Fin Crisis: Too late and too little executed in US

May 16, 2024 | blog

AHMEDABAD: Its too late and too little executed within the US to return out of the monetary turmoil, a disaster of 240 trillion $ can’t be stemmed with bailout packages of 1 to 10 trillion $, Arun Kumar, professor at Jawaharlal Nehru University stated right here on Thursday.

“When the US president elect Barrack Obama assumes office in January, the crisis will still be bigger,” Kumar stated whereas delivering lecture on Current Financial Turmoil and Lesson for Future at Ahmedabad Management Association right now.

“150 billion $ tax cut package for the housing sector was too little and too late to stem the collapse of a much higher magnitude,” Kumar stated including “Every aspect of financial sector got sucked into the financial turmoil.”

“In last two decades the financial markets in US got deregulated, under the guidance of Alan Greenspan as he worked on assumption that markets are self stabilising, but in a recent testitmony Greenspan admitted he was wrong for 16 years,” Kumar stated whereas quoting a US main each day.

This deregulation led to the collapse of Lehman Brothers, Bear Stern and different troubled entitites, he added.“Government has intervened, crisis has slowed down, but there is crisis of confidence now amongst the banks. The financial and money markets work on certain degree of trust and confidence and this should not be shattered at any cost,” he added.”Collapse in US was so sharp against the gradual rise because the banks were interlocked in deals. Due to deregulartion there were instruments promising much higher returns and even a marginal fall in assest pricing triggered it all,” Arun Kumar stated.

US financial system was thriving on borrowed funds, so publish disaster international locations comparable to Japan, China, Iceland, Ukraine and others are in serious trouble. China is discovering methods to delink from greenback, after company income started falling displaying early indicators of heading into recession, Arun Kumar stated.

Now protectionism of financial system has creeped in attributable to insecurity, that too is dangeorus, he cautioned. So when the US President-elect Barrack Obama joins workplace he would prioritise job creation in sectors like BPO and name centres, Kumar stated including, prior to now 1.5 billion job loss has been reported in US.

So at this historic juncture a out-of-box re-architecturing is required for the $ 600 trillion monetary sector, he added.

In the backdrop of such a state of affairs the G-20 initiative is necessary and intensive coordination between the federal government’s together with Indian must be advanced to return over it, Kumar added.

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