South Asian Outlook : An Independent e-Monthly | Focus on Economy: "Once-in-a-Century Credit Tsunami"

Ex-president Carter slams Bush on market crisis

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Former President Jimmy Carter, the 84-year old Democrat, said on October 10, the "atrocious economic policies" of the Bush administration had caused the worst global financial crisis since the Great Depression of the 1930s.

"I think it's because of the atrocious economic policies of the Bush administration," said Carter, who served in the White House from 1977-1981 during a period of high inflation and energy crisis.

"The economic situation is an entrenched problem. It is going to take years to correct what has been done economically," Carter said, adding he hoped Democrat Barrack Obama would win and immediately improve Washington's image in the world.

Eight years ago, the United States had a budget surplus, low inflation and a stable, strong economy, he said. Whoever wins next month's U.S. presidential election would inherit economic problems that would force them to postpone implementing some of their proposed reforms, he added.

Carter said he was astonished that the United States now owed China "in the neighborhood of $1 trillion."

"Deregulation and what he called a withdrawal of supervision of Wall Street had encouraged irresponsible elements in the U.S. financial system, enabling banks to borrow 30 times their value," reports Paul Taylor for Reuters.

Running Deficits or...?

The great debate is under way. During recessionary times, should governments ramp up spending to stimulate the economy even if it means running deficits, or should they batten down the hatches and resist the temptation to splurge until the economic storm passes?

Paul Krugman, the freshly minted Nobel prize-winning economist and writer for The New York Times, argued in a column recently that immobilizing spending could exacerbate existing problems. Instead, he said, Washington should consider extending unemployment benefits to the growing numbers of jobless, offer emergency financial aid to state and local governments, buy up troubled mortgages and engage in major infrastructure investment.

- GARY MASON Globe and Mail October 18, 2008