Paul Jorion: "Obama is Discouraging"

During a visit to Paris, one of the few economists who anticipated the current crisis was the guest of the French Internet program Parlons Net. This economist pondered his conclusion for a long time before proposing the radical abolition of speculation to save capitalism.

Paul Jorion is more than a talented economist and a successful blogger. He has an unusual history. Here is someone who worked in American finance and was one of the first to predict the current crisis. He wrote a book about that in 2004 that no editor wanted. With the help of Jacques Attali, the manuscript appeared in 2007. Its title? “Are we Heading for a Crisis of American Capitalism?” Jorion describes the perfect storm created by subprime lending. The only error is in the title: the crisis of capitalism is global, not just American.

We know the continuation of that. Jorion abandoned finance and began writing books and his blog. He became one of the official prophets of the crisis.

Parlons Net was able, thanks to complicity of Vendredi, another French media, to question him for a long time on Friday, June 5. Philippe Labarde of Vendredi, Samuel Laurent of the Figaro, Pascal Riché of Rue89 and Philippe Cohen of Marianne2 were present, along with David Abiker.

Is the current crisis financial or systemic? One part of the interview focused on the diagnosis of this crisis. Paul Jorion recognized the development of subprime lending as the consequence of high demand, with credit becoming a supplement to lower salaries in developed countries. Nevertheless, he remains a free trade advocate.

“Do condemn the China, it is our future!” he said, even when we evoke the monetary or wage dumping of that country.

Nevertheless, Jorion believes in a long term crisis.

“The scale of the losses is not calculable,” he said, explaining that as unemployment strikes an increasing number of Americans, they cannot continue to pay off their loans. That contributes to increase of toxic assets. Jorion notices again that France is not yet really in the crisis. In six months to a year, the economic and social situation will really degrade, he said.

Jorion also thinks that the world is steered by an oligarchy that took Obama in hostage.

“Obama is discouraging,” he said. “Say that the United States has a charitable plan. They do not know where they will go. The confusion of the leaders is deep. “

Finally, as a solution, Jorion pushes for the eradication of speculation in the capitalist system. What does this mean? The ban on any investment based on the variation of the prices.