Emerging Economy should Consume More & Save Less Developed Economy Should Save More & Consume Less. Presented by  Deepa  C...
 
 
<ul><li>TWO STAGES OF MARKET ECONOMY </li></ul><ul><ul><li>Growing Market Economy </li></ul></ul><ul><ul><li>Declining Mar...
 
 
<ul><li>Producer  wants his demand always to be  high   </li></ul><ul><li>Consumer  wants his buying cost always to be  lo...
<ul><li>Recession </li></ul><ul><li>When your neighbour Loses his job </li></ul><ul><li>Depression </li></ul><ul><li>When ...
Recession
<ul><ul><li>Gross Domestic Product (GDP) </li></ul></ul><ul><ul><li>Employment </li></ul></ul><ul><ul><li>Investment spend...
<ul><li>The Two Major Reasons For Recession </li></ul><ul><ul><ul><li>Over Production </li></ul></ul></ul><ul><ul><ul><li>...
<ul><li>Low confidence level  Word of Mouth  </li></ul><ul><li>Cost Reduction Activities </li></ul><ul><li>Producer Do not...
 
<ul><li>US Corporate Equities </li></ul><ul><ul><li>1999: $19.4 Trillion (2.1 GDP) </li></ul></ul><ul><ul><li>2008: $15.2 ...
<ul><li>•  What caused the Global Recession? </li></ul><ul><ul><ul><li>Financial Crisis </li></ul></ul></ul><ul><li>•  Wha...
<ul><li>•  Geo-Political-Organization </li></ul><ul><ul><li>–  The opening of China </li></ul></ul><ul><ul><li>–  The open...
•  Chinese factories can compete directly with US Factories •  Workers from India can directly compete with workers in the...
* Corporate = non-agency non-government debt
To Come out of Recession <ul><li>Emerging Economy  Consume More & Save Less </li></ul><ul><ul><li>Eg . China , India </li>...
Government Plans <ul><li>Fiscal Policies  – by Government </li></ul><ul><li>The Government Influence the Economy by changi...
Emerging Economy – Fiscal Policies <ul><li>Tax Benefits for the businessess & individuals – More Money available for spend...
Monetary Polices for the Emerging Economy <ul><li>Reduced the Cash Reserve Ratio </li></ul><ul><li>Increasing the Liquidit...
<ul><li>A Stylized Model of Offshoring …… </li></ul><ul><li>Money Flow through better Financial engineering. </li></ul><ul...
 
