TAILIEUCHUNG - The Global Financial Crisis: Analysis and Policy Implications - 2009

Our goal is to provide food for thought rather than an off-the-shelf solution. Many of the outside practices we explore are somewhat distant from conventional thinking. We are aware that some of our ideas will be controversial. We therefore do not necessarily speak of them as “recommendations.” Instead, we hope that our report will inspire a fruitful discussion between those stakeholders that have an interest in a more resilient financial system: policy-makers and supra-national bodies at a global level, regulators and governments at a national level, and senior managers at a firm level. It is our intention to stimulate, provoke, and challenge – and by. | The Global Financial Crisis Analysis and Policy Implications Dick K. Nanto Coordinator Specialist in Industry and Trade October 2 2009 Congressional Research Service 7-5700 RL34742 CRS Report for Congress------------- Prepared for Members and Committees of Congress The Global Financial Crisis Analysis and Policy Implications Summary The world is near the bottom of a global recession that is causing widespread business contraction increases in unemployment and shrinking government revenues. Although recent data indicate the large industrialized economies may have reached bottom and are beginning to recover for the most part unemployment is still rising. Numerous small banks and households still face huge problems in restoring their balance sheets and unemployment has combined with sub-prime loans to keep home foreclosures at a high rate. Nearly all industrialized countries and many emerging and developing nations have announced economic stimulus and or financial sector rescue packages such as the American Recovery and Reinvestment Act of 2009 . 1115 . Several countries have resorted to borrowing from the International Monetary Fund as a last resort. The crisis has exposed fundamental weaknesses in financial systems worldwide demonstrated how interconnected and interdependent economies are today and has posed vexing policy dilemmas. The process for coping with the crisis by countries across the globe has been manifest in four basic phases. The first has been intervention to contain the contagion and restore confidence in the system. This has required extraordinary measures both in scope cost and extent of government reach. The second has been coping with the secondary effects of the crisis particularly the global recession and flight of capital from countries in emerging markets and elsewhere that have been affected by the crisis. The third phase of this process is to make changes in the financial system to reduce risk and prevent future crises. In .

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