Economic Aspect: Global Meltdown Presented By: AniruddhaSanyal AbhishekNandanMishra Anita Kumari
Recession and Depression Recession: In economics, a recession is a business cycle contraction, a general slowdown in economic activity over a period of time. Depression: In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe downturn than a recession, which is seen as part of a normal business cycle.
History of Economic Meltdown . G D P Years Graph of the Great Depression timeline from 1920 - 2010
How it all started? Growth of the housing bubble Easy credit conditions Sub-prime lending Predatory lending Increased debt burden or over-leveraging Commodities boom Banking industry collapsed (Lehman Brothers announced bankruptcy) The crisis engulfed the whole US economy Soon the stock market of many countries were in red Worst hit were: the European Union (EU) and Japan
Impact on Indian economy
The Present scenario The badly hit sector at present being the financial sector, and major issue being the "LIQUIDITY Crises" in the market. To curb the liquidity crises the RBI will continue to initiate liquidity measures as long as the current unusually tight domestic liquidity environment prevails. Lowering of interest rates and reduction of PLR is necessary. The BOP- Balance of Payment deficit – at a time when domestic credit demand is very high – is resulting in a vicious loop of reduced access to liquidity, slowing growth, and increased risk-aversion in the financial system. Several people lost jobs-facing the financial problems. But , the current condition of Indian markets have drastically improved. There is absolute transparency and instant transactions. The markets is undergoing a change from a bullish temperament to a bearish slide. Any small bit of information or even a rumour from any part of the country can affect the market and is a fairly accurate indicator of the prevalent atmosphere in the region or country. Banks providing business loans at low rates.
ARE INDIA’S POMPOUS CELEBRATIONS OVER? Agriculture set to grow by 2.4% against 4.9% Financial Year 2009 -2010 Manufacturing is likely to expand by 3.4% against 8.2% Financial, Insurance & Real estate are set to grow by 8.1% against 11.7% Trade,Hotels ,Transport & Communication Projected to grow by 8.1% against 12.4%
The moral of the story Economic meltdown reminded us that it is the time to think, reassess, revaluate, redefine and realign. It is time for full brain thinking. The recession got our attention; we now must learn from it and use its tough but valuable lessons. We realize we can't spend what we don't have; credit and credit cards are not the same as cash. We should not always rely on the daily list of BSE top gainers or BSE top losers as it only takes a minute to get the things changed here. Keeping ones eyes and ears open can insure the investor against any major losses. Following such rules and with some experience and practice, one can emerge victorious and can churn out a fortune for himself as well. Hence, it is a way to turn your savings into a fortune.
What is still needed? The Indian Stock Markets can be a very rewarding avenue of investment but the constant changes and the inherent dynamic nature of the markets can wipe out your funds or savings within a minute. Thus, the key words for every retail investor is to be constantly alert and very observant. Keeping ones eyes and ears open can insure the investor against any major losses. Following such rules and with some experience and practice, one can emerge victorious and can churn out a fortune for himself as well. Hence, it is a way to turn your savings into a fortune. The case still remains that most countries don't actually know they're out of recession until the official numbers are produced. Now is the time when employers need to be thinking ahead and repositioning themselves for the next phase of growth. The National Bureau of Economic Research only announced in December 2008 that the United States had been in recession since December 2007.Therefore,proper testing techniques should be designed , implemented, and made available to know the inner insights of the market and economy.