The USA economy recession

Thèmes abordés

USA, economy, recession, Obama

Résumé du document

In 2008 Obama was able to fix the economy. 2 years later, the spectra of the Giant depression is still looming. The first sign of recession is unemployment reaching records level 9.6% (except during the great depression) second sign: growth decrease 2.5% not enough to decrease unemployment. According to the IMF, world output contracted by 0.6% in 2009, world trade contracted by10.7% in 2009.Opinions differed about of the origins crisis.

Everybody agrees that the crisis started in the US; many people think that Am (American) bankers are responsible of the crisis. Recession is not a US problem but beyond the borders of the country. According to the IMF, world input contracted by 0.6% in 2009 and world trade by 10.7%. Many people think the crisis started in the US because of the US laissez-faire and there is still controversy about the 70's crisis.

Extraits

[...] Why the prices so much increased? A growing population, There are not enough supply, Some high salaries (able to afford an expensive house rent), More people had job (good days ahead optimism Low interest rate, The federal government is present with government Sponsored Entities : GSE's, National Mortgage Association, Fannie, Mae, Freddie Mac : they provide government guarantee on mortgage credit, Interest on house credit is Tax-deductible A bubble burst: o What is the relationship between interest rates and speculative bubbles? [...]

[...] The Fed tried to avoid a domino effect on wall street, a moral hazard=alea moral and teach people to have a responsible bahaviour. a worldwide credit crunch o How did the crisis become global? o What happens when liquidities drives up? o Why should we care about banks? o the crisis became global because of the subprimes, during the summer 2007 the 1st European bank touched was Northern Rock which provide mortgage in the UK, they responsible in England. Customers were worried about their deposit. [...]

[...] How central is wall street in the geography of global finance? What is disintermediation? he past, it already existed (for example, silk between Rom and Beijing), Now it goes faster, all kind of goods can be moved very fast throughout the world Immigrants are aware of where to find good job opportunities, Outsourcing: company move their production from Europe to cheaper countries (lower taxes, lower wages), Decisions in the US have an impact all over in the world, Globalization is everywhere (TV for example with e FIFA soccer world cup). [...]

[...] The british minister of finance announced in February 2008 that N.R was going to be nationalize in the summer 2008 : confidence disappeared between the banks : the level of interest →good means trust Exple the LIBOR (London Inter Bank offered rate)a certain margin spread if its higher it means the risk is higher Summer 2008: spectra of a global economy collapse worldwide materialized by the lack of confidence. www.oboolo.com the Lehman brother trauma Who made the decision to let Lehman die? Why Bear Stearns and Lehman Brothers? How did market react? The Fed was accused of encouraging moral hazard. Bear Stearns supported the Fed. The government voted the Housing and Economic Recovery Act. After BS, Freddie Mac & Fannie Mac were under a risk. Lehman was founded in 1850. They started negociations with Bank of America, Meryl & Lynch. [...]

[...] Indian financial crisis: started in July 1997 and contaminated to global finance. The crisis started in Thailand with the collapse of Thai baht Indonesia, South Korea and Russia were contaminated. Consequences: decrease of fund, IMF advices. LTCM (long-term-capital-management) is a Hedge fund which strategy is to offset potential looses in the assets by using variety of wage instrument (it is his strategy to reduce risks). Central banks & monetary policy o o o Why do central banks matter? How is the Federal Reserve System organized? [...]