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Long-term liquidity crisis?

The crisis keeps setting new lows, and governments and central banks are desperately fighting back with everything they’ve got. But what are the long-term effects of US government interventions?

There have been a lot of different opinions about how the US government have handled the financial crisis, and how they should handle it moving forward – both among economic experts, but also, as we saw with the rescue package bill, among themselves. Many believe the government has done the right thing by interfering in the financial markets, providing liquidity, helping packages, etc. etc. And of course it seems as a satisfactory solution when the market bounce right up in the minutes following the announcements, but what will the medium or long-term effects of this be? Spitting too much money out in the banks and in the financial system will obviously have consequences on a long-term basis, and will probably cause the end of a number of planned government projects and goals. On the environment side, take for example the Renewable Portfolio Standard (RPS), a project which the US government set in motion with a goal of achieving a 15% rate of alternative energy by the year of 2020. Not only is it unsure how they will finance the project after pumping liquidity into the markets and potentially raising taxes, but the financial crisis have also set it’s marks on the alternative energy providers that the US would be working with in order to achieve this goal, such as Siemens and Danish company Vestas, both of which have previously (even before the crisis) had trouble with meeting clients’ demands. Long-term finacial liquidity crisis and the Liquidity Solutions