Government
Intervention And
The United States Credit Crunch
The U.S. government
has taken action to bring the credit crunch to a halt, but so far little payoff
has been seen. As time moves forward, will the intervention be enough to overturn
the economic unrest? The United States credit crunch
has been the worst seen since the Great Depression, and it is expected to get
much worse before it gets any better. While the government has taken action recently
to stimulate spending from citizens and prevent large industries from collapsing,
little improvements have yet to be seen. The government
intervention into the United States credit crunch began with a stimulus package
that returned a portion of paid income taxes back to the citizens. The goal was
to get them to spend the money and revive the economies from the bottom up. This
did not work out as expected, since most people do not have confidence in the
market and are being more conservative with their spending habits. Much of the
stimulus package was spent on bills, which are piling up in most households as
millions of workers are laid off from their jobs. Much
of the money put toward the stimulus package was also placed into savings accounts
by people who are concerned with their retirement funds being lost in the volatile
stock market. Instead of buying toys for their children or presents for the upcoming
holiday season, more people held onto their money. By
far the most substantial government intervention into the United States credit
crunch has been billions of dollars put into the largest banks in the country
to prevent their collapse. The government started with Fannie Mae and Freddie
Mac, who they declared were too large to fail. It followed with billions more
dollars to other banks in attempt to boost their lending power and lessen the
grip of the United States credit crunch. At this point
no improvements have been seen in the credit crunch from pumping in this money,
and even more industries are running out of money are may be awarded even further
money to continue operation. All of this has already taken the U.S. deficit to
over a quarter of a trillion dollars, and that is expected to hit the trillion
dollar mark by the end of the year, which is not far off. While
there are already discussions underway considering a bailout package for the struggling
automotive industry, the retail and food industries could be the next to go under
without intervention since they are struggling just as badly. All of this has
meant massive job loss throughout the country which compresses the economy even
further as people line up for unemployment benefits that burden state government
resources. Other results of the credit crunch have been
a foreclosure crisis where millions of homes are being lost and an increase of
demand for government assistance in medical care and food supplies. So
far the effects of these measures to control the United States credit crunch have
not been much, but could that change in the future? It is possible, but much will
depend on the actions of the new president and congress coming into power. Exactly
how much government assistance the new government will be willing to offer could
determine the direction the struggling economy takes next.
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