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.

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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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