Fed lays out details for bank loans by Radka Konkolova

Economy is a system, that’s certainly clear. I think it is very complicated but on the other hand logically going system. But everyone has his own opinion. Even in the history there have been many approaches to economy as a whole and partially. Some economists have claimed government should not lead or help to lead economy because it works alone and when there is some crisis, consequently it helps to recover economy. Yes, it is true, because where there is depression or a slump, when the situation can’t be worse economy is going to start to recover and its next expansion. In the time of crisis the inefficiency is pulled out of the market.

World, especially financial and economic world has been hit by crisis. I think everybody knows almost every part of the world has got some troubles with finances. The most stricken is the economy of the United States. It is because North part of America’s continent is the very place where this situation has started.

Of course this very slump is not something what happened immediately although it could seem so. It started one or two years ago. The reason why the whole world has to face this crisis can be American banking and financial system. The United States are liberal enough and they don’t have as strict rules as Europe has got. I mean mainly providing of mortgages and loans. Here, in Europe is much more difficult to acquire a loan and applicant has to have some documents which declare his or her financial situation, family status, reliability, the high of his or her incomes and capability to repay borrowed money. In the United States the conditions to achieve a loan are more benevolent. It means many people got money from some financial institution but later they couldn’t pay them back. And this caused many problems because there have been quite many such people. A citizen of the United Stated can even bankrupt. It is something very strange in my opinion, because when they announced bankruptcy, they have to pay only the half of the amount they owe to state or bank. And in my opinion such amounts have made quite high deficit. And this money is really missing in the economy now.

Last time many Stock exchanges are decreasing and some of the biggest and oldest banks have bankrupted. So FED and the government of the US have met and been discussing this situation with effort to find the best solution of it. Finally they decided to assure a huge financial syringe. To help ease credit stresses, the FED announced Monday it will provide as much as $900 billion in cash loans to banks. Most of the loans are for 28-days and 84-days. Some are shorter — 13-day and 17-day loans.

I am so curious how it will seem in few weeks or months because in my opinion, this slump will be stronger and also other parts of the world will be hit. And certainly it will be worse than it is now…

related story: http://news.yahoo.com/s/ap/20081007/ap_on_bi_ge/fed_credit_crisis;_ylt=AqdN7C13u6jcuzL3GzJcN1Ss0NUE

by Radka Konkolova for PocketNews (http://pocketnews.tv)

PocketNews is a new real-time news broadcaster delivering the latest and hottest news right to your pocket ! With global clients who want to be kept up to date, PocketNews is everyone's way of keeping in touch with the World.

These news are original content from young talents around the world and are selected for you by Chris Cantell.


edited by Beata Biskova