Now that the chickens have come home to roost regarding the current global financial and economic turmoil, some soul searching is going on at both international and national levels on what went wrong and how to fix it. At the beginning, sometime towards the end of 2007, the United States of America (USA) - the world's first and leading economic power, detected some disturbing economic indicators in its economy that required government's immediate attention in order to prevent the economy from going into recession. 

Therefore, President Bush and his administration, together with the US Congress (i.e. the legislative branch), started to work out and put in place some remedial measures to save the faltering financial and economic situation from going the way of recession. For example, the sub-prime mortgage sub-sector was found to be in distress and needed government's urgent intervention to avert bankruptcies and bank failures not just in the US but across the world. 

The Bush administration, working together with the US Congress, crafted a multi billion rescue package under the framework of an Economic Stimulus Package and a legislative Act to back it up. This action was initiated and completed with an enactment of the Economic Stimulus Act of 2008 (H.R. 5140) on February 13, 2008. 

The H.R. 5140 was designed to jumpstart the US economy. It provides for several kinds of economic stimuli intended to boost the economy of the United States in 2008 and to avert or ameliorate a recession.

The law provides for tax rebates to low- and middle-income US taxpayers, tax incentives to stimulate business investment, (e.g., $44.8 billion in business incentives and help for homeowners facing foreclosure because of the mortgage meltdown), and an increase in the limits imposed on mortgages eligible for purchase by government-sponsored enterprises (e.g., Fannie Mae and Freddie Mac). The total cost of this bill was projected at $152 billion for 2008, with an additional $124 billion to be spent over the next 10 years.

However, by the second quarter of 2008, what started as US-centred financial and economic malaises, had metamorphosed rapidly and engulfed the entire global financial and economic system, largely hooked on a neoliberal capitalist architecture built upon "Washington Consensus" paradigm - a paradigm that promotes and or seeks to minimise the role of the state in financial and economic policy and management. 

Thus, the Washington Consensus serves to promote neoliberal agenda setting of the now globalised world. Therefore, currently, no nation can claim to be totally immune from either the effect or impact of the financial and economic meltdown - adduced to be the worst financial crisis since the Great Depression of the 1930s.

That is the main reason why the leaders of the Group of 20 most advanced and developing economies of the world (i.e., G-20) had a meeting in Washington, D.C., USA, on Saturday, 15 November 2008, grappling and deliberating on how to deliver a concrete plan to ward off the imminent recession and prevent future meltdowns.

While it is generally acknowledged the world over, that the main reason why the current financial crisis and economic damage from credit market turmoil that began about 17 months ago occurred is largely traced to the failure of government to exact its role in ensuring a stricter regulatory framework to govern the workings of the national and international financial system (and by extension, the world capitalist system), hard-core neoliberals are refusing to take responsibility even though they do acknowledge the failure of the free-market in self-correcting its excesses and extravaganzas over time.

For example, even some hours to the start of the G-20 meeting in Washington, D.C., out-going President Bush of the United States was still refusing to accept the blame traced to the failing of the free-market capitalist system! Who's to blame then for the crisis?

Economics Nobel laureate Joseph Stiglitz and many other respected and influential individuals in the field that share favourable ideological pre-dispositions towards markets, private capital and free trade and investment, have a long time ago, since the East Asian financial crisis of 1997, warned about the instability of the system and the possibility of its repeat on a global dimension unless reform of the system is carried out.

Abubakar Atiku Nuhu-Koko

Robot  # 1 | 31.12.2008 01:59

Now that the chickens have come home to roost regarding the current global financial and economic turmoil, some soul searching is going on at both international and national levels on what went wrong and how to fix it. At the beginning, sometime towards the end of 2007, the United States of America (USA) - the world's first and leading economic power, detected some disturbing economic indicators in its economy that required government's immediate attention in order to prevent the economy from going into recession. Therefore, President Bush and his administration, together with the US Congress (i.e. the legislative branch), started to work out and put in place some remedial measures to save the faltering financial and economic situation from going the way of recession. For example, the sub-prime mortgage sub-sector was found to be in distress and needed government's urgent intervention to avert bankruptcies and ...Read the full article.