1. FINANCIAL GLOBALIZATION IS
NOTHING BUT A SPECULATION
AND RUIN
Shamma Packianathan
Jacob Praveen Kumar
Neha. R
C.Sivashankar Ganesh
M.K.Muthukrishnan

2. Outlay
 Detailed view of financial globalization its
corresponding activities and its implications.
 We are going to see various Financial crisis
happened before.
 Impact of recent Financial crisis in India. ( A real
proof of speculation due to Financial globalization).
 We have provided a solution by which decision
should be taken by government to reduce the
speculation happened by Financial globalization.

3. Globalization
 Globalization describes an ongoing
process by which regional economies,
societies, and cultures have become
integrated through a globe-spanning
network of communication and exchange.

4. Financial globalization
 The Globalization of Finance means the flow of
capital and corporate investments between various
countries.

5. Growth of Financial globalization
 The growth in Financial Globalization can be seen
from the fact that from 1973 to 2005, world trade
increased at the rate of 11% per year rising from
more than 22% of the GDP of world to 42% in 2005.
 The flow of capital from developed countries to
developing countries has also increased since
Financial Globalization increased dramatically in the
early 1990s and now amounts to more than US$
300 billion per year in 2005.

6. Advantages
 The advantage of Financial Globalization is that
with more money entering the nations, people now
have more money at their disposal and this has
helped in improving the international living
standards.

7. Disadvantages
 Increased interconnectedness has exposed the
nations to financial shocks.
 There is always the risk factor that sudden reversal
of capital may lead to economic disruption on a
large- scale.
 Financial Globalization has proved beneficial for the
developed countries who have exploited the
developing countries.

8. Illegal activities due to financial
globalization
 Black money
 Hawala

9. Black money
 Black money is the sum total of transactions
deliberately kept out of the books of accounts by
household and business in the economy.

10. Hawala
 Informal value transfer system.
 In the most basic variant of the hawala system,
money is transferred via a network of hawala
brokers, or hawaladars. A customer approaches a
hawala broker in one city and gives a sum of money
to be transferred to a recipient in another, usually
foreign, city. The hawala broker calls another
hawala broker in the recipient's city, gives
disposition instructions of the funds (usually minus a
small commission), and promises to settle the debt
at a later date.

11. Some of the Financial Crisis due to
Financial globalization
 Panic of 1907
 Wall street crash of 1929
 Great depression (1929-1939)
 Black Monday (1987)
 1997 Asian financial crisis
 US Sub prime mortgage crisis (2008)

12. Panic of 1907
 1907 Bankers' Panic
 United Copper
Company
 Otto Heinze, devised
a scheme
 Short selling
 J. P. Morgan pledged
large sum of money
 Leading to the
creation of the
Federal Reserve
System.

13. Wall Street crash 1929
 Great Crash or the
Stock Market Crash of
1929
 Initial crash Thursday,
October 24, 1929
 Markets risen sixfold
-381.2 from 63.9
 unsettling price
declines
 fell 38 points to 260, a
drop of 12.8%
 Two days, the Dow
Jones Industrial
Average fell 23%.

14. Great depression 1929-1939
 The time of great
depression varied
across nations.
 John D. Rockefeller- In
93 yrs of my life
recessions have come
and gone.
 Most severe economic
depression in the 20th
century

15.  Congress: for overzealously pushing homeownership
 Fed: for keeping interest rate so low
 Predatory lenders: for taking advantage of unqualified
and vulnerable home buyers
 Home buyers: for getting over the heads
 White House: for letting banking regulations become too
loose
 Finance executives: for selling products they didn’t
understand while enjoying outsized profits
 Mark-to-market accounting: for accelerating downturn
 Rating agencies: for mischaracterizing paper
 Short-selling hedge funds: for betting on doomsday
 The transformation of investment banks from private
partnerships into publicly traded companies
Caused the U.S. sub-prime crisis?

17. Implications on economy due to black
money
 India has about 1500 billion US dollars in Swiss
banks as black money.
 This amount is about 10 times larger than the
country’s foreign debt.

18. Implications on economy due to black
money
 Black money generated every year in India accounts
for 20 % of GDP which will be around 160 billion US
dollars.
 Black money is like block money.
 Creation of a Parallel Economy.
 Used now days in financing terrorist’s activities and
also put in “hawala” for illegal transactions

20. Impact of US Sub prime crisis in India
 Our country’s GDP came down to 6.3% in FY2009
from 9.6% in FY2007.
 Made the cost of the funds to go high.
 Many FDI’s withdraw their investments from India.

21. Hindrances faced by Indian economy
in FY2009.
 Declining aggregate demand
 Contracting employment/rising unemployment
 Sharp fall in business confidence & profits
including a reduction in investment spending
 Reduced inventory levels and heavy discounting
 Falling demand for imports
 Increased government borrowing
 Lower central banks interest rates

23. Q & A
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