US View on the Current Economic Crisis

To most, the United States is the epicenter of the global financial crisis that has overtaken the world. The collapse began with American banking firms and was partially caused by the American subprime mortgage lending program that had been undertaken by banks all over the world. However, the responsibility of the American Federal Reserve Bank has minimized the impact of this economic downturn and has reduced any effects of this recession upon the rest of the world. While not going so far as to save all irresponsible American banks, the stimulus package was able to save some of the banks who were in danger of facing bankruptcy in the face of bad debts. Lehmann Brothers and Bear Stearns were able to have their best assets recovered and the losses to the American people were minimal.
The manner in which the global economy has progressed over the past several decades has meant that the world’s financial institutions have become intimately linked. With investments being made in foreign currencies and assets being traded from nation to nation, when one nation’s banking sector was hit as an effect of excessive deregulation others inevitably followed. The United States was not the only nation to be hurt by this issue. When Great Britain and the Netherlands decided they could make a higher inflation rate by investing in Iceland and their nation’s banks were hurt in much the same way. Japan went through a similar process in the 1990s and the Southeast Asian crisis went along the same lines as well. The United States is not to blame for the state of economic affairs the globe is currently experiencing but its actions to escape the recession should be followed as the nations of the world move past this horrible time.
The European Central bank underwent a similar bailout plan to recapitalize the banking system and give it the liquidity it required in order to avoid disaster. As the banking systems around the world become more able to lend without fear of overleveraging themselves, the world will begin to exit this crisis and be able to move forward stronger than ever. As the crisis abates, the world will have to remember that it was the extreme deregulation of the recent past that allowed for this crisis to occur and by ensuring that the banking system is appropriately governed by the responsible parties of the world, future crises can be avoided. The large stimulus package the United States invested into its economy has already begun to pay off as several banks have repaid the loans with interest. Any nations that are still feeling the reeling effects of the global crisis should take this point to heart as they can follow with their own stimulus packages in order to grow out of their own piece of the crisis. Under no circumstances should this crisis be used as an excuse to stop the process of globalization. The free movement of goods and capital cannot possibly be contained and stopped and any attempt to do so would only send those economies even further into a deep depression. The ages of isolationism are over and the global economy must be embraced. However, regulation of this global economy must be carried out in order to prevent individual actors from wreaking havoc upon the world once again.