Short Term Response to Debt

If you have debt crisis, what would like to do? The debt crisis often happen to the company who can't manage their company smoothly. The debt crisis led to significant slowdowns in the economic grwoth. If this economic crisis happen to giant country like America, the growth of economic will show slow down to all over the world because many contry also depend to the American market. The fourth quater of 2008 saw an increase in the unemployment rate, about 11% highest rate since 1983.

The debt crisis brought to the global financial system to the threshold of collapsing. The instant strategy on overcoming the crisis is by loan to world bank or to other rich countries. The central bank then bought US$ 2.5 trillion of government debt and distressed private asset from banks during the last quarter of 2008. This is the largest liquidity injection into the credit market, and the largest monetary policy action to overcome the country crisis.

European government then increase their fund to US of their national banking system for about $1.5 trillion. This loan is done by buying newly issued preferred stock in their major banks. Short term action to overcoming this crisis, the government also bailed out a variety of firm thus bearing large financial obligations. Different U.S government agencies have obligated trillions of dollars in loans, asset purchases, guarantees, and direct spending.