‘The American Dream Has Become a Myth’

Interview with Economist Joseph Stiglitz

Stiglitz: There is nothing wrong if someone who has invented the transistor or made some other technical breakthrough that is beneficial for all receives a large income. He deserves the money. But many of those in the financial sector got rich by economic manipulation, by deceptive and anti-competitive practices, by predatory lending. They took advantage of the poor and uninformed, as they made enormous amounts of money by preying upon these groups with predatory lending. They sold them costly mortgages and were hiding details of the fees in fine print.

SPIEGEL: Why didn’t the government stop this behavior?

Stiglitz: The reason is obvious: The financial elite support the political campaigns with huge contributions. They buy the rules that allow them to make the money. Much of the inequality that exists today is a result of government policies.  >continue<

photo: Reuters

The Disastrous Consequences of a Euro Crash
Der Spiegel »

It’s understandable that companies want to protect themselves from a euro crash. But if things get serious, all of these efforts could be worthless, because the consequences of a monetary disaster would spread across the entire economy like a tidal wave.

Economists with the Dutch bank ING have calculated that in the first two years following a collapse, the countries in the euro zone would lose 12 percent of their economic output. This corresponds to the loss of more than €1 trillion. It would make the recession that followed the bankruptcy of investment bank Lehmann Brothers seem like a minor industrial accident by comparison… >continue<

photo: Der Spiegel

The End of Germany’s Illusions
A Commentary by Stefan Kaiser - Der Spiegel »

In the last 10 days, the DAX, Germany’s blue-chip stock index, has fallen by 16 percent. On Monday it fell below the 6,000 point benchmark for the first time since January and has continued its plunge on Tuesday. Has the crisis, which for so long seemed to leave Germany untouched, finally reached Europe’s largest economy?

…The fact that Germany has felt so little of the crisis so far is due largely to emerging markets like China, India, Brazil and Russia. Their economies booming, companies and consumers in developing economies were eagerly buying German products. In 2011, for example, China bought a record number of German cars.

But things are cooling off here too. The Chinese economy has long since ceased to grow as quickly as it did a year ago, while Russia feels the effects of the crisis in the form of currency turbulence. Not to mention that the United States, the biggest economy in the world, is also suffering major problems. The party in Germany could be over soon.

This makes it all the more important to finally grasp just how deeply mired in the crisis we are...  >continue<

related: G7 Emergency Talks  |  Eurozone unemployment spike

Drag on U.S.  |  Guardian Eurozone Digest 

update:  Start the engines, Angela

Eurozone Rescue Emerging  | Frantic Skepticism over Greece

Irish Collateral Damage?  | How to save the Euro

Guardian Euro Crisis Blog  |  Occupy Germany

Vatican Condemns ‘Idolatry of the Market’

photo credit, Parthenon: Kayoko Tabata 2005 interpolated
_______________

30/12: Denial as Greece Unravels  |  2/21: Nightmare Scenario Avoided