit reduction in and of itself was the engine of economic recovery. Along with all this came a \"hero myth\" that attributed the good times to the brilliance of economic leaders, particularly Alan Greenspan, chairman of the Federal Reserve Board. All of these myths, he said, \"were useful in the short term but ultimately harmful.\"
....
Cashing OutSunday, November 23, 2003; Page BW03
THE ROARING NINETIES
A New History of the World's Most Prosperous Decade
By Joseph E. Stiglitz. Norton. 379 pp. $25.95
....
When the financial health of a nation shifts as dramatically as it did in the United States from 1996 to now, the recent past seems not so much gone as completely transformed. Comfortable government surpluses and millions of jobs have abruptly vanished almost as though they never existed. Supposed heroes of finance inevitably showed their fallibility, and new, new things have become old and stale. Hence the need for a reinterpretation, the \"new history\" of Stiglitz's subtitle.
....
Although he never said it publicly during his White House days, Stiglitz now asserts that the Clinton administration, in searching for its third way, tried to please the big boys of finance so much, and became so enthralled by the buzz of the new economy, that it lost its balance and sided too often with free-marketeers. \"What happened in the nineties was that a set of longstanding checks and balances -- between Wall Street, Main Street, and labor, old industry and new technology, government and the market -- was upset in some essential ways by the new ascendancy of Finance. Everyone deferred to its judgment,\" including, Stiglitz says, Clinton and many of his advisers, especially in Treasury and Commerce.
As the decade progressed and Wall Street boomed, economic policy became beholden to what Stiglitz now sees as a series of myths: that deregulation and self-regulated markets were the key to sustained prosperity; that economic success came only by \"subjecting oneself to the discipline of the financial markets\"; that economic problems resulted from big government; that \"American-style globalization will inevitably lead to global prosperity\"; and that deficit reduction in and of itself was the engine of economic recovery. Along with all this came a \"hero myth\" that attributed the good times to the brilliance of economic leaders, particularly Alan Greenspan, chairman of the Federal Reserve Board. All of these myths, he said, \"were useful in the short term but ultimately harmful.\"
....
QUOTE
Reviewed by James K. Galbraith
Sunday, November 23, 2003; Page BW03
IN AN UNCERTAIN WORLD
Tough Choices from Wall Street to Washington
By Robert E. Rubin and Jacob Weisberg. Random House. 406 pp. $35
....
[O]ne may well ask, when the chance next arises, whether someone like Robert Rubin should again be placed in charge.
Debt TrapSunday, November 23, 2003; Page BW03
IN AN UNCERTAIN WORLD
Tough Choices from Wall Street to Washington
By Robert E. Rubin and Jacob Weisberg. Random House. 406 pp. $35
....
[O]ne may well ask, when the chance next arises, whether someone like Robert Rubin should again be placed in charge.
QUOTE
Reviewed by Alan Tonelson
Sunday, November 23, 2003; Page BW04
FORTUNE FAVORS THE BOLD
What We Must Do to Build a New and Lasting Global Prosperity
By Lester C. Thurow. HarperBusiness. 352 pp. $26.95
....
By far the most important dots left inadequately connected by Thurow concern the mind-numbing international economic imbalances that the United States has piled up for roughly the last decade. Every presidential candidate -- especially the incumbent -- should read Thurow's discussion of these deficits and the nation's resulting international debts. For the author argues with unusual force and clarity that they represent mortal threats to the economic health of the United States as well as the rest of the world. Yet he overlooks what may be the main cause of these deficits.
The U.S. economy remains so strong that most Americans understandably ignore or simply don't know how deeply in debt the nation has sunk, and thus how heavily their living standards now depend on borrowing from abroad. This dependence results from Americans buying so much more from other countries than they sell to them, and from foreign creditors' willingness to provide affordable loans to fill the gap.
America's unique advantages have permitted prime-rate borrowing to continue despite these towering debts. In addition, much American borrowing during the 1990s was invested -- in theory promoting robust future growth.
More recent borrowing has been spent largely on consumer goods in a frenetic national shopping binge. America's economic and business establishment still believes that the debts can be managed without triggering national and worldwide recessions or worse. Thurow's greatest achievement is systematically demolishing the case for a so-called soft landing.
Indeed, the debts are already so large, the author demonstrates, that the least painful economic responses would spark upheavals unseen since the Great Depression. This reckoning may still be long postponed. Eventually, however, the dollar and Americans' global purchasing power will be deeply devalued (though somehow an Argentine-style currency rout will be prevented). Or austerity-minded U.S. leaders will engineer a recession some 10 times worse than the downturn that technically ended last year. Such balancing of the national books would also require an American willingness to \"accept living standards that are permanently falling relative to the living standards in the rest of the world.\" But most ominously, the magnitude of these best-case events would surely harden the soft landing and produce a sharp, prolonged global downturn.
....
Sunday, November 23, 2003; Page BW04
FORTUNE FAVORS THE BOLD
What We Must Do to Build a New and Lasting Global Prosperity
By Lester C. Thurow. HarperBusiness. 352 pp. $26.95
....
By far the most important dots left inadequately connected by Thurow concern the mind-numbing international economic imbalances that the United States has piled up for roughly the last decade. Every presidential candidate -- especially the incumbent -- should read Thurow's discussion of these deficits and the nation's resulting international debts. For the author argues with unusual force and clarity that they represent mortal threats to the economic health of the United States as well as the rest of the world. Yet he overlooks what may be the main cause of these deficits.
The U.S. economy remains so strong that most Americans understandably ignore or simply don't know how deeply in debt the nation has sunk, and thus how heavily their living standards now depend on borrowing from abroad. This dependence results from Americans buying so much more from other countries than they sell to them, and from foreign creditors' willingness to provide affordable loans to fill the gap.
America's unique advantages have permitted prime-rate borrowing to continue despite these towering debts. In addition, much American borrowing during the 1990s was invested -- in theory promoting robust future growth.
More recent borrowing has been spent largely on consumer goods in a frenetic national shopping binge. America's economic and business establishment still believes that the debts can be managed without triggering national and worldwide recessions or worse. Thurow's greatest achievement is systematically demolishing the case for a so-called soft landing.
Indeed, the debts are already so large, the author demonstrates, that the least painful economic responses would spark upheavals unseen since the Great Depression. This reckoning may still be long postponed. Eventually, however, the dollar and Americans' global purchasing power will be deeply devalued (though somehow an Argentine-style currency rout will be prevented). Or austerity-minded U.S. leaders will engineer a recession some 10 times worse than the downturn that technically ended last year. Such balancing of the national books would also require an American willingness to \"accept living standards that are permanently falling relative to the living standards in the rest of the world.\" But most ominously, the magnitude of these best-case events would surely harden the soft landing and produce a sharp, prolonged global downturn.
....