Stiglitz Gone Wild

During a period when the Federal Reserve pumped huge amounts of money into the system, pushing interest rates far below where they would otherwise be, a period when quasi-government entities, Fannie Mae and Freddie Mac, encouraged home loan mortgage financing at astronomical home prices and the government bank deposit insurance entity, the FDIC, created trillions in moral hazard money because of its guarantees, economist Joseph Stiglitz has gone wild and claims there was no government intervention in the economy leading up to the crisis.

In a new paper out today at Project Syndicate,The Ideological Crisis of Western Capitalism, Stiglitz imitates a surfer in a rubber suit on a sand dune in the desert bitching about the rough surf. He declares:

Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin.

If Stiglitz truly believes that the primary dealers in the financial crisis,i.e., the Federal Reserve, Fannie, Freddie and the FDIC, are free markets organizations, then it appears I have a new client for my amazing San Francisco fog making machine.