Information Related to "Farewell to America as a Financial World Power"
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Just five years ago, it would have been hard to imagine an official representative of the German government making such statements in a speech outlining his government's position in Germany's parliament, the Bundestag. Yet at the end of September, German Finance Minister Peer Steinbrück bluntly stated his view of the world financial crisis.
One thing is absolutely clear, he said: "The United States is the place of origin and the focal point of the crisis." Although the long-term effects of the crisis are as yet undetermined, Germany 's finance minister stated bluntly that America "will lose its status as [the] superpower of the world's financial systems."
It doesn't take a lot of insight to identify America as "ground zero" of the turmoil in the world's financial markets. The latter part of 2008 will go down as one of the most noteworthy chapters in the history of the modern financial system. In less than 30 days the world witnessed several alarming developments in the United States:
• The U.S. Department of the Treasury nationalized mortgage lenders Fannie Mae and Freddie Mac.
• The investment bank Lehman Brothers declared bankruptcy, making it the largest insolvency in American history with a loss of some $600 billion.
• To stave off possible failure, the investment banks Goldman Sachs and Morgan Stanley applied to operate as commercial banks to gain access to the FDIC for securing investor deposits. In so doing, both banks voluntarily accepted regulation by the U.S. Federal Reserve Bank.
• The U.S. Congress approved an emergency aid package worth $700 billion to prevent a possible economic meltdown.
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