Presentation On Global Economic Cycles: Presented by
Presentation On Global Economic Cycles: Presented by
on
Global Economic Cycles
Presented By:
Chandan Kr. Gupta
1
Flow of Presentation
• Definition
• Phases
• Sub-Prime Crisis
2
What is an Economic Cycle ????
3
4
Economic Cycle Phases
• Expansion/Growth: During this phase of the business cycle, consumer
and business spending rise. Unemployment will drop during this
phase, which will further aid consumer spending.
• Momentum
• Technological Innovations
• Variations in Inventories
• Monetary Policies
• It began in the U.S. soon after the New York Stock Market
Crash of 1929 and lasted until about 1939.
Start-End
Post world war II recessions
Duration
Nov. 1948 - Oct. 1949 11 months
July 1953 - May 1954 10 months
Aug. 1957 - April 1958 8 months
April 1960 - Feb. 1961 10 months
Dec. 1969 - Nov. 1970 11 months
Nov. 1973 - March 1975 16 months
Jan. 1980 - July 1980 6 months
July 1981 - Nov. 1982 16 months
July 1990 - March 1991 8 months
March 2001 - Nov. 2001 8 months
Dec. 2007 - July 2009 20 months
1. V – Shaped
2. U – Shaped
3. W – Shaped
4. L – Shaped
9
V – Shaped Recession
14
US Mortgage Market
15
US Mortgage Market
Sub-prime
20%
Prime , 45%
Target VH
3%
Alt-A
20% Jumbo
12%
16
What actually happened
17
Burst of Housing Bubble
• The boom was led by rising housing prices, low interest rates
& aggravated by financial innovation viz. MBS, CDO and CDS.
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Video
20
Next Recession
21
Double Dip on Cards
Reasons:
• U.S. orders for durable goods fell 1.0% in June. Economists expected
them to rise 1.0%. Inventories rose for the sixth month in a row,
indicating goods are being produced, but they're not moving out the
door.
• After a sharp drop in June, U.S. consumer confidence fell even more in
July. The Conference Board's latest reading was 50.4. A reading of 90 or
above indicates a robust economy.
22
Reasons Contd.
• The U.S. trade deficit widened in July. This happened even though oil
imports fell over 9%.
24
Queries ????
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