The role of the banks in terms of decreasing unemployment, maintaining Essay

The role of the banks in terms of decreasing unemployment, maintaining price stability and facilitating economic growth - Essay ExampleCapitalism tends towards the idea that organizations are in good luck when they make significant profits but its tough luck when they make significant losses, getting neither sympathy nor envy. However, the economy now is not a pure free market but, rather, it is a mixed economy, in which the markets are regulated by a disposal instituted framework. In addition, the government also carries out various functions, instead of leaving the private sector to make decisions (Mitchell, 2014 p61). The banking sector is a prime example because of their importance to the economy, including management of add and savings facilities.The banking crisis of 2007 initially led to a rush by UK citizens to withdraw their money all at once, meaning that banks would have failed since they would have been unable to pay, portending potentially incalculable damage to the U K economy. It was, therefore, the responsibility of government agencies to stabilize the system by supervising banking activities and propping up banks that threatened to destabilize the system through bailouts (Cordella & Levy-Yeyati, 2013 p34). In essence, it is the deal owed money by the banks that the government is bailing out. In addition, some of the biggest investment banks in the world are institutions that are so critical to the market and job foundation that they have gradually come under the control of the government. This explains the bailout of AIG by the US government with a $100 billion loan that ensured American businesses would not split if they suffered losses, hurting national employment levels. Takeover of big mortgage guarantors in the UK, such as Bradford and Bingley, was also necessary because, in spite of its private shareholding, it was a de facto agency of the government and, in effect, the public (Cordella & Levy-Yeyati, 2013 p35). Failing to nationaliz e the company would have