This last He represented a significant blow to the U.S. At NY Restaurateur you will find additional information. financial system. Why the U.S. Government comes to rescue Citigroup? The first thing that must be said is that Citibank had not opened in yesterday if not for the financial assistance received from the American Government. For Government American, so key how to achieve that the economy recovers, it is avoid new episodes of crisis of magnitude in the financial system. The fall of Citigroup would have meant the collapse of the financial system and the deepening of the crisis on the real economy, which would have also extended the duration of the economic downturn.
This is due not only to the size that has the entity but also to the multiplicity of interconnections that it possesses the same within the financial system. What happened with the Citigroup has generated fears about the possibility of other large entities are going through similar situations. So it is that to generate tranquility in the markets, President George Bush announced that he is ready to apply similar measures to safeguard the U.S. financial system. Bush said in their statements: maybe take such decisions in the future.
It is not that the rescue would ensure that the economic prospects of the United States look better from the same, but avoids one major problem. The strategy of the U.S. Government to overcome the current crisis passes first because they contain the difficulties of the financial system, to then advance in the second step which is to stimulate the economy to be able to start its recovery. Within this strategy, the passage of time helps financial institutions are streamlining their balance sheets, although in this way is of utmost importance the Government intervention that avoid difficulties by debtors, because this would end up worsening the situation. These stress events, are not positive in terms of the prospects for recovery of the American economy since they damage the private sector expectations. In this sense, the influence of the President-elect Barack Obama can play a key role. These days, Obama announced the development of a plan of economic stimulus, Keynesian, of two years which aims to create 2.5 million jobs. On the day yesterday, Obama introduced his economic team composed of prominent economists where the current President of the New York Fed, Timothy Geithner, will serve as his Treasury Secretary, and former Secretary of the Treasury Lawrence Summers will occupy the post of director of the Economic Council. The announcement even though it does not have a concrete and perceptible impact on the economic situation, yes serves and much to improve tempers since it generates greater confidence approaching the capacity of the new management to cope with the crisis to overcome it. How you continue everything after the rescue of Citigroup? There is a message clear by the U.S. Government (the outgoing management both in the incoming) and that there is full will make the greatest efforts to sustain the American financial system and to achieve to revive the economy. Fortunately, profile that shows Obama is try to sort the fiscal accounts of the Government, which would ensure that once overcome greater turmoil in the American economy, would usher in a medium-term fiscal deficit reduction action. This would avoid any wastage of public resources generated by the present crisis, will be transformed into a new crisis in the future.