The critical perspectives Essay Example | Topics and Well Written Essays - 2500 words

The critical perspectives - Essay ExampleAs Jeremy (2011) points out that after the collapse of financial system, the efforts were enjoin towards repairing the system without realizing that the system itself motivatinged to change. This book by the Nobel Prize winning economist appeals to believe and reconsider the present capitalist structure in the markets. The author talks about how overspending and low nest egg have brought down the financial meltdown. He is very skeptic about the conditions rife in lodgement market. He criticizes how low interest rates to boost consumption and monetary expansion have brought liberal control over the delivery. Stiglitz predicts that it will take a long time before USA markets fully recover as he calls it Japanese style recovery, w present markets will face low merge output and low wages. In his opinion America needs to fix its macroeconomic structure by means of increasing savings, reducing consumption and more allocation of funds towa rds issues such as town mean and climate change. Turner (2010) states in a review that Stiglitz has made it the sources of the current crisis very obvious for those who contest that the current crisis was unforseen. He criticises the policies of Bush and Obama for bringing the economy to collapse in 2008. Stiglitz has criticized Obama for not developing a clear vision and strategy to improve the conditions of the economy. In fact Stiglitz acc procedures his lack of control over the economy which left the economy even more vulnerable at the hands of those running the financial sector than ever before. Stiglitz is also skeptical about how members of Bushs administration continued their role in present government and ar not rectifying the errors that created huge ups and downs in the business cycle previously. He has mentioned that the policies are made in a manner that increases the burden on taxpayers in case of any passing or bailout situation. Moreover Freefall also criticizes the role of retired bankers in policy formulation and regulation of the financial sector, which accord to Stiglitz has created a greater imbalance in power. Stiglitz strongly advocates imposition of stringent regulations and restructuring of banks. He accuses Obama administration for devolve under the influence of finance tycoons and failing to exercise control over the banks and other financial institutions which became withal giant to handle a crisis. He still believes that large banks need to be broken up in order to right-size them an example is Citigroup, which is too huge in size to handle. He also is dejects the use of mortgage securitization, and encourages to police derivatives. Analysis Economic Policies Stiglitz considers Keynesian economics to be the solution for the current prevalent problems, however there are a number of factors that place a question mark on this proposition. Firstly we need to understand that in order to predict the impact of an injection of funds into the economy, we need to know the GDP multiplier. This GDP multiplier is dependant over the banking system because they are the ones to extend accredit to the private sector. Now if the banking system is itself so weak and in need of funds, it is difficult to say that it canister bring the economy out of recession. Moreover we also need to understand the flaws of government control, an example here is for people to decide if they want to rely on private pensions or