Stiglitz: ”US does not have capitalism now”

One is tempted to say: has it not been obvious, Professor Stiglitz for at least a year? You can say it again. However the fact that such a well-known and respected economist says it, confirming that the current crisis is not a failure of capitalism as we do not have capitalism, leads to conclusion that basic rules of free market were broken. A breach of such rules is at best a wrongdoing at worst a crime.

Professor Stiglitz makes also, implicitly, a very important point. Many, including top experts, pointed out to the Author of this blog, that the banks have not been operating a pyramid scheme since in a pyramid scheme the beneficiaries would normally be its originators high up its chain. Whilst this is only an intuitive argument, generally it makes sense. However the banks suffered heavy loses and were not beneficiaries at all. Therefore banks were not operating such a scheme.

Professor Stiglitz, implicitly, points out a difference, even a separation and conflict, between bankers and banks. So whilst the banks (or rather their shareholders) suffered heavy losses, bankers who run the banks and were up the pyramid chain, extracted and are still extracting their profits through remuneration and also by being "sophisticated" investors in a pyramid themselves. Banks, as institutions, were not originators of a pyramid scheme. Bankers were such originators turning the banks into their tools of running a pyramid scheme.