"What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess".
Written by Joseph E. Stiglitz, a professor of economics at Columbia and ex-chairman of the Council of Economic Advisers from 1995 to 1997. He was awarded the Nobel prize in economics in 2001.
Obama’s Ersatz Capitalism
NY Times - By JOSEPH E. STIGLITZ - March 31, 2009
THE Obama administration’s $500 billion or more proposal to deal with America’s ailing banks has been described by some in the financial markets as a win-win-win proposal. Actually, it is a win-win-lose proposal: the banks win, investors win — and taxpayers lose.
Treasury hopes to get us out of the mess by replicating the flawed system that the private sector used to bring the world crashing down, with a proposal marked by overleveraging in the public sector, excessive complexity, poor incentives and a lack of transparency. (continues...)
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