Government can learn how to come up with simple solutions to stop the decline in housing foreclosure, and provide more liquidity to assist businesses in alleviating the credit crisis. Simultaneously, it can enforce strict requirements on banks to be more robust in preventing the abuse of gambling away assets. Government can learn above all else, that banks cannot be trusted to regulate themselves. With the moral hazard of free market, the government must take the initiative and discourage reckless behavior.
The US economic credit difficulties has triggered immense job cuts and forced millions of people to lose their homes through mortgage payment default, and more people are becoming worried as there appears to be no slowing down of the crisis, the problem has contributed to the breakdown of the family unit in some places, and volatile marriages which were under threat, seemed to be abating with compromises, as many couples come to terms with the lack of money and are divorcing less.
The government is learning from past experience, that through the lack of supervise risk assessment, the credit crunch in banking crisis has severely affected subprime borrowers, and many have lost their treasured homes, along with all their savings, in all honesty, some of the problems that were created in the finance industry, which contributed to the downturn in the property market, was obviously self inflicted, help on by misleading information.
Banks gave people the credit approval to borrow over and above what they could afford to pay back, this was done intentionally, so that loan companies could get a large slice of the commission profit without taking into account the possible dangers; consequently people defaulted on mortgage payments, because they could not afford to make monthly payment.
Life in modern America, and Europe, is not as prosperous as in previous decades, when surplus cash was found in abundant, now people are down on their heel, in collision with earth, executing fewer social events, and been generally careful about what they spent money on, the government is also learning how to take on responsibility of rescuing the banks, knowing that the worst of the financial credit crunch is still to pass the mark of the great depression, so many market analysts believe the consequences could be even more dire.
In sustaining financial stability, FED has cut rates to bolster the finance sector, and safeguard mortgages and other assets, in generating vast amount of liquidity, the stimulus has given the government greater influence in the banking industry, where some banks have been rescued from winding up in administration, and even though the lowering of interest rates is having direct impact on savings account, by reducing the fervency of saving deposits, the government can learn the importance of risk assessment.
The credit crisis has had some strange and unintended consequences on individual’s freedom and lifestyle, and the inconsistency of the stock market has continued to give investors the jitters, for example, some business has canceled vast expansion plans, preferring instead to sit and carefully watch the market trend before attempting to reinvest in alternative portfolios. While the government is borrowing their way out of colossal debt, to pave the way for a better global economy, there is a huge price to pay, and repayment will be a difficult subject to tackle.
No one knows when the economy will get stronger, top government politicians are looking at every conceivable way of dissolving the credit problems, the G8 is an economic organization, which meet to discuss the state of the world financial matters. The countries include Canada, France, Germany, Italy, Japan, Russia, the United States, and the United Kingdom.
The responsibility of general hospitality and the settling up of all expenses is placed upon country that holds the presidency, they have the privilege to host the G8 summit, which usually takes place once during the year, and the summit goes on for three days with intense financial matters arising.
Far from the credit crisis abating, in America and Europe, the financial gloom is increasing more with the car industry suffering decline along with the housing property market, so the conclusion that many people have dawn, is becoming painfully embarrassing, on a whole, people believe the government is getting too much of a foot hold in public affairs.
The action of bailing out the culprits does not go down well with the public, and rather than making things better for everyone, they are actually making situation worse, by not severely routing out all the greedy bankers and make them accountable for losses. The only lesson it appears that the government has learn is how to borrow more money to get banks out of the credit crunch.