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The Sleepless eco slump
It has been said by many well known economist round the world that this "Recession" is undoubtedly the longest and deepest" since the 1930s and more government rescue funds are needed to stabilize the Global financial system.It all started with US Financial system crashing down followed by Europe.
The incredible size of the U.S. current account deficit, and the national debt, possibly triggered the economic panic that made difficult for monetary policy to affect. No one really knows, since the current U.S. debt level is unprecedented.The U.S. economy has been living on borrowed money for a long time, and the economy is experiencing the unwinding of that excess currently. However, it probably won't be enough to disarm the global economy's growth, so a worldwide depression is unlikely. Although the U.S. economy may see another quarter of negative GDP growth, the global economy may not even slow that much, thanks to growth in China ,India and other emerging markets.
We are in the middle of a very severe recession that's going to continue through all of 2009-10.It's the bursting of a huge leveraged-up credit bubble. There's no going back, and there is no bottom to it. It was excessive in everything from subprime to prime, from credit cards to student loans, from corporate bonds to muni bonds. You name it. And it's all reversing right now in a very, very massive way. At this point it's not just a U.S. recession. All of the advanced economies are at the beginning of a hard landing. And emerging markets, beginning with China,India are in a severe slowdown. So we're having a global recession and it's becoming worse.
Then came the "Bailout Plans" .The emergency Economic Stabilization Act of 2008, more commonly known as the bailout of the U.S. financial system, is a law which was signed into power that gives the United States Secretary of Treasury up to 700 billion dollars with which it can purchase assets and mortgage-backed securities from banks which are facing issues. This bill, an idea which was originally brought to the table by President George W. Bush and the Secretary of Treasury Henry Paulson, was designed to inject new life into the struggling financial sector of the U.S. during the financial crisis of September-October 2008.
This type of plan, otherwise known as a bailout, would plant new life into the economic sector by giving liquidity to bankrupt or near bankrupted entities, which could be corporations or banks, which would then need to meet a set of short-term obligations in order to qualify for the assistance. More often than not, a bailout is proposed as a sort of resolution in order to fix some kind of cash flow problem, such as a cash flow crunch, and is needed to tide entities over. These entities, given the aid of a bailout plan, can then continue to survive until the short-term problems which have caused the crunch are resolved. This kind of plan is usually only offered when the entity or entities in question have sufficient assets and are usually offered by either a government or by another group of investors. Often, the cost of a private bailout includes turning over control of the company or entity in return for the aid.
There is also the argument that perhaps the government should have let the banks fall, if in fact a fall was coming at all. In this case, the flaws of the current system could fix themselves instead of the government spending billions of dollars in order to protect the system which got the banks in trouble in the first place
Being recession-proof means being prepared in case you lose your job. What if, no matter how amazing an employee you are, you get laid-off? You must have a financial backup plan. Have at least three months of expenses saved in case something happens. The optimal amount of savings is six months but I know many find that unrealistic. If you can do six months, however, all the better.
Many companies are now struggling with falling revenues and tighter profit margins and are forced to slash jobs in huge numbers, the result is households continuing to scale back spending creating a vicious cycle for the already withering Global economy.
Now everybody is feeling insecure.A guy who had devote some 5yrs of sweat n brain for a firm is now shown the Exit door and the reason given is "Performance".How out of sudden his/her performance gone down so much that the company couldn't afford him anymore.
A guy working in a IT firm in India gets only 1 day salary that client gives him/her.Rest 30-31days salary of his/her goes for the salary of all benchers and for company infrastructure.Now i have a question : before recession so many years the company have been getting profit and now the company is not ready to afford the guy coz the company is not getting any profit due to global economic slump.Is it fair as far as the professional is concerned ? If company is not able to bear the salary then why they are still doing intake of fresh trainees.I feel Experience always matters.Still companies believes in removing the highly billed experienced guy by a low cost trainee.Yeah am not against trainees getting in.If they are given offer letters then they should be given a letter stating company's position and asking them to stay @ home without pay or look for alernatives.I feel it is injustice if you think of an experience guy who had worked with devotion for the company being given pink slips to be replaced by a new trainee.
