Causes of global economic recession

[jb100]

The global economic recession is not yet completely over although it has eased a lot since 2007.According to FOMC chairman Mr. Bernanke the worst is almost over but some shocks are still left to come in the form of un-employment problem,lower growth and rising inflation etc.But he is not saying anything categorically about the causes of such global crisis.What are causes of such economic crisis that made millions homeless and un-employed?

 

[SysOp]

No I just saw on the TV in the news that they expect this to be even worse in 2010, so I think you will still need to consider you option and future.

 

[jb100]

No I just saw on the TV in the news that they expect this to be even worse in 2010, so I think you will still need to consider you option and future.

Watching TV news is good but to arrive at a conclusion is not good.You check the report of IMF, world Bank,the official statement of Federal Reserve Chairman Mr. Ben Bernanke and all relevant data ,You would realize the global recession is nearing an end.We would witness huge growth in global GDP in year 2010.The stock markets all over the world has already demonstrated what I have described above.

 

[vandana7]

Causes for recession


I think recession was caused because of speculations not based on facts. For example - India has a population of say a 1000, so if we generate employment for 500 thru outsourcing, we get 500 customers for our product. Wrong! The 500 have a mind of their own! It is a market, it is not a guaranteed market! Projections based on such speculations, into which investors bought recklessly, without being realistic. Similarly, real estate was another area that saw investors buying mortgages. There is a demand supply curve. In the past, Japan did experience a long period of recession and real estate there did become something people didnt want to buy simply because it was too expensive. So why did we not learn from it? I think there is a cycle in real estate. Every 23 years or so, there is a boom time, and such recessionary conditions follow it. This time it seems magnified because we are now looking at it globally, and a lot of money has gone into the Afghan, Iraq wars. Those, I think would be the true reasons for the present recession. And there is no quick fix to this. 2010 will remain depressed, and part of 2011 as well, before some signs of improvement start appearing in horizon. It might be as late as Septermber or October of 2011 before we can truly say recession is behind us.

 

[jb100]

I think recession was caused because of speculations not based on facts. For example - India has a population of say a 1000, so if we generate employment for 500 thru outsourcing, we get 500 customers for our product. Wrong! The 500 have a mind of their own! It is a market, it is not a guaranteed market! Projections based on such speculations, into which investors bought recklessly, without being realistic. Similarly, real estate was another area that saw investors buying mortgages. There is a demand supply curve. In the past, Japan did experience a long period of recession and real estate there did become something people didnt want to buy simply because it was too expensive. So why did we not learn from it? I think there is a cycle in real estate. Every 23 years or so, there is a boom time, and such recessionary conditions follow it. This time it seems magnified because we are now looking at it globally, and a lot of money has gone into the Afghan, Iraq wars. Those, I think would be the true reasons for the present recession. And there is no quick fix to this. 2010 will remain depressed, and part of 2011 as well, before some signs of improvement start appearing in horizon. It might be as late as Septermber or October of 2011 before we can truly say recession is behind us.

First I would offer my vote of thanks for such detailed and analytical response.I am not fully convinced with some of your points.The recession mighty have been cyclic in nature but there are multiple causes of it. The Banking regulators, economist and people with administrative responsibilities can never call them innocent as far as USA is concerned.I am confident the recession will end in the last quarter in FY 2009-10.

 

[Mockingbird]

I think that the recession was caused by alot of false hype on the part of american business. It's like a vicious circle, once one area is artificially inflated it effects values in mnay other areas. Like a house of cards waiting for that one big wind.