Causes of Global Economic Crises

By: Rajat Jhingan

Economic Meltdown; By: Rajat Jhingan

Global Economic Crises Expert Belief

Sub Prime Crises.

The U.S. Housing Market Collapse. Easy Access to credit. Relaxed lending standards. Inadequate regulations. Complex Credit Derivatives. The Housing Sector Market Collapse.
Economic Meltdown; By: Rajat Jhingan

Global Economic Crises

Sub prime Mortgage Crisis
Housing bubble Ballooned & then Burst FED lowered interest rates sharply since 2000 Easy credit encouraged weaker borrowers to assume mortgages

Excessive use of credit and debt leverage

Economic Meltdown; By: Rajat Jhingan

Global Economic Crises

Some Other View PointsLikely causes.

New Bank Capital requirements. Role of Credit Rating Agencies. Banks Riskier Investment Decisions.

Economic Meltdown; By: Rajat Jhingan

Global Economic Crises

Some Other View PointsLikely causes.

Mark to Market Accounting Rules. Misleading Economic Statistics.

Economic Meltdown; By: Rajat Jhingan

Global Economic Crises

The

Cocktail Crises
Liquidity

Equity Crises Housing Burst

Economic Meltdown; By: Rajat Jhingan

Credit Crises

Global Economic Crises

First Ingredient L i q u i d i t y

Selling of Bear Stern. The Lehman Factor. Standards & Poors Rating. Stock Exchange Closures.
Economic Meltdown; By: Rajat Jhingan

Global Economic Crises

The Second Ingredient C r e d i t C r i s e s

Fannie Mae, Freddie Mac Nationalized. Dramatical increase in LIBOR from 2 % to 6%. Effects on overnight inter bank borrowing. Collapse of 22 commercial banks all across United States.

Economic Meltdown; By: Rajat Jhingan

Global Economic Crises

The third ingredient H o u s i n g B u r s t

Loan given to Sub-prime borrowers. Banks unable to recover their loans. The decline of creditworthiness. Loss of Liquidity. Banks become insolvent 22.

Economic Meltdown; By: Rajat Jhingan

Global Economic Crises

Economic Crises Enters India.

The collapse of global share markets. FII tries to withdraw from Indian Markets. Thus they stimulated bearish trend. FDI was lower as compared to FII. Corporate sector lost market value. Panic amongst retail investors. C o s t - C u t t i n g Job Cuts.

Economic Meltdown; By: Rajat Jhingan

Global Economic Crises

Economic Crises Enters India.

Other Impacts.

The Correction in Real Estate

Sector.

Lack of infrastructure investments.

The Auto sector is badly hit.

Gradual decline in exports.

Economic Meltdown; By: Rajat Jhingan

Economic Meltdown; By: Rajat Jhingan