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To begin with, let’s accept the truth that we are going through the worst financial crisis witnessed by the world since the days of the Great Depression. The fall began with USA but later on it spread to all over the world. There are several factors responsible for this vicious global financial crisis. If the truth be told, the world economy is trapped in a predicament of its own making.
Safe to term this financial problem as ’Economic Recession’, the first signs of it were visible some 17 months back. USA had a relatively smooth economy with added advantage of low inflation since the last two decades. That factor contributed to administration and regulators becoming complacent about regulatory norms. That was the first mistake. Soon enough, ever increasing greed of investment banks took over the basic sense of economics. Increasing profits on their balance sheets made them take hugely risky projects.
Initially, this risk propensity approach paid rich dividends but with other problems like, mortgage bonds and housing issues surfacing, the bubble had to burst. With the biggest names of world economy; Lehman Brothers, Merrill Lynch, Bear Sterns, Fannie Mae, etc going bust, government and its policy makers had no option but to wake up and try to inject some sense in self-created financial web. But, it’s almost like a case of too late and too little.
Everywhere, including the otherwise strong Europe, governments are injecting funds, releasing bailout packages and nationalizing doomed banks. It’s like fear and mayhem running across the financial streets of the world.
The point is no one is sure about the extent of damage and the exact time frame of economic revival. Governments are loosening their purse strings. In hindsight, it’s quite similar to socialism. Interestingly, the path of socialism is being pursued by world’s most capitalist countries. Capitalism is not known for interfering in market forces and rescuing companies. This was more of a socialist trait employed by erstwhile USSR. But now what we are witnessing is father of all capitalists, USA is pumping huge sums of money to rescue private firms which will consequently help in easing credit crunch.
Americans are using all the possible models of economy including, socialism, capitalism and mixed economy. Weaker banks are merged with strong banks (Wachovia with Wells Fargo); nationalizing mortgage companies (Fannie Mae and Freddie Mac); allowing few other majors to go kaput (Lehman Brothers and Indy Bank), ending the era of investment banks (Goldman Sachs and Morgan Stanley), and bailout package to purchase doomed assets from fragile banks with hope that it will enhance their capital are some other frantic steps undertaken by USA policy makers.
The idea is to shore up the credit condition at the cost of taxpayers’ money and making these financial institutions stable in the long run. Yet, despite all the efforts of injecting liquidity in the system, revival is no more in the sight. It has been estimated that it may take another one year to stem the fall.
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Comments:
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The central idea is presented well. A well rounded conclusion summarizing the key takeaways will greatly improve the article.
Here are 5 things that we liked or would change/revise:
1. Title: The title sounds odd, the article ‘the’ needs to be added before the phrase, ‘global financial crisis’. ‘Truth of’ is also grammatically incorrect.
2. Format: The content flows well but the use of sub heads will help streamline the article
3. Grammar & Usage: The article requires a basic edit and proof reading. Article usage and punctuation needs to be fixed. You may want to consider our Detailed Expert Review or editing option.
4. Language: The style of writing is good but the use of shorter sentences would create better impact. Some phrases are a little awkward, like ‘smooth economy’. Stable would be a better word than smooth.
5. Target Audience: If your article is for the lay man it would work well but if it is intended for a business audience, it should have your views on how to address the problem.