Ginger Post

US$700 billion can buy you lots of things. Or, have you ever thought of that you would have that much money? If you were given $700 billion, what would you have done? The US government decided to use that amount to bail out the US banking systems. It was reported that there was only one page for the first draft of the proposal on using this amount by the Treasury Department. Of course, this did not work well in the Congress and later it had become a 200+ pages document, titled Emergency Economic Stabilization Act of 2008 (1). As we are now living in a global economy, this collapse of the US banking system created a domino effect on the world financial systems. Not only that the European governments formed joint effort to inject monetary support into their respective banking system, the Chinese government had also attempted to help out the failing US financial system by purchasing US$200 billion worth of bonds (2). By doing this, the Chinese government helped in stabilizing the US financial system. If the US economy were going downhill, it would have a direct impact on its growing export industry as a less amount of goods would be acquired by Americans - one of her major trading partners. With the amount of money now being flown into the global financial system, is this indeed an effort to heal the wound? Or just to stop the bleeding. Time will tell. On a closing note, there is one piece of news that has not been made it to the headline on many major media. MSNBC reported that despite the instability in Iraq, its stock exchange index (ISX) soared nearly 40% in September while US, its occupant, is facing an economic meltdown (3). Life is full of ironies.

1: http://www.treas.gov/economic-plan/ [Accessed October 14, 2008]
2: “Economy Crisis” (Translated from Chinese) Sing Tao Daily, October 5, 20008, p. A1.
3: http://www.msnbc.msn.com/id/27150517/