joseph stiglitz born in gary indiana in 1943 started stanford m.i.t. and was drummond professor -- he is now university press are at columbia and chair of columbia's committee on global thought and co-founder and executive director of initiative for policy dialogue there and was awarded the nobel prize in economics 10 years ago for his analyses of markets with asymmetric information. he was lead author of the 1995 report on the intergovernmental panel on climate change that and shared the 2007 nobel peace prize. mr. stiglitz was a member of the advisers in the clinton years and served as chair from 1995 to 1997 and became chief economist and senior vice president of the world bank from 97 to 2000. thank you for joining us. edwards edward kane is professor of finance at boston college where he held the edward reese chair of economics at ohio state university and had the bad judgment to lead. currently he consults with the world bank is a senior fellow at at the federal deposit insurance corporation for financial research. he has consulted for the congre

joseph stiglitz is a nobel prize winning economist and columbia university professor and he's pushing for a rethinking of the global economic framework in the wake of the financial crisis now he's come with other economic and policy leaders to the historic bretton woods where decades ago a conference here led to the formation of the international monetary fund and named the u.s. dollar as the reserve currency and they've gathered to rethink some of those very policies he joins us now to tell us more about it i want to thank you so much for joining us professor now you've written recently about the increasing disparity between rich and poor in the united states and you've even compared these conditions to what led to the other us we've seen in the middle east so what do you think are the factors that led to this and what do you think the consequences will be with. the increase in the concentration of income in wealth. united states there's been enormous. happen in the last couple decades is almost a quarter of the income goes to the upper one percent around forty percent but you measur

stiglitz?rst i want to address the second question i want to go back to my a change in the debt equity, change in the financial structure of banks is not really to the extent that there is a to the extent we can put aside the subsidy, the therefore they would would be less lending point. >> do you agree that there would be i will get back to you on the rest of your answer mr. stiglitz issue here is a practical matter mr. chairman is that so costly and particularly at this time they have raised so much to increase number of the banks will consider instead accommodate. >> are they more reluctant to issue dividends? >> as you know know the dividends have actually been restrained federal regulators. >> recently they were distributed and from simon johnson and some others at the banks because of equity issues and attract enough equity that they ought to hold onto their profits for a period of time that sort of a line of thinking? >> it is a matter balance mr. chairman. they can issue reasonable diff

right bud if you don't tackle the issue that stiglitz story and sorrows mentioned solidarity within europe the meeting itself is a bit one puts and merkel said only expect too much from it which means basically will to say and i think this is they are there. a large part of it is p.r. initiated by the french president right a while there you spake there and they about what's happening in france picking at germany now they we had some worrying news there when the economy almost stalled in the second quarter of this year if not a sign that the year resigns or driving forces now seriously under economic threats well i think great now are german authorities but not all german economists resisting what is obvious there needs to be solidarity within the same. monetary union if you don't have a kind of compensating mechanism it cannot work and german history spiritedly pens of course only to their efficient economic machine but also on the health of its customers and its customers are mostly in europe it's all the customers of german products in europe collapse then germany itself collapse so the

joseph stiglitz will analyze the amount of debt holding companies have. this is live at the dierkson building. >> we will -- i will do an opening statement. the questions and answers may be a little more free flowing. i'll probably ask you to respond to each other's assertions and statements and observations. all four of you are highly respected in these fields and have thought a lot about this and reflected a lot about this. it should be an interesting discussion for an hour or so. the recent debate that we just concluded is fixated on the national debt but it was more than just the national debt we should be worried about. too many people in washington seem to be forgotten about the debt that put us in this deep recession and cost this country and almost everyone in it so much and that's the debt of the financial sector. c.b.o. estimates the entire cost of rescuing our failing banking system, the bailouts, the decreased tax revenues, new spending programs in response to the troubled economy and interest payments will cost our nation some $8.6 trillion,

stiglitz. dr. cain, thank you for joining us. >> thank you, mr. chairman . it is an honor and privilege. >> is your microphone on? >> shall i start again? >> go ahead. >> the distributional effects of making taxpayers back up, treasury and federal reserve bailouts have been solvent and ungrateful financial institutions. during the housing bubble, in our representative democracy, the interests of foreign and domestic financial institutions was much better served than the interests of society as a whole as joe stiglitz has been saying. but why were taxpayer interests poorly represented? huge loopholes into the capital retirements and regulatory definitions of risk. they are now supposed to keep instablingt in check. the dodd frank act left many issues open. it did not try to define systemic risk. implementation of its strategy for dealing with regulation and disciplining the lead institutions is left to regulators. the keeting 5 tell us how hard it will be for regulators to write rules that crack down on influential firms. sadly the same gaps and issues are in

for more on the factors at play, i am joined by justice giglets -- by joseph siglitz -- stiglitz from columbia university. the see the kind of policies american needs to reverse the unemployment rate? >> obama has some ideas that i think will make a difference. i think the republican candidates will make a difference, but for the worse. it is amazing how people have forgotten what happened from 2000 through 2008, when the country ran huge deficits, created a bubble, and the years of dealing with the consequences of the bubble created after 2001. what is needed right now is to stimulate the economy with investments in education, technology, and infrastructure. the u.s. government can borrow at close to a zero interest rate. the return on those investments, especially since we have under invested for the last decade, are very high. the result of higher return investments is more jobs to date and lower deficits tomorrow. >> yet you have in america and europe politicians across the board saying what we must not do is have any more spending at all, no more momentum. we have christine lagar

