Stiglitz. The Man.

A review of Joe Stiglitz's new book 'Freefall' in the NYT:

This is a useful and timely book. Joseph E. Stiglitz is one of the two or three score pundits, economists and historians who more or less predicted the disasters that have overtaken the American economy. And as a member of the President’s Council of Economic Advisers under Bill Clinton, he has the political credentials to criticize the new Democratic administration as well.

“Freefall” has three standout strengths. First, it is a powerful indictment of Wall Street, the United States financial sector and the Federal Reserve Board. Second, it offers a reluctant but persuasive elaboration of how the Obama administration decided to embrace the financial sector and the Fed, continuing and enlarging both the bailout and the too-big-to-fail philosophy that it inherited from George W. Bush. Finally, it is a blunt attack on Stiglitz’s own profession, for transforming “scientific discipline” into “free-market capitalism’s biggest cheerleader.”

Stiglitz supported Obama for president and still finds things to praise about him. But the criticism starts to flow as early as his second chapter, where Stiglitz contends that Obama chose a conservative strategy that he calls muddling through. The president may have been concerned to maintain national unity, but the risk, Stiglitz writes, “was that the problems were more like festering wounds that could be healed only be exposing them to the antiseptic effects of sunlight.”

He amplifies: “The Obama administration also didn’t have (or at least didn’t articulate) a clear view of why the U.S. financial system failed. Without a vision of the future and an understanding of the failures of the past, its response floundered. At first, it offered little more than the usual platitudes of better regulation and more responsible banking. Instead of redesigning the system, the administration spent much of the money on reinforcing the existing failed system.”

Exactly. Which is why this man should be in one of the big three economic positions in this adminstration: Treasury, Fed, or Chair of Economic Advisors.  When he is there, then I'll believe Obama is serious about reform.