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Day of Reckoning for Americans Who Lived Beyond Their Means

London, UK - 26 August 2007, 08:29 GMT

Dear ATCA Colleagues

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

Further to the ATCA submission Asymmetric Knowledge Risk -- Insurance Lessons for Sub-Prime Contagion incorporating the conclusion of Prof Joseph Stiglitz's Nobel prize winning analysis (along with George Akerlof and Michael Spence) of "Asymmetric Information," we are grateful to:

. Prof Joseph Stiglitz, Nobel Laureate in Economics (2001), Columbia University, New York, USA , for "Day of Reckoning for Americans who lived Beyond their Means;"

Dear DK and Colleagues

Re: Day of Reckoning for Americans who lived Beyond their Means

The pessimists who have long forecast that the US economy was in for trouble finally seem to be coming into their own. Of course, there is no glee in seeing stock prices tumble as a result of soaring mortgage defaults. But it was largely predictable, as are the likely consequences for both the millions of Americans who will be facing financial distress and the global economy.

[CONTINUES] [ATCA Membership]

Many thanks


Joseph Stiglitz

Joseph E Stiglitz was born in Gary, Indiana, USA in 1943. A graduate of Amherst College, he received his PhD from MIT in 1967, became a full professor at Yale in 1970, and in 1979 was awarded the John Bates Clark Award, given biennially by the American Economic Association to the economist under 40 who has made the most significant contribution to the field. He has taught at Princeton, Stanford, MIT and was the Drummond Professor and a fellow of All Souls College, University of Oxford. He is now University Professor at Columbia University in New York and Chair of Columbia University's Committee on Global Thought. He is also the co-founder and Executive Director of the Initiative for Policy Dialogue at Columbia. In 2001, he was awarded the Nobel Prize in economics for his analyses of markets with asymmetric information. He was a member of the Council of Economic Advisers (CEA) from 1993-95, during the Clinton administration, and served as CEA chairman from 1995-97. He then became Chief Economist and Senior Vice-President of the World Bank from 1997-2000. Stiglitz holds a part-time appointment at the University of Manchester as Chair of the Management Board and Director of Graduate Summer Programs at the Brooks World Poverty Institute.

Prof Stiglitz helped create a new branch of economics, "The Economics of Information," exploring the consequences of information asymmetries and pioneering such pivotal concepts as adverse selection and moral hazard, which have now become standard tools not only of theorists, but of policy analysts. He has made major contributions to macro-economics and monetary theory, to development economics and trade theory, to public and corporate finance, to the theories of industrial organization and rural organization, and to the theories of welfare economics and of income and wealth distribution. In the 1980s, he helped revive interest in the economics of R&D. His work has helped explain the circumstances in which markets do not work well, and how selective government intervention can improve their performance. Recognized around the world as a leading economic educator, Prof Stiglitz has written textbooks that have been translated into more than a dozen languages. He founded one of the leading economics journals, The Journal of Economic Perspectives. His book Globalization and Its Discontents (WW Norton June 2001) has been translated into 35 languages and has sold more than one million copies worldwide. Other recent books include The Roaring Nineties (WW Norton), Towards a New Paradigm in Monetary Economics (Cambridge University Press) with Bruce Greenwald, and Fair Trade for All (Oxford University Press), with Andrew Charlton. His latest book, Making Globalization Work, was published by WW Norton and Penguin/ Allen Lane in September 2006.

[ENDS]

We are grateful to:

. Prof Joseph Stiglitz, Nobel Laureate in Economics (2001), Columbia University, New York, USA , for "Day of Reckoning for Americans who lived Beyond their Means;"
. Dr George Feiger, President & CEO, Contango Capital Advisors, based in Berkeley, California, USA for "Suggestions for Resolving Sub-Prime Dilemma Step by Step;"
* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Understanding Rating Agencies beyond the Sub-Prime Meltdown;"
* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London, UK, for "Asymmetric Knowledge Risk and Market Deadlock;"
* Anthony Whitehouse based in Coppet and Geneva, Switzerland, for "High Credit Ratings and Breakdown of Trust;"
* John Pickering, Vice-Chairman, Labour Finance and Industry Group, based in London and Tunbridge Wells, UK, for "Role of Auditors;"
* The ATCA Research and Analysis Wing (RAW), based in Canary Wharf, London, UK, for "ATCA QUERY: Role of Credit Rating Agencies;"
. Peter Tasker, Founding Partner, Arcus Investment, based in Tokyo, Japan, for "Resilience of Corporate Profits & Sub-Prime Fiasco -- Global View from Japan;"
. Daniel Morler, Head of Middle East, LGT Private Bank, based in Vaduz, Liechtenstein, for "Human Factor, Information Lag, Geo-Politics and Central Banks;"

