3. A situation in
which the economy of a country
experiences a sudden downturn brought
on by a financial crisis.
What is economic crisis?
4. Economic crisis in 1929-1933
(overproduction)
• The biggest overproduction.
• Reason: excessive producing >< low
purchasing power too much
inventories.
5. • Happening:
_The crisis started from the US in 9/1929
_In the US:
industrial production fell 50%
iron and steel dropped 75%
automotive down 90%
11500 enterprises went bankrupt
_In the UK (1931)
production of pig iron lost 50% profit
the trade fell 60%
6. • Happening(cont.):
_In France (1930-1936):
industrial output fell by 30%
60% of foreign trade
30% of national income
_In Germany: industrial output fell 77%.
_The crisis lasted for four years, until 1933, then
ended.
8. _The salary was reduced a lot
industrial wages only 56% (the US), and fell
60% (Britain)
salary reduced from 30 to 40% (France)
farmers' incomes
decreased by 2.7 times
9. How did the crisis effect to global politic?
• In the US
2 thousand workers demonstrated (1930)
3,5 million workers participated in the strike. (1929-
1933)
• In Germany: 15 thousand
workers on strike (1930) and 35
thousand miners strike (1933)
11. WORLD BANK
• 1944 - Bretton Woods Conference
• WB and IMF : based in Washington, D.C
• reduction of poverty, provides loans to developing
countries for capital programs
• IBRD and IDA
• A component of the World Bank Group & a member
of the United Nations Development Group
• Developing countries : human, agriculture and rural
development, environmental protection, etc
12. International Monetary Fund (IMF)
• 1944 - Bretton Woods Conference : at the beginning 29
member – currently : 188 members
• "188 countries working to foster global monetary
cooperation, secure financial stability, facilitate international
trade, promote high employment and sustainable economic
growth, and reduce poverty around the world“
13. • Objectives :
– promote international economic cooperation
– international trade
– employment
– exchange-rate stability
– foster global growth and economic stability
– mend the pieces of the international economy after the
Great Depression and World War II
– technical assistance
14. The Organization for Economic Co-operation and
Development (OECD)
• 1961
• American recovery program
15. World Bank Group
• 27 December 1945 following international ratification of
the Bretton Woods agreements
• Mission : Achieve the twin goals of ending extreme
poverty and building shared prosperity
Consists of:
• The International Bank for Reconstruction and
Development (IBRD), ( 1945)
• The International Finance Corporation (IFC) ( 1956)
• The International Development Association (IDA), ( 1960)
• The International Centre for Settlement of Investment
Disputes (ICSID) ( 1965)
• The Multilateral Investment Guarantee Agency (MIGA),
(1988)
16. Impact of economic
organizations
• 1993 to 1999, the IMF
extended to Jordan three
extended fund facility loans
• was admitted to the World
Trade Organization (WTO)
(2000)
• free trade accord with the US
• bring down debt payment
• WB : US$250M to France for
postwar reconstruction
18. China
Politic:
-China communist party
18th conference
- Xi Jinping (General
Secretary of the Communist
Party of China)
- Reform
- Corruption
-Jiang Zemin (former
General Secretary of the
Communist Party of China)
-Problems in sea.
20. Global Affection
• Vietnam ( oil, currency ..)
• Venezuela ( Loan 50B $$$)
• American ( Starup in China)
• Inflation in import nation
21. Greece
• Political:
Election in 2012 :
3 main party: ND, PASOK, SYRIZA
- Prime minister : Alexis Tsipras
- 3rd Supporting Budget ( from EU and IMF)
22. Economic
• GDP decrease
• Dept is much
• Banking system is emergency
• Need IMF and EU support.
• Out EU zone.
23. Global Affection
• China want to help.
• A new collarborator
in political problem.
• Domino effect
• Burden of EU
25. Economic
• Embargo ( US and Europe)
• Finding the new collarborators, market (
import and export)
• Ready become a new competitor with Europe.
26. Global Affection
• American and EU losing
• China can take benefit for Russia Economic
• Becoming a new potential market for
developing country.
• Global political problem.
27. Forces driving globalization
● Advances in information and computer
technologies
● The globalization of national economies
● The liberalization of national financial and
capital markets
● Competition among the providers of
intermediary services
28. Changes in capital markets
These forces have, in turn, led to dramatic changes in the
structure of national and international capital markets.
_Process of disintermediation
_Cross-border financial activity has increased
_The nonbank financial institutions are competing
_Banks have expanded beyond their traditional
deposit-taking and balance-sheet-lending businesses
29. Benefits versus risks
All in all, the radical change in the nature of capital
markets has offered unprecedented benefits. But it
has also changed market dynamics
.One of the main benefits of the growing diversity of
funding sources is that it reduces the risk of a
"credit crunch”
.More choices open to them, borrowers and investors
can obtain better terms on their financing
