Thursday, January 24, 2008

Ignoring its own advice to other nations, U.S. government plans no ‘shock treatment’ for ailing economy

File this under irony (or is that ironical?). Maybe development guru Jeffrey Sachs could offer a helping hand.

From the Los Angeles Times:

In the 1990s, when Latin America and Asia were rocked by financial crises similar to the one now dogging the United States, Washington officials were quick with stern advice: Don't bail out distressed banks. Don't intervene when stock market and real estate bubbles pop. Let your overblown economies shrink to their natural levels.

"It was all, 'You've got to be tough and take your castor oil,' " said Joseph E. Stiglitz, the Nobel Prize-winning economist, chairman of the Council of Economic Advisors under President Clinton and former vice president of the World Bank.

To date, U.S. officials haven't followed any of the advice they so readily dispensed to others. They have tried to aid troubled banks. They have slashed interest rates to help the struggling housing and stock markets. They have made it clear that they will go to extreme lengths to keep the American economy out of recession.

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