. Justin Urquhart Stewart, Director, Seven Investment Management, London, UK, for "Pride Before the Fall -- Those Who Don't Know that they Don't Know;"
. Martin Wolf, Associate Editor & Chief Economics Commentator, Financial Times, London, UK, for "To Cut or Not to Cut: Federal Reserve must Prolong the Party;"
. The Hon Al McDonald, Chairman and CEO, Avenir Group, from Michigan, USA, for "Balancing The Role of Management in Extreme Financial Turbulence."
. The ATCA Editorial Team based in Canary Wharf, London, UK, for "Subprime Crisis Spreads Across Regions and Financial Sectors;"
* Hervé de Carmoy, European Vice-Chairman, Trilateral Commission, based in Paris, France, for "Role of Large Financial Institutions in Fuelling Crisis;"
* Dr Jim Walker, Chief Economist, CLSA, based in Hong Kong for "China Chaos and Subprime Butterfly;"
. Ashutosh Sheshabalaya, CEO, India-Advisory, based in Brussels, EU, and Bassilly, Belgium, for "India turns History Upside Down;"
. John Elkington, Chief Entrepreneur, SustainAbility, based in London, UK, and returning from India, for "Mother Convulsion - India's Third Liberation;"
. Stephen Lendman, based in Chicago, Illinois, USA, for "Slow Motion Train Wreck" via Ashok Khosla, Chairman, Development Alternatives, New Delhi, India;
. The ATCA Editorial Team based in Canary Wharf, London, UK, for "Market Convulsions;"

. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Federal Reserve's Changed Focus;"
. Bill Emmott, Director, UK-Japan 21st Century Group, based in London and Somerset, UK, for "Japan's Strong Yen;"
* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "The Asymmetric Loss of Trust and Chain Reaction;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Public Inquisition of Credit Rating Agencies may Accelerate Downturn;"
. Dr George Feiger, President and CEO, Contango Capital Advisors, based in Berkeley, California, USA, for "Watch out for Dramatic Winners;"
* The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Systemic Risk & Sectoral Meltdown: Heightened Correlation and Deleveraging;"
. Rudi Bogni, Chairman, Medinvest, and Director, Old Mutual, from Basel, Switzerland, for, "Non-Stop Central Banks' Intervention;"
. Dr Ravi Batra, Professor of Economics, Southern Methodist University, Dallas, Texas, USA, for, "Towards a Global Economic Crisis?;"
. Aurora Carlson, Founder, Open One Center, based on the West Coast, Sweden, for "The Coming Storm of Change;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Large Quake hits Quants as Computer-Driven Quantitative Hedge Funds Short-Circuit;"

* Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, USA for "Prolonged Credit Market Correction Ahead;"
. Prof Dr Norbert Walter, Chief Economist, Deutsche Bank Group, based in Frankfurt, Germany, for "Economic Consequences of The Sub-Prime Crisis;"
. Anthony Whitehouse based in Coppet and Geneva, Switzerland, for "Regulators, Hedge Fund Lending and Cross-Selling;"
. The ATCA Editorial Team, based in Canary Wharf, London, UK, for "Perfect Storm: Credit Freeze and Distress Selling by Hedge Funds;"
. Dr George Feiger, based in Berkeley, California, USA, for "Two Faces of the Same Coin;"
* The ATCA Editorial Team, based in Canary Wharf, London, for "Contagion and Systemic Risk? ECB Injects Record Euro 95bn post Major Disturbance;"
. The ATCA Editorial Team, for "Flight to Quality as Markets finally Appreciate Risk;"
. Robert McNally, Chairman, London Chamber of Commerce Property and Construction Group, for "Erosion of Commercial Real Estate as a Solid Asset Class;"
. Alexander Hoare, CEO, C Hoare and Co, Private Bankers, based in the City of London, for "Destructive Creativity, Leverage and The Derivatives Market;" and
. Dr Harald Malmgren, CEO, Malmgren Global, based in Washington, DC, for "The Fear of Central Bankers -- Flight from Illiquidity, Derivatives and Heightened Risk of Contagion;"

in response to, "Are the Currency Markets Warning that there is Trouble Ahead? The Precipitous Decline of the US Dollar and its Impact on the World."

* Denotes ATCA QUERY: Role of Credit Rating Agencies

We look forward to your further thoughts, observations and views. Thank you.

Best wishes


For and on behalf of DK Matai, Chairman, Asymmetric Threats Contingency Alliance (ATCA)


ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

The views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. Please do not forward or use the material circulated without permission and full attribution.



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