After committing over $7 trillion into the finance sector, the market continued to fail and the economy heading downward. If just $2 trillion of the $7 trillion the government has so far committed for the financial sector were to be channeled directly to the unemployed, each worker would receive $200,000 (the equivalent of four years at average wages) to tie them over their jobless phase to kick-start the economy.
The same amount would support for one whole year 40 million middle-income families with an annual income of $50,000. If government funds were directed towards people rather than institutions, consumer demand will revive immediately and companies will sell again to make profits. The recession will end within 18 months.
But alas, the measures taken by the US government thus far were all designed to save the financial system and its institutions from the penalty of excessive risk rather than to help the economy and its people from the pains of recession. The net result of this top-down approach will be to punish the economy with a lost decade while feeding the cancer of a dysfunction financial system held together by unsustainable debt.
Still, the market-oriented US leader felt the need to adhere ideologically only to a top-down solution. The priority must be to save the dysfunctional financial system and its wayward institutions, while the public must wait for the presumed trickling down benefits, if any. A decade-long depression will be the result.
The leaders of the G20 have a collective responsibility to face the reality of the crisis to save the world economy from total collapse instead of meekly following misguided US rescue measures of adding more liquidity to a crisis created by excess liquidity.
