Imagine an extended stay with a thousand residents. The ‘all you can eat’ buffet at the extended stay is amazing. The spread is lavish, and the taste is unbeatable.
The thousand people staying there binge at breakfast, lunch and dinner. Also, between the meals, there are unlimited snacking options.
This goes on for several months, and then finally the residents start developing all sorts of health issues – obesity, upset stomach, acidity and diarrhea.
They start cutting down on their food intake. The kitchen staff start to worry. They wonder why the food intake has dropped so dramatically.
To counter this, they announce a “stimulus package” – a wider spread, tastier food at a lesser price!
Do you think that will help solve the problem? Will the residents “bite”? And if they do, will it help them with their health issues?
The same is the situation with all the stimulus packages that the various governments across the globe have been announcing. The problems created by cheap and easy credit cannot be solved by easier and still cheaper credit.
- NYTimes – Credit Crisis: The essentials
- BBC – A quick guide to the origins of the global financial crisis.