The financial crisis in the U.S. is obviously very threatening to our nation's habits and motivations, but now markets all around the globe are facing huge declines. Markets in Asia, Europe, South America, Mexico...the list goes on...are all dropping. Monday the European Dow Jones dropped 7.6%, German DAX fell 7.1%, and French CAC-40 faced a 9% decline. These scary percentages reap huge consequences on global economies. Dow Jones in the U.S. has dropped a whopping 13% over the past 5 days, even despite the approval of the rescue plan. The main problem is all global markets are affected by eachother and important investors (big and small alike) are quickly backing out.
So what is being done about this? Well even more measures are having to be taken. Economist Carl Weinberg suggests "to cut rates as close to zero as you dare,'' pump money into the banking system ``hand over fist'' and increase government spending." Once people start to lose their fears of spending and investing, markets will rise again...but that won't happen until the government takes decisive action. On Tuesday morning the Fed said it would "purchase unsecured and asset-backed commercial paper from issuers in an effort to ease the log jam." This will help with short-term funding and hopefully have an impact on increasing the "rescue" of our economy, and consequentially global economies.
So what is being done about this? Well even more measures are having to be taken. Economist Carl Weinberg suggests "to cut rates as close to zero as you dare,'' pump money into the banking system ``hand over fist'' and increase government spending." Once people start to lose their fears of spending and investing, markets will rise again...but that won't happen until the government takes decisive action. On Tuesday morning the Fed said it would "purchase unsecured and asset-backed commercial paper from issuers in an effort to ease the log jam." This will help with short-term funding and hopefully have an impact on increasing the "rescue" of our economy, and consequentially global economies.
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2 comments:
Britney,
Global economies certainly have taken a downturn, with Americans ignoring the economies of foreign countries. All the economies of the world seem to be connected and dependent on one another. If America is able to uplift its own economy, then other economies may also be uplifted. Will America alone be able to lift the global economy or will all of the world need to work on the global economy?
Tommy
Britney,
You make a good point when you say that all the global economies are interconnected. Does this mean that when the US is doing well, the rest of the world tends to do well also and vice versa when the economy is down? Also, is the US the only country in a financial crisis? The nationalization of banks which occurred last Tuesday, October 14th , followed Europe's example. Do you believe that the banks should require more regulation in the future such as in other more socialist and communist countries(ex:Sweden and Russia) or that the US should continue the "free" market as it and maintain its status as a capitalist society?
Caitlin
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