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INTERNATIONAL SCHOOL OF MANAGEMENT EXCELLENCE PRESENTED  BY   KUMARI NEETU CHOUDHARY NIKHIL CHHABRA VINIT KUMAR DALMIYA  G...
What is Global Meltdown ? <ul><li>Global Meltdown means slow down of all the economies. </li></ul>
HOUSING BUBBLE <ul><li>Federal Reserve cut Interest Rate </li></ul><ul><li>Large inflows of Foreign Fund </li></ul><ul><li...
The Sub Prime Crisis <ul><li>Subprime lending is the practice of making loans to borrowers ( who have low credit history o...
Continued….. <ul><li>They got it insured from Insurance Companies & it got rated from them as AAA, BBB. </li></ul><ul><li>...
<ul><li>Atlast Bubble Bursts </li></ul><ul><li>-High House Prices </li></ul><ul><li>-High Interest Rates </li></ul><ul><li...
AIG Impact <ul><li>Credit Default Swap </li></ul><ul><li>Did not put any collateral </li></ul><ul><li>Booked Artificial pr...
Main Institutions & Banks <ul><li>Collapse of Five Giant Financial Institutions </li></ul><ul><li>Lehman Brothers,  Fannie...
Bankruptcy/Takeover flavor of the season <ul><li>Bear Stearns was acquired in March 2008 by J.P. Morgan Chase for  $1.2  b...
 
Global Meltdown 1929 Repeated.. <ul><li>Originated From : USA </li></ul><ul><li>Interest Rates : First it Increased & Late...
GLOBAL EFFECTS   <ul><li>Adverse Effect on Trade and Industrial Production </li></ul><ul><li>Unemployment </li></ul><ul><l...
 