And due to this insecurities i have thought and have decided that for the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It's better to stay in things with low returns rather than to lose 50% of your wealth. You should preserve capital. It'll be hard and challenging enough. I wish I could be more cheerful, and I think I'll be right this year-end.
The incredible size of the U.S. current account deficit, and the national debt, possibly triggered the economic panic that made difficult for monetary policy to affect. No one really knows, since the current U.S. debt level is unprecedented.The U.S. economy has been living on borrowed money for a long time, and the economy is experiencing the unwinding of that excess currently. However, it probably won't be enough to disarm the global economy's growth, so a worldwide depression is unlikely. Although the U.S. economy may see another quarter of negative GDP growth, the global economy may not even slow that much, thanks to growth in China ,India and other emerging markets.
We are in the middle of a very severe recession that's going to continue through all of 2009-10.It's the bursting of a huge leveraged-up credit bubble. There's no going back, and there is no bottom to it. It was excessive in everything from subprime to prime, from credit cards to student loans, from corporate bonds to muni bonds. You name it. And it's all reversing right now in a very, very massive way. At this point it's not just a U.S. recession. All of the advanced economies are at the beginning of a hard landing. And emerging markets, beginning with China,India are in a severe slowdown. So we're having a global recession and it's becoming worse.
Then came the "Bailout Plans" .The emergency Economic Stabilization Act of 2008, more commonly known as the bailout of the U.S. financial system, is a law which was signed into power that gives the United States Secretary of Treasury up to 700 billion dollars with which it can purchase assets and mortgage-backed securities from banks which are facing issues. This bill, an idea which was originally brought to the table by President George W. Bush and the Secretary of Treasury Henry Paulson, was designed to inject new life into the struggling financial sector of the U.S. during the financial crisis of September-October 2008.
This type of plan, otherwise known as a bailout, would plant new life into the economic sector by giving liquidity to bankrupt or near bankrupted entities, which could be corporations or banks, which would then need to meet a set of short-term obligations in order to qualify for the assistance. More often than not, a bailout is proposed as a sort of resolution in order to fix some kind of cash flow problem, such as a cash flow crunch, and is needed to tide entities over. These entities, given the aid of a bailout plan, can then continue to survive until the short-term problems which have caused the crunch are resolved. This kind of plan is usually only offered when the entity or entities in question have sufficient assets and are usually offered by either a government or by another group of investors. Often, the cost of a private bailout includes turning over control of the company or entity in return for the aid.
There is also the argument that perhaps the government should have let the banks fall, if in fact a fall was coming at all. In this case, the flaws of the current system could fix themselves instead of the government spending billions of dollars in order to protect the system which got the banks in trouble in the first place
Being recession-proof means being prepared in case you lose your job. What if, no matter how amazing an employee you are, you get laid-off? You must have a financial backup plan. Have at least three months of expenses saved in case something happens. The optimal amount of savings is six months but I know many find that unrealistic. If you can do six months, however, all the better.
Many companies are now struggling with falling revenues and tighter profit margins and are forced to slash jobs in huge numbers, the result is households continuing to scale back spending creating a vicious cycle for the already withering Global economy.
Now everybody is feeling insecure.A guy who had devote some 5yrs of sweat n brain for a firm is now shown the Exit door and the reason given is "Performance".How out of sudden his/her performance gone down so much that the company couldn't afford him anymore.
A guy working in a IT firm in India gets only 1 day salary that client gives him/her.Rest 30-31days salary of his/her goes for the salary of all benchers and for company infrastructure.Now i have a question : before recession so many years the company have been getting profit and now the company is not ready to afford the guy coz the company is not getting any profit due to global economic slump.Is it fair as far as the professional is concerned ? If company is not able to bear the salary then why they are still doing intake of fresh trainees.I feel Experience always matters.Still companies believes in removing the highly billed experienced guy by a low cost trainee.Yeah am not against trainees getting in.If they are given offer letters then they should be given a letter stating company's position and asking them to stay @ home without pay or look for alernatives.I feel it is injustice if you think of an experience guy who had worked with devotion for the company being given pink slips to be replaced by a new trainee.
And due to this insecurities i have thought and have decided that for the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It's better to stay in things with low returns rather than to lose 50% of your wealth. You should preserve capital. It'll be hard and challenging enough. I wish I could be more cheerful, and I think I'll be right this year-end.
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