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Banka had money with them and wanted to give it somwer. So gave subprime loans. So ppl also started taking loans. Then real estate bubble broke down and had imoact on banks
Wen govt debt rate inc, interest rates are relaxed. High liquidity—to high inflation. How to manage risk.
Govt went to fiscal policies. Wer expenditure of govt is higher than Risk related to rise in debt are: European debt crisis----govt default therefore bank defaults towards ppl. So ppl stop borrowing and lending to banks. So there is liquidity crunch. Impacts growth of economy in terms of unemplymnt gdp exp imp.iip(index of industrial production) savings rate.
Wen high inflation, govt goes for tightenin of money flow and vice versa Steps taken by us govt to inc flow of money Reduction of intrst rate. Quantitative easing: federal bank(main central bnk) started purchasing assets from other banks lik loans. Started selling some assets to other countries to increase the money in economy.as it was dollars.
The prime actions of a government on fighting against recession should be focused on increasing money circulation.Steps Needed To Be Taken By Governments To Stop Recession Government of a country is the key player to stop recession and to divert the economy to the path of growth. Contain Inflation We are on earth with the strong invisible gravitational pull keeping us stuck on the surface of earth balancing everything. encourage savings from individual level or family level. it will further add fuel to flame elevating the inflation numbers as people tend to borrow and spend on least important needs than priority needs since they have easy access to funds. even the spiraling prices. of any economy. Discourage Borrowings If Inflation Is Ruling High If easy access has been given to credit at the times of high inflation. reducing per capita debt level. Hence tighten credit as one of the measures to contain inflation. containing inflation. This should bring the price to a stable level. If steel and cement is ruling high in your country. year on year. encourage imports so that let the deregulated market determine the price of a commodity. Hence take any measure deemed necessary to bring the inflation rates down as inflation erodes away the value of money. boosting per capita disposable income. so is the case with every other commodity. Encourage Savings Any family without savings is a roofless home. discourage exports and encourage imports of these goods by imposing and repealing taxes respectively. ensuring an atmosphere conducive to business activities and any other supporting measures for these causes. In the mean time on the earth when the prices go high. the more the damage. it causes its own mess eroding the purchasing powers of every individual leading to recession. balancing interest rates. Hence everything that goes up has to come down. Encourage Imports of High-Priced Commodities To contain the prices of the articles that are sky high. it is not insulated and can be subjected to rain or shine any time. Hence starting from microeconomics. Any finance budget without surplus/savings (deficit budget) is a source of concern whether it is the budget of a country or the budget of a family. The more the time the prices stay above the purchasing power of an average citizen. Give .
Cut Taxes Give tax sops to encourage people with good amount of savings to loose their purse strings to go for a shopping spree on real estate assets or to invest in stocks. Give tax sops on the savings of your citizens abroad. Encourage Foreign Direct Investments . Economies with their population having considerable amount of per capita savings and per capita disposable income are very much better insulated in recession times than their counterparts with population of more debt levels. Reduce Interest Rates Access to credit should not be a barrier for any deserving enthusiastic entrepreneur to start a business and this can only be achieved by reducing the interest rates. encourage exports to the extent that it doesn‟t cause inflation in your own country. itself owning and conducting businesses. bonds or to even start new businesses so that new job opportunities are made and the money lying idle in savings instruments is routed to a healthy cause. Reduce subsidies and less priority expenditures of the government. hence the administrators should always have their hand on the steering of this aspect balancing the interest rates and inflation. Encourage Exports No country can be self sufficient. who are bringing back money to homeland to invest it here. Hence to keep your foreign currency reserves in good health. whenever the inflation rate goes up. Hence route government funds so saved to infrastructure development and activities that will generate employment than investing in businesses. But it is a double edged sword. Reduce Government Expenditure And Focus On Infrastructure Development The people at top government level should be the role models in cutting down unnecessary expenditure by switching to simple lifestyles and shelving down not-so-important projects. the interest rate has also to go up to discourage borrowing for not so important purposes. A government can‟t spoon feed all of its population. An ideal government should be a facilitator of business providing infrastructure to a community than a conductor of business. At the minimum any country will need to trade in for food or energy.tax sops for savings. Encouraging exports should turn your country from a consumer state to a producer state.
