Monday, October 27, 2008

The looming recession

Incase you haven't heard (and who hasn't), the two topics everyone is talking about are the financial crisis and the US election.

Today (being stuck in the most boring lecture ever) I would like to sum up the economical situation as I understand it to be.. In words we can all get xD


Market inflation, high prices of oil, and pushing consumerism to its breaking point lead to alotta people getting bank loans ( to get stuff they can't really pay for) aka: empty loans. Banks then used those empty loans in the stock market.. Which -inevitably- lead to a stock market crash.. Banks closed down, people went out of business.. Major corporations suffered from the crunch (tried to accommodate by mergers.. Eg. General Motors).

With people not having enough money to go out and spend money.. Oil prices started to fall.. However, this can add more strain on the financial situation as lower demands worsen the economy.

The government stepped in with a bailout plan to pump money back into the economy. Weather or not banks will use this for more loans is questionable.

Global recession:

Since the states compose 21% of the world economy, their financial crash has affected a lot of countries. Stocks fell worldwide, prices soared, and economists predict the worst financial crisis in the last 80 years to be around the corner.

So there you have it! What has to be done and what the future holds is still not clear (what with the elections, financial plans, government involvements.. Etc). But whatever happens is going to affect all of us, oil rich countries included.

- to 1600, and a fleeting week! xx

Sent from my BlackBerry® wireless device


MiYaFuSHi said...

Hope it gets fixed soon:<

Sham3at Al Jillas said...

As they say, "When the US sneezes, the rest of the world catches the cold"

Baroque said...

an mba student i'm guessing and a doctor?
wow! :*

ĐǻñĎõøðñ said...

a wonderful way to kick off the year, no? =(

Fastidious Babe said...

miyafushi: yeah me too!

sham3at al jillas: that's globalization for us!

baroque: not an mba student, just a hypothetical thinker/analyst :P

dandoon: i guess it was bound to happen sooner or later..

Mi said...

bailout is when US government had to buy the banks (or a big share of them) to avoid more losses in the economy. (which kind of looks like communism\socialism --think china, russia, cuba)

Us, we are related because 1. our currency is pegged to the dollar, 2. govs sell oil in usd 3. national investment companies (dubai world, adic) own big shares of these US banks & companies, 4. & MOST importantly, we speach englaizy.

Ruby Woo said...

Recession is divided in:
1) Mild recession
2) Recession
3) Deep recession
4) Depression

We're currently at stage 2 which might take a few years for the market to go back to normal, let's just hope that we don't reach 3 and 4!

Fastidious Babe said...

mi: bailout isnt just about banks.. and yes we will definitely go down with them! lol wl3nglaiZy has nothing to do with it.. u just wanted to put that in :P xx

ruby woo: wow! i would have thought we are in stage one! i hope government interventions will stop the situation from tumbling!

Mi said...

ygoolech China had loss the least... cuz they don't do 3ngraizy