The current credit crunch was result of excessive lending by naive bankers. The last thing which is required to correct this mess is to lower interest rates. When people are not saving enough, how can bank going to lend more and that too with low interest rates? The solution for all this mess is to
- increase interest rates,
- ask people to save more
- ask United States to cut spending on War and defense expenses
This will result in lower spending in America and lower export for China, India or other countries and in turn will fuel recession. But all this is necessary to curb the problem before it result in world war III. Before lending to US, IMF or Asian banks should demand less spending on defense.
Commodity speculations should be brought under control by banning all financial derivatives i.e. future contracts which does not result in physical delivery of commodity… This will keep investment bankers and gamblers out of commodity market and will result in fair price calculation of commodity. The speculation had driven the Oil prices so high in last 2 years how else you can explain the recent 50% drop!! The oil demand hasn't gone down by that much percentage nor has supply gone up in last 6 months.
So this Christmas do not expect Santa Claus bringing gift for you or your children but instead pray that world economy do not slump down more than it has to.
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