The current economic crisis that (arguably) began in the United States with the subprime mortgage crisis and has undoubtably spread across the globe. While the international implications are evident, the United States government has been working dilligently to pass legislation that will help get our Nation’s economy out of this rut. Yet, from the United Kingdom to East Asia to the European Union, other nations’ governments are following suit and passing rescue and stimulus plans to cope with the effects of the global financial crisis.
On October 8, 2008 the British government announced a bank rescue package totalling some $850 billion U.S. dollars. The plan provides for 200 billion Euros to be made available for short term load through the Bank of England. The government will also support Biritish banks in their effort to increase market capitalization by setting up the “Bank Recapitalization Fund”. This fund will lend 25 billion Euros in the first instance of need and 25 billion more that can be called upon if need. In addition to the lending, the British government is willing to underwrite any eligible lending between British banks. Also on October 8, there was a coordinated effort by seven central banks to to cut interest rates by .5% (these banks included The Bank of England, The European Central Bank, The U.S. Federal Reserbve and the central banks of China, Switzerland, Canada, and Sweden).
Similar to the actions taken by the British Government, the People’s Republic of China announced a US$ 586 stimulus package on Novermber 9, 2008. This package will be invested in key areas suh as housing, rural infrastructure, tax-cuts, and finance. There was also a meeting of the East Asian Countries of China, South Korea, and Japan to discuss the global economic crisis. This collaborative effort was not unique as the European Union also came together to propose a European stimulus plan that would affect all 27 members of the Union.
What does this all mean? It means that while we may be centered around and focused on the U.S. economy, the problem extends far beyond our borders and nations all over the globe have recognized the brevity of this situation. This brings up questions of whether or not the U.S. acting alone can bring an end to this recession. It may take global collaborative efforts to really bring the world out of this rut and get the economies headed once again in the right direction.
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