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15 Jun, 2012 10:51

'Banking is a gamble, hosted by a limited few' - Nobel laureate

As people in the street suffer from the ongoing banking turmoil a few individuals benefit, Edward Prescott, 2004 Nobel Prize winner in Economics, told Business RT. He believes the current crisis will not sweep passed the United States.

“The banks are the groups of people who have this business enterprise called the Bank,” who are closely tied together and better informed he said. “I get scared with the Washington – New York connection. … “The Government gets favors out of certain people and then get big contributions,” Prescott added without going into detail.“People who lend to these financial institutions [banks] know that they’ll be bailed out or expect it, and therefore the institutions can borrow at a low rate,” he said.The US, the world economic locomotive, is also set to fall victim to a financial crisis some time soon, Prescott said. The process there is perfectly managed, Nobel laureate concluded.“There will be some bankruptcies and some major interventions by the fed to avoid a row of bankruptcies.”