Saturday, August 7, 2010

Stiglitz on Production versus Well-Being and How it Relates to the Global Crisis

We just added an entry to our LMG Intrablog at Seeking Alpha, a US-based platform for Investment Analysis.

This is where we will normally publish our entries that are not directly linked to Emerging or Frontier Markets. Well, to some extent to attached entry is EM related.

Part of what went wrong in the Global Crisis is related to Measurement errors and improper accounting according to Noble Prize Laureate Joe Stiglitz. Based on flawless short-term monetary indicators like GDP and similar economic indicators, investors, entrepreneurs and consumers all went wrong. They overstretched their loan capacity with excess leverage and we all know what happened in 2008/09 when the Crisis hit us hard.

The leverage was way too high. In this piece we explain why and how we can avoid repetition in the future.

Interestingly, the presentation by Stiglitz does also provide for a linkage between Ecologists and Sustainability adepts on the one hand and more traditional economists on the other.

The presentation does also provide for a nice linkage to our earlier contribution on an application of Maslow's Pyramid at the Macro Level that we wrote on our Facebook Page. Click here if you want to re-read that piece.

Joe Stiglitz: 'We are measuring the wrong things'

Our entry on the LMG Intrabblog at Seeking Alpha

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