inefficiency.If your country does not have rich people with enough resources to start new businesses let some foreigners do it to flourish the economy. no compromise on this aspect by the countries who want their economy to flourish. Send troops abroad to sell your country‟s advantages in opening up shops and to lobby entrepreneurs. Do you want to test that again with innocent taxpayers‟ money? Was it the public who got the share of profit of these organizations‟ profits all these days? A government cannot spoon-feed each and every commercial organization that is falling down. I‟m wondering whether United States is moving from capitalism to socialism with the government taking stake in businesses! These car majors have world wide operations and had they operated profitable at least sparing US. This way you‟re creating new employment opportunities and inviting fresh flow of cash to your country. may be you can keep the controlling stake with your citizens itself by regulating the ownership ratio of 51:49. Let them consolidate.4B. Who will need to invest in a country torn apart by terrorists or with a fear of terrorist attack every other day or is a nurturing ground for terrorist activities? Hence be hard on terrorists and separatists. What benefits do the public or an innocent tax payer have if you bail out an automotive company or some other commercial organization with tax payers‟ money? Only a few thousand employees of that company might be saved making them further lazy. it is obvious that businessmen pull their investments to migrate to a country where they could make profits and see their capital investment grow. automakers to get $17. No Bailout Plans For Any Companies Except Banks And Insurance Companies We‟ve already seen the flaws. Ford‟s CEO Alan Mulally is reluctant to accept the bailout as of now because of a comfortable cash cushion they have developed foreseeing market conditions. but they too will fall on the prey if recession . Else. they would not have requested a single cent as bailout from the government. survival of the fittest. Leave it out to the nature‟s phenomenon. Of course. (Five minutes past I completed writing this post on Friday and scheduled to surface on Monday. Hence say no to bridging loans or any bailout plan of that sort for any commercial organization sparing banks and insurance companies (since public‟s money is involved with these two) so as to boost the morale of the public on economy and banking system of the country. Ensure a peaceful atmosphere conducive to business activities. Conduct international trade fairs to attract investors. unproductivity and failures of socialist economies. Ensure Peaceful Atmosphere Conducive To Businesses Businesses flourish under peaceful atmosphere and favorable government policies. Yahoo News reported that the Bush administration approved bailout. let the big fishes swallow the small fishes or let the big fishes die and become prey for the small ones.
Until you operate on wafer-thin margins. this is the time to build your brand. decrease your margin and increase your turnover. why not the Americans? Just inefficiency and I don‟t know why (only) the Americans are paying for their car majors‟ accrued losses having international operations and don‟t know how the bailout is going to stop the tumbling cards and boost the American economy! Pity the American tax payers. an economic slow down. only now Toyota is forecasting its first ever operating loss! So. If you haven‟t been focusing on this aspect. It‟s time to rage war against recession and any act to win this war including downscaling salaries. offer attractive selling incentives for your folks and buying incentives for the prospective buyers. Steps Needed To Be Taken By Individuals And General Public To Stop Recession Recession means not the end of days or the end of life on earth. If you‟re a cash strapped company. it is for sure that you‟ll be out of business this recession. margins. It‟s a global recession and still don‟t stick on to that 200% profit margins that you made during the boom. Food grain production and supply have not gone down. This way you‟re providing new employment opportunities as well as increasing your asset base. As I said earlier inrecession proofing your current stint at job.tightens its grip and deepens its roots. Keep innovating your products. mergers. may be the recession of the major economy of US catalyzed global economic slowdown. consolidations and starting new ventures. If you‟re into service industry. Work More . buyouts. it‟s a matter of extinction or surviving the recession for companies. Note that in its 71-year history of business. it hasn‟t to be a recession morning. obviously you become extinct one day. This recession.) Steps Needed To Be Taken By Companies To Stop Recession Innovation is the secret of success for business. Unless you keep on innovating your products to suit the tastes of consumers. People are not spending either because they don‟t have money as their personal debt levels have gone high or they‟re afraid to loosen their grip on savings. It‟s only a recession. undercutting competitors‟ prices can be welcomed. It‟s not a world wide famine. If your company and business ideas are still running successful in this recession and if you are sitting on huge cash reserves. Cut down all non-essential expenditures. So you need to only worry about making money to buy your bread or to have enough savings to buy bread if you‟re given a pink slip. keep working on to get the best satisfaction for your customers out of your service. if Korean. recession times are the best times for bargain hunting. Japanese or German car maker giants can withstand and survive the recession without any government aid from their respective governments. sell out the none-core businesses and assets to bring in revenue.
