Global financial problems have had adverse effects on the welfare of global countries

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Summary

The New Yorker Ice lands Deep Freeze by James Surowiecki The International Monetary Fund Deters Capital Flow Economics by Robert Krol

This discusses the conception of credit crunch This discusses the causes of financial problems of countries

Argues that depended on foreign capital increases the vulnerability of the country to the implications of the global credit crunch Argues that government, rather that market forces contribute to financial crises that countries face. It proposes that open markets system is more beneficial than closed market system

Opinions are similar. This cites that governments are responsible for maintaining the economy of the country It ascertain that the global financial organizations are imperative for providing help to the government and are not responsible fr individual failures of the same.

Cites Iceland and posits that its financial crisis is attributed to underestimation of the risks related to reliance on foreign investors Cites Turkey and Argentina and affirms that their current financial crisis is attributed to government failure rather than market failures.

Synthesis

Global financial problems have had adverse effects on the welfare of global countries. This argument has been presented in The New Yorker Ice lands Deep Freeze by James Surowiecki. Likewise, The international Monetary Fund Deters Capital Flow Economic by Robert Krol also addresses this issue in light of the importance of open markets. The important lesson that can be derived from these is that the governments need to be responsible for their economies and stop blaming the international financial institutions and foreign investors.

Suroweicki cites the Ice lands to be experiencing significant financial problems as a result of over reliance on foreign capital. Its government failed to factor in the important risks associated with reliance on foreign investors which led to its plunging of the economy in financial problems. This has been compounded by speculators who aim at further undervaluing the currency of this country.

Krol argues that the financial problems that Argentina and Turkey are facing are contributed to by the failure of their governments to formulate and enforce sustainable economic policies (1). These can not be attributed to global financial institutions as their help cushions the country against financial problems. Free flow of capital according to him enhances economic success as different countries can have access to the same in different economic situations. Countries should make use of the open market system as it is more beneficial than the closed market system.

Governments need to assume the responsibility of formulating and enforcing viable economic policies that would prevent their countries from facing financial crises. This can be attained through effective and critical evaluation of the inherent market and economic forces that have various impacts on the effectiveness of the economy. It is certain that foreign investors and global financial institutions play an elemental role in providing economic aid to countries. These readings are important because they provide useful insights and seek to enlighten the global governments regarding the economic mistakes that they make during policy formulation.

Work Cited

Robert, krol. The International Monetary Fund Deters Capital Flow Economics. Retrieved, 29th March, 2010 from: http://findarticles.com/p/articles/mi_m1272/is_2678_130/ai_80533080/