Worldview On U.S. Financial Crisis

February 20. 2009

World scholars have been submitting their views on the U.S. financial crisis. One even offered that is has become worse than the Great Depression. In some respects it has.

While, the jobless rate was higher during the Great Depression than where it currently sits (which could change), the national debt and massive number of home foreclosures in the present crisis are significantly higher.

U.S. cannot go back to old ways, Nobel laureates say

Fri Feb 20, 2009 7:15pm EST - NEW YORK (Reuters) - The United States cannot battle its economic crisis by simply trying to go back to its old ways of spending too much and saving too little, two Nobel prize-winning economists said on Friday.

Jeffrey Sachs, director of the Earth Institute at Columbia University in New York, said a $40 trillion loss in global wealth, a reflection of declines in stock prices and home values, would not easily be reversed.

"The scale and drama and rapidity is extraordinary," Sachs said at a panel at Columbia. "We're not likely to be sending demand and consumption back up. Fixing the banks is not really the key to unlocking the demand side." ...

"They not only didn't innovate, they actually resisted innovations that were important," Stiglitz said. "It was heads I win, tails you lose. And you lost." ...

http://www.reuters.com

Crisis may be worse than Depression: Volcker

NEW YORK (Reuters) - The global economy may be deteriorating even faster than it did during the Great Depression, Paul Volcker, a top adviser to President Barack Obama, said on Friday.

Volcker noted that industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker told a luncheon of economists and investors at Columbia University...

He said all financial institutions that are deemed too large to fail should be subject to increased scrutiny, echoing the findings of the Group of 30, a panel of policy-makers and influential economists, which he leads.

http://www.reuters.com

Analysis: Obama plans eclipsing New Deal spending

WASHINGTON (AP) - In sheer size, the economic measures announced by President Barack Obama to address "a crisis unlike we've ever known" are remarkable, rivaling and in many cases dwarfing the New Deal programs that Franklin D. Roosevelt famously created to battle the Great Depression.

Maybe there's just been too long a run of bad news. Arthur Hogan, chief market analyst at Wachovia Securities, blames much of the negativity on "the fact that people are so down. They have no confidence in the future."

Republicans complain about wasted money. Some Democratic supporters say the plan won't help very much very quickly ...

Last month's jobless rate was 7.6 percent, up from 4.9 percent a year before but still shy of the postwar high of 10.8 percent reached in 1982—and far from Great Depression levels.

http://www.breitbart.com

Obama Tells Mayors to Spend Wisely

WASHINGTON — President Obama told the nation’s mayors on Friday that he would hold them accountable for how they spend the money in his $787 billion economic stimulus package, which he described as “a true partnership” between the federal government and cities that have been too long neglected by Washington.

“I want to be clear about this: We cannot tolerate business as usual -- not in Washington, not in our state capitols, not in America’s cities and towns,” Mr. Obama told a gathering of the United States Conference of Mayors. He said he was putting them “on notice” that if they propose a wasteful project, “I will call them out on it.”…

http://www.nytimes.com