Unveiling the Top Chartered Accountants in India and Their Staggering Net Worth
Ifm
1. International financial crisis
Study of Euro, Mexican & Asian financial crisis.
- By
Pawan KumarYalla
Gagan Bakshi
IIT Roorkee – Process eng with Management
3. Euro financial crisis
The Eurozone crisis is an ongoing crisis that has been affecting
the countries of the Eurozone since early 2009, when a group of 10
central and eastern European banks asked for a bailout.
4. In 1992, members of the European Union
signed the MaastrichtTreaty, under which
they pledged to limit their deficit spending
and debt levels.
no greater than 3% of GDP.
5. Private debts arising from a property bubble were
transferred to sovereign debt.
In Greece, high public sector wage and pension
commitments were connected to the debt increase.
The structure of the Eurozone as a currency union (i.e.,
one currency) without fiscal union.
(e.g., different tax and public pension rules)
European banks, now own a significant amount of
sovereign debt
6. Causes
easy credit conditions during the 2002–2008 period
that encouraged high-risk lending and borrowing
practices
the financial crisis of 2007–08
international trade imbalances
real estate bubbles that have since burst
the Great Recession of 2008–2012
fiscal policy choices related to government revenues
and expenses
approaches used by nations to bail out troubled
banking industries and private bondholders
10. Greece
A research report, explains-
"The current Eurozone crisis has been unfolding since
2009, when a new Greek government revealed that
previous Greek governments had been underreporting
the budget deficit. The crisis subsequently spread to
Ireland and Portugal, while raising concerns about Italy,
Spain and the European banking system, and more
fundamental imbalances within the Eurozone"
11. Crisis - process
In the early mid-2000s, Greece's economy
was one of the fastest growing in the
eurozone and was associated with a large
structural deficit. -( then fin crisis 07-08)
**on 23 April 2010, the Greek
government requested an initial loan
of €45 billion from the EU & IMF.
Greece's sovereign debt rating to BB+ or
"junk" status
12. Numbers
a revision of the forecast for the 2009 budget deficit
from "6–8%" of GDP (no greater than 3% of GDP was a
rule of the Maastricht Treaty) to 12.7%
the Greek debt exceeded $400 billion (over 120% of
GDP) and France owned 10% of that debt, struck terror
into investors at the word "default“
Greece was bailed out in 2010 with a 110 billion euro
direct loan by the European Union and the International
Monetary Fund.
After 2 years of fiscal austerity and Greek riots, another
130 billion euro loan was made.
13. more
primary deficit—i.e., fiscal deficit before interest
payments—from €24.7bn (10.6% of GDP) in 2009 to
just €5.2bn (2.4% of GDP) in 2011.
The Greek GDP had its worst decline in 2011 with
−6.9%
the seasonal adjusted industrial output ended 28.4%
lower than in 2005
111,000 Greek companies going bankrupt (27% higher
than in 2010).
youth unemployment rate rose from 22.0% to as high
as 62%
14. Conditions by IMF
reduce the Greek spendings with €3.3bn in 2012 and
another €10bn in 2013 and 2014.
debt restructure agreement -
- private holders of Greek government bonds forced to
accept a bond swap with a 53.5% nominal write-off, partly in
short-term EFSF notes, partly in new Greek bonds with lower interest
rates and the maturity prolonged to 11–30 years
- affected some €206 billion of Greek government
bonds
caused the Greek debt level to fall from roughly
€350bn to €240bn in March 2012
18. On 10 April 2014, Greece returned to
international capital markets, issuing
bonds worth €3 billion , though its still
severely affected and situation is bleak.
20. 1982 – 1986 Causes
Current Account deficit
Heavy government borrowing of short
term loans
Depletion of government foreign reserves
Higher U.S. interest rates due toVolcker's
anti-inflation policies
Falling oil-prices
Large capital outflows
Peso devaluation
22. Solutions
IMF injection of $4.55 billion to keep
from defaulting
$3.625 billion from United States to be
repaid in 1 year
Long process of stagnation and slow
growth for years
Crisis spread throughout most of Latin
world
23. 1994 - Causes
Political upheaval, assassination, and loss
of confidence
Current account deficit and Capital flight
Peso devaluation
Large amounts of credit flow domestic
and foreign
Liberalization of the then privatized
financial sector
26. Solutions
$48.8 billion from IMF
$20 billion from U.S.
Loans were repaid rapidly
Mexico quickly recovered and returned
to global markets
Spread to other Latin countries did not
occur to a great extent
End of crawling pegged exchange rate
policy and beginning of floating system
27. Conclusion
Mexico learned to not get itself that position
again with a current account deficit and
easily retractable capital in-flows.
They learned not to overvalue their
currency for fear of another great
devaluation and start floating exchange rate
policy
Privatized many industries opening them up
to foreign markets and reaping the rewards
of FDI
28. 1997 Asian financial crisis
The crisis started in Thailand.
- Financial collapse of theThai baht after
the Thai government was forced
to float the baht due to lack of foreign
currency
29.
30.
31. Effects
Foreign debt-to-GDP ratios rose from
100% to 167% in 4 of ASEAN countries
in 1993–96, then shot up beyond 180%
May 1998 in the wake of widespread
rioting that followed sharp price increases
caused by a drastic devaluation of
the rupiah
1998 the Philippines growth dropped to
virtually zero
33. Credit bubbles and fixed
currency exchange rates
Thailand's economy developed into an economic
bubble fueled by hot money.
The short-term capital flow was expensive and often
highly conditioned for quick profit.
had large private current account deficits and the
maintenance of fixed exchange rates encouraged
external borrowing and led to excessive exposure
to foreign exchange risk
34. Next -
the devaluation of the Chinese renminbi
and the Japanese yen.
raising of US interest rates which led to a
strong U.S. dollar
the sharp decline in semiconductor prices
35. Last -
led to a large withdrawal of credit
from the crisis countries, causing
a credit crunch and further
bankruptcies.
36. Numbers - Thailand
From 1985 to 1996,Thailand's economy
grew at an average of over 9% per year.
Inflation was kept reasonably low within
a range of 3.4–5.7%.
The baht was pegged at 25 to the US
dollar.
37. On 14 May and 15 May 1997, the Thai
baht was hit by massive speculative
attacks.
reached its lowest point of 56 units to the
US dollar in January 1998.
the Thai stock market dropped 75%.
38. Measures
On 11 August 1997, the IMF unveiled a
rescue package forThailand with more
than $17 billion.
The IMF approved on 20 August 1997,
another bailout package of $3.9 billion.
By 2001,Thailand's economy had
recovered theThai baht continued to
appreciate to 29 Baht to the Dollar in
October 2010
