Monday, February 15, 2010

Withdrawing the Drugs

This article discusses the future of economic recovery efforts around the world. The world economy is starting to turn around and governments are now faced with reducing the assistance they have been providing. Governments must decide when will be the best time to tighten the fiscal and monetary policies, which tactics should they use, and how should they approach these tactics. Various ideas are suggested, but in the end, the key is to make sure the changes are coherent and coordinated. Even with these changes, things will never be the same as they were before the economic downturn.

One of the key factors to this article is that when a government helps out an industry or market, taking this help away is always difficult. The industry and market come to rely on the help they receive from the government and will work hard to keep it, even if it is no longer needed. They will employ lobbyists to get the government to act in the industry's best interest. Even if the help is reduced, people know that the government will step in and help. This has left the world changed.

Another key point is that there is no one way to reduce the help governments have provided. Governments around the world are faced with different economic systems. This has led to these governments taking different approaches to the economic downturn and means different solutions will be needed to fix the problem of reducing the help.

1 comment:

Kevin said...

One of the things our government ought to draw away from its takeovers and bailouts is that it needed not be so necessarily interventionist if it had been more reliably regulative of these financial institutions. If Congress can pass some meaningful banking regulation, then the whole point of "injecting" money into the system would be less necessary and government can go back to handling other services.