Question by classic47: the Effect of american economy on the global economy.?
i want americas’ situation in these international economic issues also suggestions for options please
Greatest answer:
Answer by I , a content Bolshevik
The Paulson Program attacks as the primary problem illiquidity although the accurate core problem is insolvency. Securitization dispersed globally the risks and created bankruptcy dangers opaque, destroying thus any creditworthiness and freezing the credit lines. Lending by banks was over-extended, occasionally 60 instances far more than their assets, generating them now candidates to file for bankruptcy. The Paulson Strategy gives some short-term relief to the Wall Street magnates whilst the taxpayer ‘Main Street’ has to spend the bill. It transfers one more part of the large private debt to the public debt of an currently over-indebted America.
While, with the growth of US deficits, the require for foreign investors for financing it grows, US creditworthiness is rapidly deteriorating. The ratio of total US debt to GDP from 163 % in 1980 became 240% in 1990 and jumped to 346% in 2007.It is enormously aggravated with the dramatic developments of 2007-2008, like the addition to the public debt of $ 6 trillion liabilities of Fannie and Freddie and the $ 700 billion of the Paulson Plan. America has been transformed into a super-Argentina in a non-declared default. The issue of US more than-indebtedness is transferred to the next Administration.
The interest rates cut by the Fed, twice in October 2008, to the lowest level reached after 9/11(and comparable moves that followed by the ECB, the Bank of England, the Bank of Japan and other central banks in Asia) could have a extremely ephemeral impact in the volatile stock markets but are entirely unable to reverse the contraction of world economy. As numerous analysts pointed out, these cuts are just a sign of desperation
Know better? Leave your personal answer in the comments!
