Sunday, February 7, 2010

Are markets and developing countries to dependent on government action?

Here’s an interesting article in The Economist outlining the ongoing “Stimulating Debate” in the United States. The article highlights the idea that despite better-than-expected economic data that poured in during February the facts may be more than a little deceiving. The economic push seems to be largely fueled by heavy government spending (Bailouts & Stimulus Packages) and the central banks. However, “both cannot co-exist for long; either the recovery will not last or, if it does, the stimulus will be taken away.” The US economy is walking a very fine line. Do they reduce the stimulus package today and risk sending the economy back into recession or let the stimulus work and risk damaging long-term growth? An interesting question that shall plague America in the coming year. 

2 comments:

Mishaal said...

That is an interesting question. However, the heavy government spending is only to help the economy.

craisdegy said...

It is hard to think about the government spending any more money keeping in mind it's trillion dollar debt. Perhaps the government should try saving and let industries work out naturally, even if they are "Too Big to Fail."