Ninety-eight banks have failed so far this year as losses have mounted on commercial real estate and other soured loans in the wake of the financial crisis and the recession that has gripped the economy. The failures have cost the fund that insures bank deposits about $25 billion, the FDIC said Tuesday.This is what the International Monetary Fund says about the global recovery:
The fund has been so sapped by the wave of collapsing banks that it now has fallen into the red. The FDIC now expects the cost of bank failures to grow to about $100 billion over the next four years — up from an estimate of $70 billion made in the spring. Most of the $100 billion in costs are expected to come from failures this year and next.
Beyond 2010They're talking about a major restructuring of the way the whirled does business. This could take a lifetime, especially if the lords and rulers try to force one failed change after another. There has been talk lately of how Roosevelt's interventions prolonged the Great Depression. I don't how valid those arguments are but the market is organic and has developed over time despite the interventions of governments. Time heals all wounds.
Sustaining healthy growth over the medium run will depend critically on addressing the supply disruptions generated by the crisis and rebalancing the global pattern of demand.
To complement supply-side efforts, there must also be adjustments in the pattern of global demand. Specifically, many economies that have followed export-led growth strategies and have run current account surpluses will need to rely more on domestic demand and imports. This will help offset subdued domestic demand in economies that have typically run current account deficits and have experienced asset price (stock or housing) busts, including the United States, United Kingdom, parts of the euro area, and many emerging European economies.
To accommodate demand-side shifts, there will need to be changes on the supply side. This will require actions on many fronts, including measures to repair financial systems, improve corporate governance and financial intermediation, support public investment, and reform social safety nets to lower precautionary saving.