CBGE

About the financial crisis & how we cope with it

Is there a way out?

The financial crisis has been dragging on for quite awhile now. When it first happened a lot of people seemed to believe that it was a short term problem that would be resolved quickly. Unfortunately this has turned out not to be the case, if anything it seems to be getting worse. This does raise the question of whether or not there is a way out.

The most important thing that has to happen in order for us to get out of the financial crisis is that the banks have to start loaning money again. This requires that the banks be re-capitalized so that they are able to make the necessary loans. The problem is that this is a tough sell politically; it was after all the banks that got us into this mess in the first place. Clearly the idea of the government giving the banks money is not going to go over well. However it is going to have to happen in order to get the economy moving again.

The other big thing that is going to have to happen in order for us to get out of the financial crisis is that the spending habits of both the government and the people are going to have to change. The United States economy has largely been built on debt for years now, this cannot continue. If we are going to solve the problem the government is going to have to balance its budget and the American people are going to have to start saving money. This is going to take some major sacrifices which makes it unlikely that it will happen.

One other thing that has to happen in order for the financial crisis to be solved is that the government is going to have to increase the amount of regulation that they put on the financial sector. Not only will this make it less likely that the same thing will happen again in the future but it will restore confidence in financial institutions. This is something that has to happen if people are going to start investing their money again. This is another one of those things that may be difficult to make happen.

Whether or not we are able to get out of the current financial crisis is going to depend on how willing we are to deal with the problem. Unfortunately the results so far would seem to suggest that things are not looking good. There are a lot of people who seem to believe that if things are left alone the problem will solve itself. Even worse the politicians seem more interested in arguing with each other than in addressing the problem. The result is that little of the stuff that needs to be done is getting done. The problem is that there are serious structural issues with the economy that need to be dealt with, unless they are the economy will likely continue to struggle for years.