Damn it, the sky isn't falling.
Over the past couple of months we've been experience some of the most significant upheavals the world has ever seen in the financial markets. However, this "Made in the U.S.A." problem, caused by the U.S. sub-prime mortgage market, is probably not the end of the world!
Now, I know that many of you anti capitalists, anti globalization types and anti poverty committee members are really hoping that this is the end of the world as we know it, but you are all going to have to hold your breath a little while longer. As much as you're wishing for the end of all things linked to the global economic machine, our capital markets still work just fine - thank you very much. Hurray for capitalism and shame on all of you who are hoping for it's failure.
Yes, we are certainly living through some interesting times, but we are not living through the end times!
With all the negative news in the economic market place, the world has been hit by a crisis of confidence. Policymakers around the world are rapidly introducing measures aimed at restoring our confidence in the markets. Here are a few of the major initiatives aimed at restoring our global financial credit markets.
October 3rd - the US Congress approved a US$700 Billion bailout which allows the U.S. Treasury Secretary to buy up to US$700 Billion worth of troubled assets from U.S. Financial Institutions. The U.S. Government is targeting these funds to restore liquidity to the financial credit markets.
October 13th - the US Treasury presents a 5-point plan to stabilize the credit markets.
- Buy troubled mortgage-backed securities from U.S. Banks.
- Buy mortgages from regional U.S. Banks.
- Insure mortgage-backed securities and mortgages to ensure that investors don't lose money.
- Buy equity in a variety of U.S. Financial Institutions.
- Help home owners in mortgage default to stay in their homes.
October 14th - President Bush announces the following:
- Invest US$250 Billion to buy preferred shares in 9 major U.S. Banks including the four largest, Citygroup Inc., JPMorgan Chase & Co., Well Fargo & Co., and Bank of America. This initiative is aimed at unfreezing the credit markets and get banks lending again.
- The U.S. Government will temporarily provide unlimited coverage on all non-interest bearing accounts that exceed the Federal Deposit Insurance Corporation limit.
Nations around the globe are taking similar actions to restore confidence in our financial markets.
The Canadian Government will purchase up to $75 Billion of insured mortgage pools by the end of the fiscal year as part of its ongoing efforts to maintain the availability of longer-term credit in Canada. Here in British Columbia, Premier Campbell announced that the B.C. government is lifting the ceiling on insured deposits at credit unions. Formerly, deposits at Credit Unions were insured by the provincial government, up to only $100,000.
While I'm not entirely convinced that these measures will fix our current global credit problems, they will build back some confidence in our financial institutions over time. Once lending and liquidity in the financial markets return to a more normalized state, our global economy will return to improving the standard of living of individuals in countries all over the world.
Globalization continues to offer great opportunities for all nations. Trade must not be viewed through the distorted views of narrow interests. All efforts must be put forth to nurture globalization as it provides economic growth, employment and development for rich and poor countries alike.
Now, I know that many of you anti capitalists, anti globalization types and anti poverty committee members are really hoping that this is the end of the world as we know it, but you are all going to have to hold your breath a little while longer. As much as you're wishing for the end of all things linked to the global economic machine, our capital markets still work just fine - thank you very much. Hurray for capitalism and shame on all of you who are hoping for it's failure.
Yes, we are certainly living through some interesting times, but we are not living through the end times!
With all the negative news in the economic market place, the world has been hit by a crisis of confidence. Policymakers around the world are rapidly introducing measures aimed at restoring our confidence in the markets. Here are a few of the major initiatives aimed at restoring our global financial credit markets.
October 3rd - the US Congress approved a US$700 Billion bailout which allows the U.S. Treasury Secretary to buy up to US$700 Billion worth of troubled assets from U.S. Financial Institutions. The U.S. Government is targeting these funds to restore liquidity to the financial credit markets.
October 13th - the US Treasury presents a 5-point plan to stabilize the credit markets.
- Buy troubled mortgage-backed securities from U.S. Banks.
- Buy mortgages from regional U.S. Banks.
- Insure mortgage-backed securities and mortgages to ensure that investors don't lose money.
- Buy equity in a variety of U.S. Financial Institutions.
- Help home owners in mortgage default to stay in their homes.
October 14th - President Bush announces the following:
- Invest US$250 Billion to buy preferred shares in 9 major U.S. Banks including the four largest, Citygroup Inc., JPMorgan Chase & Co., Well Fargo & Co., and Bank of America. This initiative is aimed at unfreezing the credit markets and get banks lending again.
- The U.S. Government will temporarily provide unlimited coverage on all non-interest bearing accounts that exceed the Federal Deposit Insurance Corporation limit.
Nations around the globe are taking similar actions to restore confidence in our financial markets.
The Canadian Government will purchase up to $75 Billion of insured mortgage pools by the end of the fiscal year as part of its ongoing efforts to maintain the availability of longer-term credit in Canada. Here in British Columbia, Premier Campbell announced that the B.C. government is lifting the ceiling on insured deposits at credit unions. Formerly, deposits at Credit Unions were insured by the provincial government, up to only $100,000.
While I'm not entirely convinced that these measures will fix our current global credit problems, they will build back some confidence in our financial institutions over time. Once lending and liquidity in the financial markets return to a more normalized state, our global economy will return to improving the standard of living of individuals in countries all over the world.
Globalization continues to offer great opportunities for all nations. Trade must not be viewed through the distorted views of narrow interests. All efforts must be put forth to nurture globalization as it provides economic growth, employment and development for rich and poor countries alike.
posted by Walter Schultz @ 9:00 PM
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