Prof. Joseph Stiglitz: Real Cost of the Iraq War Part 1

http://www.interest.co.nz

I'm Bernard Hickey and welcome to www.interest.co.nz 's second exclusive interview with a newsmaker. Earlier this month we spoke Reserve Bank of New Zealand governor Alan Bollard.
Here we talk to Professor Joseph Stiglitz. He is a Columbia University professor and a Nobel Prize winner in economics who has co-written a book tallying up the true cost of the Iraq War to US taxpayers and the US economy. The book titled the Three Trillion Dollar War explains how the 5 year old war was expected to cost US$50 billion and has instead ended up costing at least US$3 trillion. The direct costs of the destroyed equipment and spending in Iraq is added to the growing medical costs for injured veterans, along with the massive macroeconomic costs of higher oil prices.
Stiglitz details how this surge of deficit-funded cash and wasteful spending has distorted global financial markets, helping create the global credit crunch that this week claimed Bear Stearns.
He goes on to say that the US Federal Reserve's move to rescue Bear Stearns creates a dangerous precedent and adds to a growing "Moral Hazard" on Wall St that investors can always rely on the US Federal Reserve to bail them out of bad lending and investing decisions.
He worries about the future of financial markets and cautions that other unnamed banks are also rumoured to be in trouble.
Stiglitz finishes by saying the Fed's liquidity pump is helping to strip the US dollar of its status as a reserve currency.
Stiglitz was in New Zealand to promote the book at the International Festival of the Arts at its Readers and Writers week. He spoke in Auckland on Tuesday night.