Bailout tarp in the united states

As the headlines in todays newspapers all most the world show, there is a global frugal slowdown. Economies all all over the world are being plunged into what is tentatively being cal lead Recession. part there are those who believe that this is simply an expected trend given the rapid growth of the global economy, it still does not detract from the fact that it is an pressing and pressing problem. In order to address this problem, several governments have issued long bail-outs and lawfulnesss designed to manage the system.In line with the principles of Keynesian Economics, it seems that the government is the provided pseudo capable of solving this problem. It is this government intervention through the Federal Reserve, led by Ben Bernanke, that is touted as the solution to the countrys, if not the worlds, economic problems. According to most economists, the current bailout scenarios that have been presented are nothing much than prime examples of throwing good money aft er bragging(a).Instead of tackling the problem head on by implementing sound fiscal and monetary policies, the United States government is knack on revitalizing the economy by allowing massive losers such as the AIG group to continue accumulating losses and patronizing its already proven bad habits. The main strategy here, as employed by Chairman Bernanke, is to eye prime the economy through a fluxed strategy of monetary and fiscal policies. It is posited that increase funding to these black hole institutions pull up stakes be the key to ending this financial crisis.One of these policies is the voluntary capital purchase program. It is aimed at selling preferred shares of stock to the United States Government on kind terms that afford the maximum amount of protection to the taxpayer. Another polity that has been implemented is the systematic risk exception under the FDIC Act which grants the FDIC the fountain to guarantee, on a temporary basis, the senior debt of all FDIC i nsured institutions. The thirdly policy that has been announced is the increased access to funding for all of the descentes in various sectors of the Ameri elicit economy.The goal of this is to stimulate economic growth on a micro level in order to develop square(p) economic fundamentals that can help resuscitate the economy. Other travel that the Federal Reserve has taken include the strengthening of capital placement and funding ability of American Financial Institutions. These are to be achieved through multilateral agreements such as the reciprocal funds arrangement (Swap Lines) with supranational Central Banks.Finally, the heralded US $700 billion bailout plan that was recently enacted into law has likewise been designed to infuse much needed capital into the market and to protect the exposure of several multinational and local financial institutions. While there are thusly real benefits for pump-priming the economy, the more pragmatic nest is to control spending. On e of the options available to control this problem is to adjust have-to doe with rates in order to prevent capital flight and also encourage more investors to bring in foreign currency. By increasing interest rates the accept for local currency is increased.The reason for this is that only the local currency can be used in transacting business in the country. This means that investors have to convert their foreign currencies into local currency in order to be able to do business dealings in the market. If foreign investors come into the country then there will now be a marked increase in the demand for the local currency thus stabilizing the exchange rate formerly more. While there is certain economic and political sense in the policies of Bernanke, the herculean task of rehabilitating one of the worlds largest economies cannot be through through the efforts of the Federal Reserve alone.Even employing one or a mix of the strategies would only be preliminary to finding the real s olution to the problem. So while current theories show that monetary and fiscal policies may indeed impact inflation and unemployment thus alleviating the economic situation, such is not unendingly the case in certain situations as shown in the example provided. The fundamentals such as solid economic fundamentals must forever and a day be considered when looking at the impact of such changes to see if they can really attain the desired effect.