So far it seems that governments have pumped at least a trillion dollars into ailing economies globally. I was brought up to be believe that market forces should always be left to balance themselves out.
Its amazing how much money is now being used to prop up global stock markets. I would have thought is stock fell then that essentially should represent its true value. After all supply and demand is the king of market. Some of the measures being taken seem to be intended to inflate the value of stocks that clearly have lost all market confidence. So where does that leave the market forces?
The US Treasury has declared its intention to make $700b available to buy up so called toxic debts from banks. Apparrently this will enable banks to get back to inter bank profiteering. Its a measure of how panicked everyone is that even the Democrats weren't able to come up with a responsible solution. I recognose that the action taken appears to be a solution of sorts. I just dont believe its the best or most socially responsible one.
Buying up the debts seems questionable to me. Why not just make loans available with the debts collateral. The banks can then refinance subject to their performance and cooperation with recovery measures. This way the banks dont just take the money and hold on to it until they feel their books are balancing or start setting exploitative rates.
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