. the current protocol that any citizen of United States of America need to follow to escape out of recession. the better off you‟ll be. Instead of two-three movies a month. examine your portfolio of debts for good debt versus bad debt. If you‟ve got credit card debt. If you look at look at creditor nations such as Germany and Japan. personal loan or any other sorts pay them off to the extent you can. Though late. they bounced back from the damn after effects of Hiroshima and Nagasaki just with their hard work. A bicycle ride to the grocery store can be friendly on your gas bill and friendly on your health too.I know Japanese for working more to show their protests to their employers. Hence extend your working hours from 40 hours a week to 48 hours a week. Instead of dining out at the weekends. The faster you get out of debt. after almost four years remaining below 1%. an average citizen saves around 10% of his/her paycheck! Per capita savings makes one‟s life secure as well as the money saved by a family or an individual can be tapped by businessmen by the way of stocks and bonds to create new industries. It is rather advisable that any faithful citizen of a country read that. that is the magical power of savings on one‟s personal finance as well as the economy of a country. that‟s why Japan is still different from the world. Share resources to stretch the maximum possible extent. businesses and jobs. so that you could plug the interest drain from your personal finance. vehicle loan. May be you can share your car with your sweetheart to the office. and Americans‟ household debt falls by 0. as the interest rates are high for credit cards and a debit card is always better than a credit card. Japanese should be our idols. pay it down first. Concentrate On Saving A Penny To Stuff Your Piggy Bank The foundation and roof of a secured life and home: Personal savings.8% though the latter can be attributed to credit crunch and more tighter lending norms. Pay Your Debts First Before getting into action of paying off debts. Eliminate your debt faster with aggressive debt reduction to reduce the heavy interest burden at times of low income. make it all member prepared homemade dinner. Americans have only now (finally??!!) realized the importance of savings that CNN reports US savings rate is on rise to almost 3% in the second quarter of 2008. I would urge you to read Jason Calcanis„ article The 120% solution to bring US out of economic crisis. Paying off a debt that charges you high interest or a bad debt should be given first priority on your agenda. Postpone your Caribbean and Mediterranean luxurious cruise vacations to next year. If you have a mortgage loan. If you‟re a US citizen. cut it down to a movie a month at the theater. Reduce your luxuries. Stick to the 50 tips for frugal living. Hard work has never killed anybody and the fruits of hard work are so sweet.
” you may end up with borrowing to invest. these were the steps that I‟m taking/took on my personal finance. Pay Taxes Promptly Any government runs on the taxes that their dutiful citizens have taken pain to pay. that the motto should be earning money for a living than to bank upon what you have. unless you have a need for money. Settle In Any Job If You’ve Been Given A Pink Slip On The Current One May be the recession has earned you a pink slip at the job that you loved most. but if you want peace of mind and a secured life.It should be people at the government who should have known the importance of domestic savings before the country‟s economy fell into the recession trap. hunt for blue chip companies and keep them safe in your cupboard until it glooms to sell it off and to see good returns. it‟s the ideal time to buy stocks though stock markets might not have “Discount Sale” board at their gates. If at all you cared a damn saving a cent. Don‟t sell your assets now. Buy Assets If you were wise enough. the whole system goes down. Life has to go on. settle down for a next level job anywhere else even if it needs relocating to some other country. a penny saved is a penny earned. making online sales etc. pay your direct taxes promptly. Hence. Focus on creating multiple income streams to your kitty by working part-time after the main job. If you have paid out your debts and have a notable amount of savings. the more active the country and its economy would become. recession times are ideal for buying assets. Go for any immovable asset bargain hunting. Hence you as a dutiful. paid almost my debts off and even packed my kitchen with supply for the next one year because we can‟t eat money if food grains become scarce because of any unknown cause! . However. watch out for stock market crashes during this period. sincere citizen to stop recession of your country. Don‟t worry. stick to “save to invest. the commonest mistake (or psychology) of any individual! Anticipating recession. If you sit and analyze about the pros and cons of “borrowing to invest versus saving to invest. start saving now. It is better late than never. It‟s a chain of activities and if you break your part of the link.” Allot a part of your savings for stocks. what we do is that we buy at the climax of bull runs due to enthusiasm and sell at the fag end of bear markets due to fear. Rethink your strategy instead of panicking and dumping stocks this recession. you would have sold your stocks when bourses showed weakness. I have a good amount of savings now. instead of banking on your savings. this recession. The more active a country‟s citizens are in paying taxes.
and these are the ideas (just common sense) that sprung up in my mind and what I expect from the government to make. what I expect my fellow citizens to act upon. and what I will make myself to get out of recession. I‟ve given here just an abstract of the action plan on getting out of recession and this may not be a whole plan of action but still it covers the major aspects. I don‟t think a finance minister have to be a brainy economist to workout those anti-recessionary measures and any common man who got affected his finances with multiple recessions and who can manage his personal finance well now. can scoop out the threat of recession of his country very well. .I‟m not one of that world renowned economic geniuses sitting on the government ornamented chair as finance minister but one dutiful citizen expecting a pleasant life.
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