By Cliff Montgomery – Oct. 29th, 2009
The Congressional Research Service (CRS) on Oct. 2nd issued a study on the Great Recession. The report’sconclusion? The financial pain is still with us, and much remains to be done.
It’s a good counter to the corporate media’s delusion that the Recession is ‘over’ and a ‘thing of the past’.
Below the American Spark has printed the summary from the CRS report:
“The world is near the bottom of a global recession that is causing widespread business contraction,increases in unemployment, and shrinking government revenues. Although recent data indicate the largeindustrialized economies may have reached bottom and are beginning to recover, for the most part,unemployment is still rising.
“Numerous small banks and households still face huge problems in restoring their balance sheets, andunemployment has combined with sub-prime loans to keep home foreclosures at a high rate.
“Nearly all industrialized countries and many emerging and developing nations have announced economicstimulus and/or financial sector rescue packages, such as the American Recovery and Reinvestment Act of2009. Several countries have resorted to borrowing from the International Monetary Fund as a last resort.
“The crisis has exposed fundamental weaknesses in financial systems worldwide, demonstrated howinterconnected and interdependent economies are today, and has posed vexing policy dilemmas.
“The process for coping with the crisis by countries across the globe has been manifest in four basic phases.
“The first has been intervention to contain the contagion and restore confidence in the system. This hasrequired extraordinary measures both in scope, cost, and extent of government reach.
“The second has been coping with the secondary effects of the crisis, particularly the global recession andflight of capital from countries in emerging markets and elsewhere that have been affected by the crisis.
“The third phase of this process is to make changes in the financial system to reduce risk and prevent futurecrises. In order to give these proposals political backing, world leaders have called for international meetings toaddress changes in policy, regulations, oversight, and enforcement. On September 24-25, 2009, heads of theG-20 nations met in Pittsburgh to address the global financial crisis.
“The fourth phase of the process is dealing with political, social, and security effects of the financial turmoil.One such effect is the strengthened role of China in financial markets.
“The role for Congress in this financial crisis is multifaceted. While the recent focus has been on combating therecession, the ultimate issue perhaps is how to ensure the smooth and efficient functioning of financialmarkets to promote the general well-being of the country while protecting taxpayer interests and facilitatingbusiness operations without creating a moral hazard.
“In addition to preventing future crises through legislative, oversight, and domestic regulatory functions, OnJune 17, 2009, the Department of the Treasury presented the Obama Administration proposal for financialregulatory reform.
“The proposal focuses on five areas and includes establishing the Federal Reserve as a systemic riskregulator, creating a Council of Regulators, regulating all financial derivatives, creating a Consumer FinancialProtection Agency, improving coordination and oversight of international financial markets, and otherprovisions.
“Treasury also has submitted to Congress proposed legislation to implement the reforms. The reform agendanow has moved to Congress. Legislation in Congress addresses many of the issues in the Treasury plan butalso may focus on other financial issues.
“Congress also plays a role in measures to reform and recapitalize the International Monetary Fund, the WorldBank, and regional development banks.”
