Economics of War :: Economics Essays

As the United States forges an international military and political conglutination to counter the heinous attacks of September 11, it is equally important to mount a coordinated response to the economic dimension of the crisis. Acceptance of a fiscal meltdown or global recession would represent as expectant a defeat as a failure to punish the perpetrators of the attack itself and their protectors. The case for a multilateral economic strategy is compelling. Even previous to the attacks, the world was experiencing its first synchronized turndown in decades. Growth had slowed astutely almost everywhere and turned negative in a soma of countries. There was genuine risk of a global recession and the latest, pre-attack US data underscore that possibility here. The terrorist actions will depress economic natural process further for at least a while. More importantly, the shock to assertion could lead American and other consumers into more cautious spending patterns for m onths or even longer. A worldwide downturn is all too possible. A synchronized policy response is thus required. The key central banks hit already taken the first essential steps by pumping good amounts of liquidity into the markets to prevent cash shortages that could disrupt commerce, and by making initial cuts in interest place. The OPEC countries have also made a study contribution by announcing that they will maintain oil production at levels that will avoid exacerbating the problem. Much more is needed, however. The next make a motion should be a further, coordinated reduction in interest rates by the central banks, especially our own Federal Reserve and the European Central Bank that manages the euro. (The Bank of lacquers interest rates are already near zero.) Given the urgent need to restore confidence and cater the maximum stimulus to reviving economic activity, the worlds monetary authorities should abide to act together in a rapid and decisive manner. wholly three of the chief economic areas, including Japan as well as the United States and Europe, should also adopt expansionary fiscal measures. Strangely, the major European countries and Japan have been contemplating spending cutbacks, in the face of recession or snappy slowdown, to meet pre-planned budget targets. This would be akin to the Hoover economics that helped contain on the Great Depression in the 1930s, making a spoiled situation much worse.