Summary Blog

Article from MercoPress:

http://en.mercopress.com/2009/04/02/g-20-agrees-on-1.1-trillion-usd-and-tougher-rules-to-tackle-global-crisis

SUMMARY

This article I just read was about the outcome of the 2009 G-20 London Summit. This was the second G-20 Summit since last year in Washington and the leaders of states from the Group of Twenty Finance Ministers and Central Bank Governors all attended. The obvious goal of this summit is to find a way to overcome the global economic crisis. The summit started on April 1st and the outcome was announced on April 2nd. Despite different and contradicting financial strategies between some of the countries, the 20 leaders came to an agreement to fight against the economic crisis by stimulating the global economy with 1.1 trillion US dollars. This amount was distributed in these ways. 500 billion dollars would be made available to the IMF (International Monetary Fund, a major international organization that oversees the global financial system) to provide aid for struggling economies around the world. Another 250 billion dollars were announced for a new IMF overdraft facility. To boost world trade, 250 billion dollars were once again provided. In the end, a 100 billion dollars were approved to assist international banks in lending money to poor countries. The G-20 leaders also decided to work with the IMF to ensure a more stabilized world economy and to provide a early warning system for future economic crises.

CONNECTION


The study of accounting is obviously related to the economics and the financial status of the world. that's why I thought that it would be a good idea to use the huge economic crisis we're experiencing right now as the topic of my summary blog of the year. Huge international banks irresponsibly lending "unlimited" amount of money to "anyone"(meaning that they don't have to prove their ability to pay the mortgage) who wanted to buy house was one of the major causes of this economic crisis. When people realized that they couldn't afford the house anymore, the banks simply took the house back and tried to sell it. But since it turned that so many people couldn't pay their mortgage, the number of houses for sale on the market increased dramatically, eventually causing the house price to decrease. This way, the banks started to lose money and their liabilities went high up into the sky. In the end, they went bankrupt. With all that money provided by the super powers now available to the world, It is possible to say that our economy might start to get back on track in one or two years (best case scenerio).

REFLECTION

First of all, 1.1 trillion... This is hugest number I've ever seen! I think I might need a calculator to figure out how many zeros there is. It seems that our economy is not THAT bad after all. Coming back to the economic crisis, I blame the greedy and irresponsible business people. They are always trying to maximize profit without considering any consequences that may follow, and now look where they got the whole world into. After they realize the consequence, they simply announce bankruptcy and go to where ever to spend the rest of their miserable and pathetic lives, leaving the completely messed up global economy in our hands. Now everyone of us is suffering for their faults, I find that really unfair. I'm quite impressed to see that the leaders from 20 of most influencial countries actually came to an agreement and invest such a huge amount of money to stimulate the economy. But I also think that the way our economy is running should seriously be improved, especially the policies of banks. If we just throw in a whole bunch of money to get the economy back on track, and just continue to allow those bank owners to do as they will, we'll probably find our economy back to the state it is today in no time.