Will U.S. rescue fund resolve financial crisis?
Washington's top economic leaders are pushing for the plan – designed to get the country out of its financial mess. The idea is to create a fund to deal with the banks' bad debts. It’s expected to cost a trillion dollars.
Chairman of the U.S. Federal Reserve, Ben Bernanke, said he was “looking forward to working closely with Congress to resolve this financial crisis and get our economy moving again.”
Both Republicans and Democrats are accusing each other of allowing the crisis to escalate. But neither seems to have a recipe for getting the country out of the financial turmoil.
According to Congressman Ron Paul: “Obama and McCain talk the same language” and “do not deal with the deficits”.
Monday has already been dubbed Black Monday, when the U.S. stock market suffered its worst one-day plunge in seven years.
The Republican presidential candidate John McCain gave a confused response: “the fundamentals of the economy are safe”. And then he made a quick admission: “But we are facing difficult times.”
To tackle the problem McCain said a special commission should be set-up.
The editor of ‘Democracy: A Journal of Ideas’, Kenneth Baer, derided McCain’s reaction.
“In the teeth of a crisis to say you are creating a group to study the issue is just not leadership and bad politics,” Baer said.
A lot of things remain unclear in the government plan, such as how will it work? And will it work?
Previous attempts to inject confidence into the markets failed. It started with the rescue of investment bank Bear Stearns six months ago. Then came the bail-outs of mortgage giants Freddie and Fannie, followed by insurer AIG.
Many viewed the rescues as inevitable, but not the former Presidential Candidate Ron Paul.
“You should allow the bankruptcy. You have to get rid of mistakes. This whole idea that we should bail out everyone unfortunately doesn't bail out the taxpayers,” he said.
Ordinary Americans fear losing their jobs and their homes. They are as much in need of a rescue package as the banks.
Forty six million Americans don't have medical cover and 28 million survive on food stamps.
The current system appears to be about privatising profits and socialising losses. Or, to repeat and often quoted bit of political irony: socialism for the rich, capitalism for everyone else.
The government plan aims to do justice to taxpayers, but there are no guarantees.
The U.S. crisis has caused panic around the world. America, some experts say, needs the help of cash-rich countries to solve the crisis – countries like China, Russia and the Arab world.
Many central banks have already responded, by injecting cash into the global financial markets. A consorted effort might be the only way to weather a looming global crisis.