Stiglitz Urges Second Round of U.S. Stimulus SpendingJan. 20 (AFP) -- Columbia University professor Joseph Stiglitz, a Nobel Prize-winning economist, said the U.S. should inject a second round of stimulus spending into the economy to avert a “double-dip” recession.
It will be “2012 or 2013 at the earliest that we will be back to normality,” Stiglitz said in an interview today. “This is a scenario that is putting us a little better but not much better than the Japanese malaise.”
Stiglitz said state governments face a shortfall of $200 billion per year in tax revenue that stimulus spending should fill. Other priorities should be writing down principal on underwater mortgages and passing new financial regulation legislation, which Stiglitz said would be difficult to accomplish.
Stiglitz’s concern contrasts with Warren Buffett’s outlook. Buffett said today, “I do not know when things will get better. I have never been more optimistic about the future of the United States and the world.”
The finance industry “did not allocate financial capital well but boy did they use their political capital well,” Stiglitz said. “They bought deregulation, they got bailouts that were on very favorable terms and now they’re being quite successful in fighting the restructuring of the regulatory framework.”
AFP