 
Bail Out Packages  <ul><li>USA $1.1 trillion </li></ul><ul><li>Japan $586 bn </li></ul><ul><li>China $550 bn </li></ul><ul...
Impact on Indian Economy 1. The industries most affected by weakening demand were : airlines, hotels, real estate, IT,BPO ...
ARE INDIA’S POMPOUS CELEBRATIONS OVER?
Recommendations $ Actions <ul><li>Regulatory Framework </li></ul><ul><li>Establish and rectify the loopholes present Regul...
Crisis Affecting Students <ul><li>Major Threats at Professional level </li></ul><ul><li>Cut Down Of Financial Aids </li></...
THE GAME PLAYERS WILL CHANGE
THE NEXT SUPER POWERS
References <ul><li>www. wikipedia .org </li></ul><ul><li>www.globalenvision.org </li></ul><ul><li>www.workers.org </li></u...
THANK YOU !!!
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  1. 1. INTERNATIONAL SCHOOL OF MANAGEMENT EXCELLENCE PRESENTED BY KUMARI NEETU CHOUDHARY NIKHIL CHHABRA VINIT KUMAR DALMIYA GUIDED BY: Dr. RAMESH TAGAT Prof. NITIN GARG Prof. AVR MAHADEV GLOBAL MELTDOWN
  2. 2. What is Global Meltdown ? <ul><li>Global Meltdown means slow down of all the economies. </li></ul>
  3. 3. HOUSING BUBBLE <ul><li>Federal Reserve cut Interest Rate </li></ul><ul><li>Large inflows of Foreign Fund </li></ul><ul><li>US Govt. Motive “A House For Every American Whether Rich Or Poor” </li></ul><ul><li>No Down payment Required </li></ul><ul><li>Rapid Increase in Demand for Houses </li></ul><ul><li>Explosion Of Price of Houses </li></ul>
  4. 4. The Sub Prime Crisis <ul><li>Subprime lending is the practice of making loans to borrowers ( who have low credit history or Risk of default is high) </li></ul><ul><li> They Lend Tremendously </li></ul><ul><li> ASSUMPTION : </li></ul><ul><li>Price of Houses will Always Go Up </li></ul><ul><li>Given $3.4 trillion for sub prime mortgages in US. </li></ul><ul><li>These Mortgages were purchased by financial institutions. </li></ul><ul><li>Created New Securities & kept these mortgages as Collateral Security </li></ul><ul><li>They rated them “Good” ,“Not so good”, “Ugly” </li></ul><ul><li>They kept “ugly” with themselves </li></ul>
  5. 5. Continued….. <ul><li>They got it insured from Insurance Companies & it got rated from them as AAA, BBB. </li></ul><ul><li>Promise to pay Low interest(less risk) to “Good” Tittle securities, more interest to (medium risk) “Not So Good” securities. </li></ul><ul><li>Best Interest Rates to “Ugly”(higher risk) </li></ul><ul><li>They promise to pay interest first to AAA , then BBB </li></ul><ul><li>Now these securities were distributed among Potential Investors in the whole world. </li></ul><ul><li>Financial institutions influenced brokers for more mortgages just to increase the no.’s </li></ul><ul><li>They showed these mortgages under SPV in their Balance sheet and escaped </li></ul>
  6. 6. <ul><li>Atlast Bubble Bursts </li></ul><ul><li>-High House Prices </li></ul><ul><li>-High Interest Rates </li></ul><ul><li>Sub prime didn’t pay interests and returns houses back </li></ul><ul><li>Now Houses were sold at lower price(they suffered huge losses) </li></ul><ul><li>Actually money was Invested by institutions then further it was used as collateral security </li></ul><ul><li>Credit Crunch </li></ul><ul><li>Mostly Financial institutions Became Bankrupt </li></ul><ul><li>Household debt grew from $705 billion at yearend 1974, to $7.4 trillion at yearend 2000, and finally to $14.5 trillion in midyear 2008 </li></ul>Continued…..
  7. 7. AIG Impact <ul><li>Credit Default Swap </li></ul><ul><li>Did not put any collateral </li></ul><ul><li>Booked Artificial profit. </li></ul><ul><li>The world largest insurance company was about to bankrupt </li></ul><ul><li>Then Federal Reserve stepped in with $85 billion.(Now total is $1.1 trillion) </li></ul><ul><li>Without Govt. action would have caused every major bank in the world to fall. </li></ul><ul><li>The key of huge global credit was Credit Default Swap </li></ul>
  8. 8. Main Institutions & Banks <ul><li>Collapse of Five Giant Financial Institutions </li></ul><ul><li>Lehman Brothers, Fannie Mae, Freddie Mac, </li></ul><ul><li>Merrill lynch, AIG with total revenue $322 Billion in 2007 </li></ul><ul><li>Followed by Largest Banks </li></ul><ul><li>Washington Mutual(WaMu) </li></ul><ul><li>Wachovia </li></ul><ul><li>Sent shock waves to Global Financial Market </li></ul><ul><li>And let to Current Global Meltdown </li></ul>
  9. 9. Bankruptcy/Takeover flavor of the season <ul><li>Bear Stearns was acquired in March 2008 by J.P. Morgan Chase for $1.2 billion. </li></ul><ul><li>Fannie Mae and Freddie Mac. was placed into onservatorship </li></ul><ul><li>government control. </li></ul><ul><li>Merrill Lynch was acquired by Bank of America in September 2008 for $50 billion. </li></ul><ul><li>Lehman Brothers declared bankruptcy on 15 September 2008. </li></ul><ul><li>The Fed provided an emergency loan of $85 billion to AIG, giving the US government a 79.9% equity stake at AIG. </li></ul><ul><li>Washington Mutual taken over by JPMorgan Chase. </li></ul><ul><li>Citi Bank, GM and Chrysler on the brink of Bankruptcy </li></ul>
  10. 11. Global Meltdown 1929 Repeated.. <ul><li>Originated From : USA </li></ul><ul><li>Interest Rates : First it Increased & Later Decreases </li></ul><ul><li>Sector affected most : Housing </li></ul><ul><li>Behavior of Stock Market : All time High & then All time Low. </li></ul><ul><li>Projected Loss in Stock Market : Approx 80% </li></ul>
  11. 12. GLOBAL EFFECTS <ul><li>Adverse Effect on Trade and Industrial Production </li></ul><ul><li>Unemployment </li></ul><ul><li>Increase in Oil Prices </li></ul><ul><li>Increase in Bankruptcy </li></ul><ul><li>Automobile Industry </li></ul><ul><li>Tourism Industry </li></ul>
  12. 15. Bail Out Packages <ul><li>USA $1.1 trillion </li></ul><ul><li>Japan $586 bn </li></ul><ul><li>China $550 bn </li></ul><ul><li>India $ 6 bn </li></ul><ul><li>Singapore $13.6 bn </li></ul><ul><li>South Korea $10.2 bn </li></ul><ul><li>Taiwan $2.5 bn </li></ul>Over all World Wide $ 2.4 trillion
  13. 16. Impact on Indian Economy 1. The industries most affected by weakening demand were : airlines, hotels, real estate, IT,BPO 2. To lift the economy out of the recession the Government announced a package of Rs 5,000 crores On December 7, 2008. The main areas benefited were: a )Housing b) Textile c) Infrastructure d) Exports e) SME’s
  14. 17. ARE INDIA’S POMPOUS CELEBRATIONS OVER?
  15. 18. Recommendations $ Actions <ul><li>Regulatory Framework </li></ul><ul><li>Establish and rectify the loopholes present Regulatory systems </li></ul><ul><li>and review them periodically. </li></ul><ul><li>Finance </li></ul><ul><li>Lower down the interest rates to spur housing demand and </li></ul><ul><li>consumer spending. </li></ul><ul><li>Taxation </li></ul><ul><li>Raise the Tax bracket for people and provide tax reliefs to </li></ul><ul><li>boost the purchasing power. </li></ul><ul><li>Public Spending and Investment </li></ul><ul><li>Massive infrastructure spending should be the prime objective </li></ul><ul><li>of the Government. </li></ul>
  16. 19. Crisis Affecting Students <ul><li>Major Threats at Professional level </li></ul><ul><li>Cut Down Of Financial Aids </li></ul><ul><li>Fewer Number of seats available at foreign universities for Indian students </li></ul>
  17. 20. THE GAME PLAYERS WILL CHANGE
  18. 21. THE NEXT SUPER POWERS
  19. 22. References <ul><li>www. wikipedia .org </li></ul><ul><li>www.globalenvision.org </li></ul><ul><li>www.workers.org </li></ul><ul><li>www.scribd.com </li></ul>
  20. 23. THANK YOU !!!

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