Stiglitz Says US Should Have Nationalized Its Banks

Nobel Prize winning economist Joseph Stiglitz said at an economic conference in Shanghai, China, that the US government should have nationalized its banks if it were to avoid the recent financial crisis. Small businesses are not able to get loans because the banks are over-correcting and not lending, and the world's largest economy is suffering because its private banks are not willing to take responsibility.

“We have this very strange situation today in America where we have given banks hundreds of billions of dollars and the president has to beg the banks to lend and they refuse,” Stiglitz said. “What we did was the wrong thing. It has weakened the economy and has increased our deficit, making it more difficult for the future.”

In socialistic societies like China, where Stiglitz said this, or in welfare states like India, most of the largest banks are either nationalized, or the government has immense control on them. While this is not exactly capitalism, this gives the government the option to correct banking practices that would otherwise hold the nation's economy hostage to private profit making initiatives.