Sunday 29 September 2002

War won't boost US economy, says Stiglitz

I've added some more economic news at the bottom of this post... click here

A strike against Iraq will only heighten anxieties over global economic health, warns Nobel Prize-winning economist

Joe Stiglitz is author of "Globalisation and it's discontents" a superb non-technical book in which he puts forward some very convincing arguments against globalisation. He's a former member of the US Council of Economic advisors and a Nobel Prize winning Economist to boot; someone that we should listen to! I've read his book and it's a must read if you're interested in globalisation.

Waging war is no longer good for a country's economy and a U.S.-led strike against Iraq would only compound uncertainty about the health of the world's largest economy, Nobel-winning economist Joe Stiglitz said on Wednesday.

"War is widely believed to be good for the economy. This war (on Iraq) is likely to be bad and possibly very bad," Stiglitz told the Forbes Global CEO Conference in Hong Kong.

An armed conflict with Iraq would not lead to a huge injection of money into the economy by the U.S. government as was the case in World War II, which was a total mobilization and pulled the country out of the Great Depression, the Columbia University professor said.

"We are now trying to fight wars on a cheap. We spend $40 billion, $50 billion, not a large amounts of money, so the direct effect is going to be very limited," he said.

"On the other hand, there are some very negative effects -- the anxiety that the business community is feeling today, the possible increases in the price of oil and more generally, an increase in risk premiums."

Stiglitz, a former World Bank chief economist, said investor confidence was already weak and few people were likely to invest as long as fear of a war with Iraq persists.
Full story...

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