"US job losses: we need to stop the bleeding"

Joseph Stiglitz, Professor at Columbia University and Nobel Prize in Economics in 2001 is not suprised at the fourth quarter GDP figures that contracted at an annual rate of 3.8%.

He expected such figures, because of the magnitude of job losses and the slowing down of activities. According to him, 2009 will look gloomy and what is needed is to stimulate the economy and to reform the financial system.

But the US stimulus package that was adopted last week in Congress won't necessarily work, according to the professor, mainly because the economy won't be rejuvenated that much.

Most of the money is going to people who won't spend it. It wouldn't have been the case if money or subsidies were given to the unemployed, or the very poor.

And he underlines that "a bad bank is a bad idea", referring to the plan of creating a bank that would absorb toxic assets of major lenders.

To watch the interview, click on the video.