Desperate times, desperate measures

In this last weeks issue, The Economist magazine published an article that gives new insight on the how the new problems that are arising will not just mean stronger measures must be taken by the american government but also those of Europe and even as far as Asia. While it is obvious  the chances of global economic superpowers taking an indifferent stance seemed quite small, it is interesting how quickly several foreign governments are taking a more collaborative stances to help shield their own economies as best as possible. With confidence in the world economy in a spiraling decline, unprecedented measures are being taken to reduce the impact and/or damage within the withering credit market (besides those being undertaken in the US). On October 8, in one unprecedented move, some key central banks such as the central Bank of Europe, the Bank of England, and The Peoples Bank of China all led a joint interest rate cuts. The interesting and positive aspect being that governments are starting an attempt to take charge of the situation. This sort of collaborative action is symbolic because most foreign nations usually tend to take a more selfish stance and wait for a big player like the US to take charge. While this change in policy is certainly a positive change, is it enough?

The main focus of all this was to restore confidence in the market before things develop into a out of control situation. Signs of such change are occurring worldwide: Iceland recently nationalized its two biggest banks, emerging markets are watching the value of their local currencies drop significantly, and those with money market funds are not taking any chances. And all of these occurrences do not even include what is happening in the United States. Another key fundamental problem that is occurring now, according to The Economist, is the fact that while we are beginning to see some decisive action from government officials, the pointless action of pointing fingers while blindly attempting to find a solution are certainly not an efficient way to help the situation get any better. So instead of looking for a culprit (which there are many) it might seem more prudent to focus on fixing the damage that has already been done instead of creating more of it.