Thursday, April 2, 2009

Isn't the world a wonderful place?

Isn't it wonderful to see the heads of government of the 20 leading industrialized and developing economies in the world come to a consensus and act decisively. I doubt there is much that can be seriously criticized about the outcome of the G20.

They have provided 1$ trillion in stimulus, divided into money for the IMF's funds and other funds, they have also made regulations concerning hedge funds along with what in many ways I think is the most important regulation, limits on how much banks can lend relative to the amount of money they actually possess in their reserves.

It is because of the banks that we have this crisis, as is clear from the fact that the first corporations to experience troubles were the banks (Freddie Mac and Fanny Mae). It is because of their reckless lending schemes such as sub-prime mortgages that the economic crisis snowball started rolling down the mountainside.

As for the stimulus money, this is crucial, especially coming from the G20. These nations are the world's leaders on the economic stage, and in all likelihood, few of them, if any, will need to take the opportunity that the greatly enlarged funds of the IMF present. In other words, these nations, the world's economic elite, have acted to aid those in more desperate straits, those that cannot help themselves. This action is worthy of commendation, an action that augurs well for the future.

When the world community acts competently, dealing with the two major branches of the current crisis effectively, who can help but feel optimistic. The only problem is the implication of these ideas. For all of us, let's hope they work.
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