According to a report by the BBC the financial crisis has led the worlds largest economies to spend $10,000 per person, in a bid to fix the financial meltdown.
New calculations by the BBC, based on IMF data given to G20 finance ministers, shows these countries have spent a total of $10 trillion (£6tn).
The report says that the UK and USA have spent the most – with the UK spending most at 94% of GDP while the USA has committed 25% of GDP, equating to £30,000 per person in the UK and $10,000 per person in the states.
The report is careful to point out that much of the money spent by governments has been in the form of bank guarantees and much of the money will be recovered as the system pulls out of crisis, but not all of the cash will be recoverable.
The US and UK with their large financial sectors appear to have been at the heart of the crisis and have been the worst hit. The private finance sector has written off an estimated $4tn through the crisis two thirds of which are losses suffered by the big international banks such as Citigroup and RBS.
The knock on effect of the write offs are well documented and have wiped out around ten years of bank profits, meaning banks need to rebuild capital reserves to give themselves security and resume lending.
Many experts think it will take years, if not decades, before lending returns to pre-crisis levels, and reduced lending was one of the key causes of the economic slowdown, along with a massive collapse of confidence in financial markets.
Source: BBC
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