That was very different. The rest of the western world was not in recession.
Slightly different. If they can get lending working again most of the problems will eventually go away tbh. Public's works projects are a very good way of improving the infrastructure whilst stopping mass unemployment.
Don't be so sure. There's no point in lending if it's fantasy money to begin with.
And that is the key issue. There's simply too many loans already out there, with a considerable amount of it defaulting due to people living beyond their means. Big businesses have also over-expanded their franchise without real money backing it up; and since they rely on profitable returns of their investments pay it off and that isn't happening, they risk going insolvent and then they fail.
Basically to sum it up, this whole crisis started when a few banks failed to meet their obligations to pay back a massive debt tab to larger banks, and due to this, everyone decides to check their tabs, and they go "OH SHIT!" realizing how astronomically large the tab is, and cease lending almost immediately to try and repay their debt obligations to others, and rebuild their capital. Big business then who relied on the bank loans, suddenly find themselves with no credit to sustain their risky (if not dodgy) investments, and immediately start to cry poor as they have little real money to back up their overinflated enterprise. So big businesses then try to effectively downsize themselves to lose any non-essential baggage while maintain enough profit to sustain their business.
However being greedy pigs the corporates are, the executives don't want to sacrifice their own vast payments schemes, so they downsize by simply laying off employees or reduce their expenditure in any other way possible (such as reduced pay, reduced working hours, hiring scabs or outsourcing, find cheaper ways to achieve things, compromise safety, etc). If they did sacrifice their vast payments, it could actually be a viable solution. Because that would free up hundreds of millions of dollars (maybe billions) annually; and that's enough to invest real money into new projects and repay any of their debt obligations over time, to hopefully dig themselves out of their mess. If they cry unfair, well I ask them this, "If you are a dumbshit for running a risky business with fake money, and want to ever earn your paycheck back; why don't you bail yourselves out with your executive pay and funds? You have the money to do something, not to mention once your business recovers, you'll still be in charge and be able to get your overinflated paychecks back eventually."
Unfortunately for small businesses on the other hand, there's little they can do except hope for public support (such as a local level of protectionism I guess, you know, buy local goods) or that banks might see them as lower risk, and thus will loan exclusively to them under strict conditions (either that or government should grant special subsidies, eligible tax breaks and support a small business trading market system exclusive for small businesses, so they support each other supply wise, providing if that doesn't exist already).
But even if you could solve those issues somehow, the situation gets worse; if what I hear is correct, the amount of total (official and estimated unofficial) debt/risk based on derivatives, credit default swaps, etc is around 530
trillion dollars, with the maximum estimate exceeding 1
quadrillion. Considering that world GDP is $54.62
trillion, well... the total debt/risk is approximately 10 to 20 times over that amount. Even if about 1% of those debt/risk were to fail, it would destroy the global economy easily, and that would cause eventual riots, wars and famine.