that year later they wrote and the famous stiglitz a nobel laureate and former economic advisor to clinton was among them that they were doing everything wrong but they were telling us was all wrong. if we think about the ability to lead within one's means who's better at that russia bag than or today's usa. you see the u.s.s.r. was living on credit of course but it was solvent and other states were eager to give credit even the us though the latter wasn't doing it directly but through european affiliates they all knew after all that the soviet economy was under control and that the country would pay its debts sooner or later even without high oil prices that's why they were eager to give credit to the u.s.s.r. especially to finance the purchase of high tech goods to be supplied to the soviet market in fact is go but after nine hundred thirty two a time of crisis for the us america wouldn't sell the u.s.s.r. complete production facilities like a car planted so yeah he or chemical plants of which the u.s.s.r. had brought for four billion dollars worth and which had played their part in its

start a year later they wrote on the famous stiglitz the nobel laureate and former economic advisor to clinton was among them but they were doing everything wrong what they were telling us was all wrong but if we think about the a big if were then once means that now the rush of those days or states years say you. know you have to see the u.s.s.r. was living on credit of course but it was sold them on other streets were eager to give credit to us all the latter wasn't doing it directly well through european affiliates they all knew after all that the soviet economy was under control and that the country would pay its debts sooner or later it even without ohio prices why they were eager to give credit to the u.s. us or especially to finance the purchase of high tech goods to be supplied to the soviet markets and the fact is though that after nine hundred forty two the time of crisis for the us america wouldn't sell the u.s. or complete production facilities a lot of the car plants all yachtie chemical plants of which the u.s. is our gold with orderly and dollars worth and which of playe

stiglitz it isn't something that can be and it isn't something that will be got rid of posing in prison sentences we've seen one for you jailed for six months for stealing one pound because the bottle of water in the united kingdom though there is greater inequality any point for the last two hundred year it is that reason as you go back to the base of the slave trade you find such a disparity between the rich and the poor what you expect if you show people repeatedly the most expensive consumer goods tell them that they're sell or they lie but their respect from other people will be judged by the degree to which they can obtain these goods and then deny them the ability to get them you there because the wage is also low or because there are no jobs at all because of endemic politics this is the combustible material that's been building up a bottle of british society for a generation ago and really the surprise is not that the riots happened before these are some of the issues that have to be addressed and simply doing the police more powers as even the police have recognised. there wou

that year later they wrote and the famous stiglitz a nobel laureate and former economic advisor to clinton was among them that they were doing everything wrong what they were telling us was all wrong. if we think about the ability to live within one's means who's better at that russia back than or today's u.s.c. . you see the u.s.s.r. was living on credit of course but it was solvent and other states were eager to give credit even the us though the latter wasn't doing it directly but through european affiliates they all knew after all that the soviet economy was under control and that the country would pay its debts sooner or later even without high oil prices that's why they were eager to give credit to the u.s.s.r. especially to finance the purchase of high tech goods to be supplied to the soviet market it has been easy for the us to take credit because of the entire system that's been built up since one thousand nine hundred five when the i.m.f. was being set up there was a heated dispute between the u.k. and the us of course the british had to back off because their economy had been gr

that they can do at this point because you know people such as nobel prize winning economist joseph stiglitz say hey q.e. two didn't work that money didn't go where it was supposed to it went overseas that liquidity went places where you can get a higher return on your investment so why would you do more quantitative easing when it hasn't worked. right so i would actually argue that it has worked and that if you look at how prices respond in the market to more quantitative easing to. how the currency markets responded every time quantitative easing has been tried it succeeded in lowering the yield on treasury and fixated on lowering the value of the dollar to things which which need to happen are necessary and sufficient conditions for it you can see working so that it actually has a number of options disposable it does cut the just three house to the rate that the federal reserve paid today i'm holding excess reserves at the at the fed. it does also use language in a more vigorous way to promise to hold rates a look at the euro two point two five percent through the middle of two thousand a

talk about the need for a new global reserve but he spoke to nobel prize winning economist joseph stiglitz on the eve of the bretton woods conference in april this year and his words now seem more relevant than ever.

as a reserve currency and bric countries of course talking about that and economists like i said stiglitz but at what point does this become do you think if debt debate will factor into that conversation and that will move it along. look i don't see it let's see what happens in the next g. twenty meeting for instance if the chinese are be very cautious about it for instance they have not antagonize the i.m.f. directly they could have put their own candidate for the i.m.f. two or three months ago in fact when lagasse the wince of the june she managed to convince the chinese in i would see two hours and they say look let's not pick this fight now let's wait and see what happens lagarde you know by herself although she is chicago wall street let's say she is an american player log on basically she's not a european player she's an atlanticist but with an american but by herself is not she's actually implement like so this wasn't a quarter of the york times saying let's be patient which is completely. redundant when you think about it so the chinese are picking this fight in the long run and w

there's a lot of wealth there's a lot of what in the united states and i want to play you what joseph stiglitz and also both economists said about both the income disparity in this country and also the belief in the american dream that maybe next year will not so aware of that we play those those sound bites but it's america was a country that sort of stood stayed together historically with great unity on the glue that we all figured if we work hard we play by the rules we do better than our parents so they would do better than their parents and our kids would do better than ours. in the last. couple decades is twenty four almost a quarter of all that income goes to the upper one percent. right forty percent bringing you measure of the will goes to the one percent and in the bottom fifty percent control two point five percent of the lot so in the u.s. there is this idea of american dream and of achieving it doing better than your parents like you didn't u.k. but the statistics don't support that that doesn't exist in the united states anymore there are lies damn lies and statistics we should n

dollar as a reserve currency and bric countries of course talking about that and get eyes like joseph stiglitz but it does this because do you think that this debt debate will factor ended a conversation and that will mean that a lot. look i don't see it let's see what happens in the next g. twenty meeting for instance after the chinese are being very cautious about it for instance be have not antagonize the i.m.f. directly they could have put their own candidate for the i.m.f. through three months ago in fact when like god the winds will be jig she managed to convince the chinese.