Nonetheless, many governments have started to contemplate these kinds of measures. For example, South Korea reduced its interest rates, as has Japan, China, England, various European countries, and many others. Many have looked to borrow billions or in some way come up with stimulus packages to try and kick-start ailing economies. (BBC)
While these might be reasonably standard things to do, it requires that during economic good times, a reversal of some of these policies are required; interest rates may need to increase (one reason for the housing booms in the US, UK and elsewhere was that interest rates were too low during good times), borrowing should be reduced and debts should start to be repaid, infrastructure investments may not need to be as direct from government and private enterprise may be able to contribute, and most politically sensitive of all, taxes should increase again to offset the reduction in borrowing. (Economics Help)
Each of these measures should no doubt come under scrutiny from opposition parties and the media, to ensure they are appropriate, but some, such as tax hikes during good times can be so politically sensitive, that governments may be afraid to make such choices, thus making economic policies during bad times even riskier as a result. (Economics Help)
Even then, the severity of these economic problems means that these strategies are not guaranteed to work, or it may take even longer to take effect. For example, more and more companies are announcing losses, closures, layoffs or other problems; people are becoming very nervous about the economy and spending less. (Economics Help)
The automobile industry in the US, for example, is feeling immense pressure with some of the largest companies in the world facing huge problems and is asking the government for some kind of bailout or assistance. Yet, the US public generally seems against this, having already bailed out the banks with enormous sums of money (BBC). If the automobile industry is bailed out, then other industries will all cry for more money; when would it stop?
It may be that this time round a more fundamental set of measures needs to be considered, possibly global in scope. The very core of the global financial system is something many are now turning their attention to.
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