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How will the US government's 700 billion dollar bailout affect global markets?
Wiki User
∙ 15y ago
It will effect trade and finance in a negative way. Not necessarily. The goal of the $700 billion investment in illiquid assets is to get credit flowing again. With credit flowing you will likely see increased economic activity which will positively impact global trade and finance. Without the bill passing, you will likely see a dramatic drop-off in economic activity as millions of Americans lose their jobs. It would not be surprising to see an unemployment rate in excess of 10% (currently 6.1%). The economic pain that the country would experience without this bill would be dramatic. The US has not experienced a real recession in 26 years ('73-'74, '80, '82) and if this bill fails we will likely experience a dislocation comparable to those three recessions. Since the revenue (in tax dollars) to the government is 100% dependent on the growth of the economy, a recession will mean less money to do anything.
Wiki User
∙ 15y ago
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How will the federal bailout affect the deficit?
From the NY Times:According to the White House, the 2008 federal deficit is projected to be $410 billion, or about 3 percent of gross domestic product. While deficits are rarely positive, this level is within the ranges maintained over the last several decades. However, if the Treasury's $700 billion plan is fully utilized, it would drive the federal deficit to more than 6 percent, in excess of the last high seen in 1983. The fiscal burden of a deficit of this size creates a considerable barrier to economic growth over the longer term.http://campaignstops.blogs.nytimes.com/2008/09/23/what-the-proposed-bailout-means-for-the-deficit/As it turns out, the TARP program (as of June 2010) is making money for the treasury and is REDUCING the deficit.The NY Times article is not correct.This is all aload of crap seriously.wtf just because i love cagdas so much, u kno wat yh i wish i cud jus talk to cagdas at least just say hi once i wud be so happu. It is unclear right now how the bailout will affect the federal deficit. Unlike general spending which have an immediate and direct effect on the deficit, this is a purchase of assets and not an expenditure. The initial way that its effect will be estimated by the Congressional Budget Office will be based upon an estimate of how much the government will profit or lose once the assets either are sold or mature. Many people believe that if this is done properly, this will reduce the deficit and the national debt because the government will make money when everything is wound up. It is entirely possible that we "the taxpayers" could make hundreds of billions of dollars on this "bailout".Everything depends on how the program is structured, how the assets are acquired and how the economy performs over the next decade.
How will the US government's 700 billion dollar bailout affect the GDP and the unemployment rate?
It is unclear the affect the bailout will have on GDP and unemployment. GDP growth has the biggest impact on employment so how the economy responds to the bailout is the critical factor, If credit markets loosen up and credit begins to flow again it will have a very positive impact on GDP growth. In that instance the impact of the bailout will be a reduction in unemployment.
Who does the bailout affect the most?
Positive Effect - On Banks & Financial institutions who are stuck with loads of bad debt Negative Effect - On the US Treasury and Federal Reserve because they are the ones who is spending this 700 billion
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