Then comes the case of ‘shadow, banking and financial institutional structures and auxiliaries, whose existence had been phantom to the tone of visibility and approach. There lies an increased drive to bring into bringing private equity and hedge fund structures into the folds of structural supervision. This is being done by demanding from all banking and financial institutions to come up with standardized solvency and liquidity requirements (Jeremy, 2008). Likewise an attempt to drag back all the risky investments to the bank’s balance sheets are underway along with the backing of appropriate capital to support them (Jeremy, 2008).
Capital requirements are envisioned to be raised up to such levels that would hamper the fall of capital industry in case such shocks surface again in future. But to mitigate such a shock scenario that occurs after the bust, there lies need to counter the expansion of bubble from becoming this lethal, thus among the restructuring processes there exists a tendency towards imposition of Counter-Cyclic capital asset provisions to get implemented (Jeremy, 2008).
This would help in restricting the bubble to increase on purely market speculations as the capital requirements on the back end would automatically hinder the banking industry’s leverage to lend across certain limits, this had been the reason that drove asset prices hence expanding the credit dome. Of all the argument, nothing said goes against capitalism and the market system whose strength can be seen in the spread of wealth and economic upheaval of billions of people out of poverty, but the most impressive of its geniuses is its greater healing capacity, the savior fair to purge itself of infections if any that might arise in its body.
Today its like an ailing body which needs medication to the extent of strengthening itself and to mend in its own ‘natural’ way rather then forced ministration There needs to be a global ruling body on the lines of UN that should govern and check world economies and corporations from detracting into direction that would cause harm on global scale. So does the question that’ as to why despite all the warnings by European Central Bank officials, no pre emptive or lets say preventive step was taken at first to check the bubble to expand to such explosive levels and then from a sudden burst?
(Bardhan, 2008) If so why wasn’t there no such levy erected to counter the incumbent tide of destructive tsunami There are more doubts then ever before that the market mechanism of supply and demand triggering ‘fears’ and the so called jolting of ‘confidence’ of investors, leading to massive buying or selling sprees have grown to be shadowy. Proven recently from the Oil price fiasco, its rise and maniac fall clearly shows the manipulative force acting in an unruly fashion. Check the trend which is drifting more towards exploitive ness then genuine speculation (Murphy, 2008).
The whole banking system should be re organized and re founded on a more solid and sound foundations, with revised rules and regulations to halt such a scenario from erupting ever again. Reinvigorating this industry could include equity investment, recapitalization of the bank assets i. e. purchasing the bad assets for cash that would help the fledging industry with the much needed cash while letting the government to exercise a limited control to steer the institutions out of the doldrums (Schwarcz, 2008).
And off course the US Tax payers should not have been dragged to bear the brunt of the debacle and wrong practices of corporate world, which had grown to be voracious and hoggish in its never ending appetite of leasing and lending for windfall profits. Instead of throwing trillions into this engulfing black hole, people should be given relief by letting them pay back through jobs, raised salaries, slashed interests and extended pay back periods.
In this respect the Mortgage assistance is necessary’ this could be done in any form i. e either the home owners be given leverage to pay back the borrowed credit by lowering of interest rates, making the payment schedule long enough that should not hamper the life style or the credit for ownership be converted into something like monthly rent’ that would be nominal enough to ward off the burden and wouldn’t render homes unoccupied.