British PM to announce bank bailout plan Monday.
http://www.cbc.ca/money/story/2009/01/18/britain-banks.html
Summary:
The Prime Minister of Britain, Gordon Brown, states that his government with implement a new bank bailout plan on Monday to encourage bank lending. He announced this move in an interview with Sky News as he spoke on an airplane flying from the Egyptian Red Sea resort of Sharm el-Sheik to Jerusalem. According to reports carried by the BBC, the Sunday Times, and other media organizations, said the treasury was preparing to underwrite loans made by the banks to increase flagging confidence in the financial sector of the country.
The Role of Government in a Market Economy: Market Shortcomings:
I feel that many financial banks and corporations are desperate in this situation and the Government is admitting that it is desperate and is doing what it can, at least in the UK. This situation may differ in many other places like Canada, rumors have it that the Prime Minister in Canada, Steven Harper, closed parliament during the worst financial crisis since the great depression, and now he is trying to spend his way into keeping his job. In other words, the situation in Europe is not as urgent as the situation here in Canadian banks. All in all, many people believe that the Canadian banks should certainly work on their own economic and financial situation.
Reflection:
I believe the government is doing everything it can to preserve and save the financial crisis of the economy at the moment. The government is certainly playing it safe, because there is certainly a huge risk at hand if there are any miscalculations or bad decisions. Although the Canadian government is helping the economic situation, I believe it is not doing enough to stabilize confident lending. Banks are still very reluctant to lend money out; they interest rates have not been practically cut to assist their clients in borrowing money. The banks’ interest rates are still way higher than the prime rates that they were offering.
Sunday, January 18, 2009
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