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The human cost of economic meltdown and its alternative
Oct 24 2008

The New York Times editorial calls this "the scariest economic free fall the world has seen since 1929," referring to the Great Depression that caused great suffering to millions. The sentiment is echoed by hundreds of leading economists, bankers and traders whose opinions are quoted daily, as
they struggle to explain the economic fallout to the general public. Yet no one is able to confidently predict our economic future.

The US government first bailed out and then, following the lead set by Britain, France, Italy and Spain, began taking over some of the largest financial institutions. How many billions and trillions do they have? Of course the answer is that they already have more than 10 trillion dollars in national debt!

The Human Costs

The human costs of this economic meltdown are only beginning to be felt. More than a million citizens have lost their homes in the past two years, and a million more are expected to lose their homes in the coming 12 months. Yet the United States government continues to pay more of the mortgage costs of rich homeowners, through larger tax deductions, than of poorer homeowners.

United States citizens have lost two trillion dollars in retirement funds, representing about 20 percent of their value since last year, reducing the income of everyone and forcing many older working citizens to continue working even into their late sixties. Countless small investors are losing their savings.

The frozen credit market, which is much more serious than the severe stock market declines, will cause companies around the world, unable to borrow, to layoff workers and unemployment will rise.

The Russian stock market fell by about two-thirds since May. Thus, the global financial crisis has wiped out roughly a trillion dollars in wealth across the country.

The country of Iceland itself is failing. Prime Minister Geir Haarde warned of the threat of "national bankruptcy." The government seized its three largest banks to prevent their failure, and the currency had already lost half its value before its trade was halted. The country is desperately seeking an emergency loan from Russia or from the International Monetary Fund (IMF). However accepting the IMF harsh structural adjustment policies to restore fiscal and monetary stability will hurt everyone, an extraordinary reversal for the island's economy which has been quite affluent for the last decade.

Source: http://www.unobserver.com/layout5.php?id=5274&blz=1


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