SOS Let's Evaluate the Changes

SOS Let us take a look at the Government actions (whether it is sustainable or necessary during an economic boom)

1. Stimulus - car credit, housing allowance [broken window concept]


2. Bailout - supporting too big to fail incompetence banks or conglomerates [proven to be waste of resource]


3. Zero interest rates [if it is good for the economy, they should have done so during the good times]

If you realise, the above steps are unsustainable and unproductive over a long run.

Let revisit what got us into the mess and see if any major changes:

1. sub prime mortgage and prime mortgage for housing


2. commecial collapse


3. derivatives debt exploded

None of the above actually changes much, in fact the following happen

1. Unemployment get to 10%


2. Food stamps at historical high


3. Bank giving out credit plummet


4. Saving rates increased

None of the above effects are good for the economy.

So, just look at the 3 solutions, the 3 causes and the 4 results you will notice that LONGER run the economy of USA is getting worst. It is similar to Europe.

Can Europe and US get out of the crisis?

Can the BRICS save them?

Depends who you ask, if you go for the school of deflation depression theory, i.e. it will effect worldwide, hence, the above answer is No and No.