Recession 2008


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  • Stock up on emergency funds. Slim down the debts Take risks that let you sleep at night. Stay positive Educate yourself s hore up your balance sheet . When times are tough, it ’ s even more important to cut spending, trim debt, and bolster your emergency fund . During a recession, you want to be especially prepared for unexpected financial setbacks. Gandel also suggests that it ’ s time to shore up your portfolio . If you ’ re really scared, consider putting more money in bonds. Otherwise, just keep a balanced portfolio with some overseas investment. (I haven ’ t covered any of these topics yet at Get Rich Slowly — someday, someday.) Finally, work harder and smarter . “ The best way to blunt a recession ’ s impact on your family is to keep your job
  • Recession 2008

    1. 1. May 14, 2008 AMERICAN SLOWDOWN OF 2008 - are we in RECESSION ?
    2. 2. ARE WE IN RECESSION ? <ul><li>What is Recession? </li></ul><ul><li>Causes of Recession </li></ul><ul><li>Effects of Recession </li></ul><ul><li>Global Recession </li></ul><ul><li>Recession Proof Yourself </li></ul><ul><li>Conclusion </li></ul>
    3. 3. WHAT IS RECESSION ? <ul><li>“ RECESSION is when your neighbor loses his job. A depression is when you lose your job.” –Ronald Reagan </li></ul><ul><li>RECESSION is a decline in a country's real gross domestic product (GDP), or negative real economic growth, for two or more successive quarters a year. </li></ul>
    4. 4. NBER DEFINITION <ul><li>RECESSION a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP , real income , employment , industrial production , and wholesale-retail sales . A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. </li></ul>
    5. 5. CAUSES OF RECESSION <ul><li>Endogenous Cyclical Forces: </li></ul><ul><li>-- Fiscal Policy (Tax Cuts, Increased Spending, Automatic Fiscal Policies) </li></ul><ul><li>-- Monetary Policy (Money Supply in Economy) </li></ul><ul><li>-- Consumer Confidence </li></ul><ul><li>-- Structural Changes in the Economy </li></ul><ul><li>-- Financial Innovations </li></ul><ul><li>-- The Creation of Global Markets for Raw Materials </li></ul>
    6. 6. CAUSES OF RECESSION <ul><li>Exogenous Shocks : </li></ul><ul><li>-- Increasing Oil Prices </li></ul><ul><li>-- Geopolitical Situation in the Middle East </li></ul><ul><li>-- Weather </li></ul><ul><li>-- War </li></ul>
    7. 7. CAUSES OF RECESSION 2008 <ul><li>Housing Bubble </li></ul><ul><li>Sub-prime Mortgage Bubble : </li></ul><ul><li>-- Financial Innovations </li></ul><ul><li>-- Credit Crisis </li></ul>
    8. 8. CAUSES OF RECESSION 2008 <ul><li>Graph of Housing Prices: 1890-2020 </li></ul>
    9. 9. CAUSES OF RECESSION 2008 <ul><li>Decline in Consumer Confidence </li></ul>RECESSION !!! BOOM !!!
    10. 10. CAUSES OF RECESSION 2008 <ul><li>U.S. Dollar Depreciation </li></ul><ul><li>Skyrocketing Oil Prices – 126 USD per barrel </li></ul><ul><li>Problem of Wave Age Theory </li></ul><ul><li>War </li></ul>
    11. 11. EFFECTS OF RECESSION <ul><li>Decline in House Values </li></ul><ul><li>Increase in Foreclosures </li></ul><ul><li>Bankruptcies </li></ul><ul><li>Huge Debts </li></ul><ul><li>Decline in Accessing New Loans </li></ul><ul><li>Decline in Business Expansion </li></ul>
    12. 12. EFFECTS OF RECESSION <ul><li>Decline in the Stock Market </li></ul><ul><li>Higher Levels of Unemployment </li></ul><ul><li>Reduced Sales </li></ul><ul><li>Increase in Energy and Food Prices </li></ul><ul><li>Aviation Crisis in April </li></ul><ul><li>Inflation </li></ul>
    13. 13. GLOBAL RECESSION <ul><li>“ If America Sneezes, </li></ul><ul><li>the World </li></ul><ul><li>Gets a Flu or Pneumonia. ” </li></ul><ul><li>The International Monetary Fund (IMF) Reckons that There is a 25% Chance of experiencing a Global Recession . </li></ul>
    14. 14. Recession-Proof Yourself <ul><li>Revise Our Budget (cut spending) </li></ul><ul><li>Get Out of Debt </li></ul><ul><li>Create an Emergency Fund </li></ul><ul><li>Invest - Take Risks that Let Us Sleep at Night </li></ul><ul><li>Keep Our Job </li></ul><ul><li>Work Harder and Smarter </li></ul><ul><li>Educate Ourself </li></ul><ul><li> Stay Positive !!!  </li></ul>
    15. 15. Conclusion <ul><li>We shouldn’t be afraid of Recession , because it is a normal part of the business cycle. </li></ul><ul><li>“ The only fear we have to fear is fear itself” </li></ul><ul><li>-F.D.Roosevelt </li></ul><ul><li>Only knowledge is the key to overcoming fear . </li></ul><ul><li>Understanding both the business cycle and your individual investment style is key to surviving a Recession . </li></ul>
    16. 16. Works Cited <ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul>
    17. 17.  THANK YOU 
    18. 18.