Freefall By Stiglitz Book Review

Stiglitz's purpose and normative perspective on the cluster of policy areas he addresses

The author of Freefall, Joseph E. Stiglitz, Nobel Laureate in Economics 2001, Professor of Economics at Columbia University, NY. It is a great critic of the postulates and neoliberal policies that imposed after the fall of the Berlin Wall in 1989, which in his view, are behind this monumental economic crisis. This book explains how America has been exporting its poor economic doctrines bad policies and bad behavior to the rest of the world to finally be able to produce only a hasty and ineffective patchwork at the time of the collapse of markets. Between what proposed, we can mention: restoring the balance between markets and government, to address the inequities of the global financial system and require economist's best ideas (and less ideology) (Stiglitz, p. 27-58).

Stiglitz analyzes the causes of this recession, examining the subsequent wave of triumphalism U.S., the outbreak of the crisis in 2008, until late 2009, in his book. Stiglitz criticizes the crisis as initiated by President Bush and continued by Obama, in his view, the rescue measures have kept the structural problems of the system, the financial system is more concentrated with institutions too big to fail and manage. The purchase of "toxic assets" transferred financial sector losses to the public sector (privatizing profits and socializing losses) compounding the problem. Stiglitz argues that there were noticeable symptoms in August 2007 of what would happen a year later and emphasizes the need to regulate financial markets and to resume the social role of government in the economy and see a modern society (Charles, p. 37).

The author argues that the ideas assume that markets self-correcting or that unemployment is voluntary, been strongly refuted by reality, especially in markets around (almost) perfect and the little importance of information asymmetries. It emphasizes the importance of aligning the incentives for truly private and social interests coincide, or at least no perverse incentives is difficult to reverse after, to stimulate (default) the approval of mortgage loans to people without any income or employment, or the "moral hazard" in the U.S. fell to make one feel that the leading banks would not fail, but that would rescue them. These stimuli are forming powerful political and economic forces that exert pressure and distort the market in their favor. This is an emerging crisis in the U.S., in a deregulated market awash with liquidity, low interest rates and subprime, in short, in a country that is living above their means, thanks to borrow and consume as if their revenues were increasing. The beginning of this crisis is the bursting of the "housing bubble" (Stiglitz, p. 27-58). Based on subprime mortgages, given to individuals less qualified than those of conventional mortgages (with low interest rates and variable charges), for which the agents perceive unlimited commissions claimed record profits. These agents acted greedily, because they had encouragement and opportunities to do so, made a lot of money in the short term, ...