ID :
20539
Mon, 09/22/2008 - 11:24
Auther :
Shortlink :
http://m.oananews.org//node/20539
The shortlink copeid
(EDITORIAL from the Joongang Daily on Sept. 22)
Shock treatment
The United States has started major emergency surgery by injecting $700 billion into the money markets. U.S. President George W. Bush said the U.S. economy is faced with an unprecedented challenge, and that the world must respond with unprecedented measures.
His statement reflects the pressing sense of crisis. The
United States is now under a full policy mobilization order. The cooperation and
intervention of the central banks of six major countries, the Federal Reserve's
loan to Bear Stearns and the American International Group (AIG) and the banning
of short stock selling are all part of this.
The aim of the present measure is to prevent the U.S. financial system from going
into a state of shock after excessive bleeding. The U.S. financial market won???t
recover for some time and has called for extensive government intervention. It
has acknowledged market failure and called for government intervention. The U.S.
Department of the Treasury has asked Congress to give it the authority to pour in
the biggest amount of bailout funds in history and an almost unlimited purchase
of bad loans. Fortunately, major stocks worldwide bounced back and capital is
flowing again.
However, emergency surgery is only a surgical treatment. The basic tumors that
the U.S. economy is suffering from, such as excessive household loans, housing
market stagnation and low consumption, still exist.
It is also questionable whether the U.S. government bailout funds are enough to
contain the financial crisis. It could be that $700 billion is enough to take
care of bad loans that have already surfaced, but it may not be enough to cover
hidden and additional insolvency. Kenneth Rogoff of Harvard University warned
that one to two trillion U.S. dollars was needed as emergency capital.
The current crisis is so severe that no matter what happens, it will not surprise
us. The losses from U.S. derivatives haven???t been contained yet and housing
prices are still dropping. We must not relax. We must continue to watch how the
emergency surgery proceeds.
???We must preemptively respond to circumstances and actively and shrewdly move
against unprecedented situations,??? said President Lee Myung-bak.
But we should be more cautious. When the economy is in such a state of flux, one
false prediction can exacerbate the crisis. We should respond in a timely manner
and submit to the market flow. Above all, we shouldn???t reduce our foreign
currency holdings; they are our best weapon against the crisis. The 1929 Great
Depression didn???t bottom out until three years later.
(END)
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The United States has started major emergency surgery by injecting $700 billion into the money markets. U.S. President George W. Bush said the U.S. economy is faced with an unprecedented challenge, and that the world must respond with unprecedented measures.
His statement reflects the pressing sense of crisis. The
United States is now under a full policy mobilization order. The cooperation and
intervention of the central banks of six major countries, the Federal Reserve's
loan to Bear Stearns and the American International Group (AIG) and the banning
of short stock selling are all part of this.
The aim of the present measure is to prevent the U.S. financial system from going
into a state of shock after excessive bleeding. The U.S. financial market won???t
recover for some time and has called for extensive government intervention. It
has acknowledged market failure and called for government intervention. The U.S.
Department of the Treasury has asked Congress to give it the authority to pour in
the biggest amount of bailout funds in history and an almost unlimited purchase
of bad loans. Fortunately, major stocks worldwide bounced back and capital is
flowing again.
However, emergency surgery is only a surgical treatment. The basic tumors that
the U.S. economy is suffering from, such as excessive household loans, housing
market stagnation and low consumption, still exist.
It is also questionable whether the U.S. government bailout funds are enough to
contain the financial crisis. It could be that $700 billion is enough to take
care of bad loans that have already surfaced, but it may not be enough to cover
hidden and additional insolvency. Kenneth Rogoff of Harvard University warned
that one to two trillion U.S. dollars was needed as emergency capital.
The current crisis is so severe that no matter what happens, it will not surprise
us. The losses from U.S. derivatives haven???t been contained yet and housing
prices are still dropping. We must not relax. We must continue to watch how the
emergency surgery proceeds.
???We must preemptively respond to circumstances and actively and shrewdly move
against unprecedented situations,??? said President Lee Myung-bak.
But we should be more cautious. When the economy is in such a state of flux, one
false prediction can exacerbate the crisis. We should respond in a timely manner
and submit to the market flow. Above all, we shouldn???t reduce our foreign
currency holdings; they are our best weapon against the crisis. The 1929 Great
Depression didn???t bottom out until three years later.
(END)
Download