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Macro Eco Project

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Macro Eco Project

  1. 1. Emerging Economy should Consume More & Save Less Developed Economy Should Save More & Consume Less. Presented by Deepa Chandrasekar
  2. 4. <ul><li>TWO STAGES OF MARKET ECONOMY </li></ul><ul><ul><li>Growing Market Economy </li></ul></ul><ul><ul><li>Declining Market Economy </li></ul></ul><ul><li>TWO FACTORS OF MARKET </li></ul><ul><ul><li>Demand & Supply </li></ul></ul>
  3. 7. <ul><li>Producer wants his demand always to be high </li></ul><ul><li>Consumer wants his buying cost always to be low </li></ul>
  4. 8. <ul><li>Recession </li></ul><ul><li>When your neighbour Loses his job </li></ul><ul><li>Depression </li></ul><ul><li>When you lose your job </li></ul><ul><li>Recovery </li></ul><ul><li>When you go shopping at Big Bazaar </li></ul><ul><li>Boom </li></ul><ul><li>When Kishor Biyani stops shopping at Big Bazaar. </li></ul>
  5. 9. Recession
  6. 10. <ul><ul><li>Gross Domestic Product (GDP) </li></ul></ul><ul><ul><li>Employment </li></ul></ul><ul><ul><li>Investment spending </li></ul></ul><ul><ul><li>Capacity utilization </li></ul></ul><ul><ul><li>Household incomes </li></ul></ul><ul><ul><li>Business profits </li></ul></ul>
  7. 11. <ul><li>The Two Major Reasons For Recession </li></ul><ul><ul><ul><li>Over Production </li></ul></ul></ul><ul><ul><ul><li>Low Confidence Level </li></ul></ul></ul>
  8. 12. <ul><li>Low confidence level Word of Mouth </li></ul><ul><li>Cost Reduction Activities </li></ul><ul><li>Producer Do not stock materials </li></ul><ul><ul><li>Consumer Hear lot of job cuts </li></ul></ul><ul><li>Consumer will get the fear of lose of job </li></ul><ul><li>Less confidence to spend money </li></ul><ul><li>Demand is Reduced </li></ul>WORD OF MOUTH
  9. 14. <ul><li>US Corporate Equities </li></ul><ul><ul><li>1999: $19.4 Trillion (2.1 GDP) </li></ul></ul><ul><ul><li>2008: $15.2 Trillion (1.1 GDP) </li></ul></ul><ul><li>US HH Net Worth </li></ul><ul><ul><li>1999: $42.1 Trillion (4.4 GDP) </li></ul></ul><ul><ul><li>2008: $51.7 Trillion (3.6 GDP) </li></ul></ul><ul><li>Peak Unemployment </li></ul><ul><ul><li>1999: 4.4% </li></ul></ul><ul><ul><li>2008: 7.2% </li></ul></ul><ul><ul><li>June 2009: 9.5% </li></ul></ul>
  10. 15. <ul><li>• What caused the Global Recession? </li></ul><ul><ul><ul><li>Financial Crisis </li></ul></ul></ul><ul><li>• What caused the Financial Crisis? </li></ul><ul><ul><ul><li>Easy Credit & Lax Regulation </li></ul></ul></ul><ul><li>• What caused Easy Credit & Lax Regulation? </li></ul><ul><ul><ul><li>Savings Glut, Too much money chasing too few opportunities </li></ul></ul></ul><ul><li>• What caused the Savings Glut? </li></ul><ul><ul><ul><li>Too much saving in Asia, and too little in the US </li></ul></ul></ul><ul><li>• Why Too Much Saving in Asia? </li></ul><ul><ul><ul><li>Asians like to save </li></ul></ul></ul><ul><li>• So what can we do to get out of the recession? </li></ul><ul><ul><ul><li>Asians should save less; Americans should save more </li></ul></ul></ul><ul><li> Will it work? </li></ul>
  11. 16. <ul><li>• Geo-Political-Organization </li></ul><ul><ul><li>– The opening of China </li></ul></ul><ul><ul><li>– The opening of India </li></ul></ul><ul><li>• Technological Innovations </li></ul><ul><ul><li>– Communication & Transportation in the 21 st Century </li></ul></ul>
  12. 17. • Chinese factories can compete directly with US Factories • Workers from India can directly compete with workers in the US • Workers in Developing World can participate in the Developed World’s labor market without moving • Huge increase in the Worlds’ labor supply in a very short time period
  13. 18. * Corporate = non-agency non-government debt
  14. 19. To Come out of Recession <ul><li>Emerging Economy Consume More & Save Less </li></ul><ul><ul><li>Eg . China , India </li></ul></ul><ul><li>Developed Economy Save More & Consume Less </li></ul><ul><ul><li>United States </li></ul></ul>
  15. 20. Government Plans <ul><li>Fiscal Policies – by Government </li></ul><ul><li>The Government Influence the Economy by changing how it spends and collects money </li></ul><ul><li>Monetary Policies – By RBI </li></ul><ul><li>RBI Manipulates the available supply of the country. </li></ul>
  16. 21. Emerging Economy – Fiscal Policies <ul><li>Tax Benefits for the businessess & individuals – More Money available for spending </li></ul><ul><li>Government Spends more to create jobs - Individuals get salary & spend more. </li></ul><ul><li>Unemployment Insurance – Some income for the unemployed people to spend. </li></ul>Demand Increases – Market can Recover
  17. 22. Monetary Polices for the Emerging Economy <ul><li>Reduced the Cash Reserve Ratio </li></ul><ul><li>Increasing the Liquidity </li></ul><ul><li>Banks can provide more loans to the consumers </li></ul><ul><li>Lower interest rates </li></ul><ul><li>Individual take more loan </li></ul>Demand Increases – Market can Recover
  18. 23. <ul><li>A Stylized Model of Offshoring …… </li></ul><ul><li>Money Flow through better Financial engineering. </li></ul><ul><li>Tightening of Credit.... </li></ul><ul><li>Encourage savings in the U.S.A, and not subsidize housing. </li></ul><ul><li>Development of institutions to channel savings within China,India, … into productive activities. </li></ul><ul><li>Corporated invest in the skills of their staff. </li></ul>

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