The World Financial Cup

July 13, 2014 | | Huffington Post |

If there were poetic justice in the world, Argentina would have beaten Germany in the last three minutes of play instead of vice versa. Germany represents everything that's wrong with the world financial system. Argentina is the epic case of countries whose economies are screwed by policies championed by Germany -- and unfortunately by the United States as well.

Let me explain.

When financial abuses crashed the global economic system in 2007-2008, there were two urgent needs. One was drastic reform to prevent the collapse from wreaking further havoc on the world's most damaged economies. The other was to clean up the banking system so that these abuses would not keep happening.

The United States managed very partial reforms. At least we had a Federal Reserve that understood the need to stimulate the economy with very low interest rates. And until Republicans took control of Congress in 2010, we had a president who appreciated the need for some public investment as fiscal stimulus. The stimulus proved too small, the administration embraced budget austerity too early in the cycle, leading to an agonizing slow recovery.