A Stiglitz Anecdote



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 Joseph Stiglitz, who shared the 2001 Nobel Prize with George A. Akerlof and A. Michael Spence, had once served as President Clinton’s Chair of the Council of Economic Advisers. In this capacity, he was privileged to have joined cabinet meetings where he often found himself torn between "the ideals of economic theory and the compromises of practical political economy." See how these conflicts are worked out at the policy level in the following anecdote, taken from J. Barkley Rosser, Jr.'s Abstract on "A Nobel Prize for Asymmetric Information: The Economic Contributions of George Akerlof,Michael Spence, and Joseph Stiglitz":

During an episode of high oil prices that would lead President Clinton to decide to release oil from the Strategic Petroleum Reserve into the market, Stiglitz met with Clinton and Chief of Staff Leon Panetta to discuss the matter. Stiglitz advised against releasing the oil on the grounds that doing so would have no effect on the market and that the price of oil would come down on its own fairly soon anyway. Panetta responded to this argument by declaring that Clinton should therefore go ahead and release the oil anyway because “it won’t cause any harm and we’ll get the credit for the drop in the price of oil.” Panetta’s argument carried the day.

How Bad Is The Economy?

Let me share another good one from a Casey Research's Daily Dispatch:

The economy is so bad that…

I got a pre-declined credit card in the mail.

I ordered a burger at McDonald's, and the kid behind the counter asked, "Can you afford fries with that?"

CEOs are now playing miniature golf.

If the bank returns your check marked "Insufficient Funds," you have to call them and ask if they mean you or them.

Hot Wheels and Matchbox stocks are trading higher than GM.

Parents in Beverly Hills and Malibu are firing their nannies and learning their children's names.

A truckload of Americans were caught sneaking into Mexico.

Motel Six won't leave the light on anymore.

The Mafia is laying off judges.

BP Oil laid off 25 congressmen.

Congress says they are looking into the Bernard Madoff scandal. Oh great! The guy who made $50 billion disappear is being investigated by the people who made $1.5 trillion disappear!

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The Danger With October

Here's a funny (but true) quote I picked up from one of Casey Research's daily newsletter:

“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” –Mark Twain

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