The year that was 2008 - the Housing meltdown
The biggest thing that happened in the year 2008 was the housing market meltdown and that caused a hell lot of issues for everyone and it had and impact on the economy as well the outcome of the US elections (well that is debatable :-)
The foundation of the crisis
When the going was good then every one at that time starting lending to every Tom Dick and harry and hence gave some absolute good money away to folks who do not have the ability to pay.
Small business companies mushroomed overnight who were ready to intermediate and get housing loans for an endless stream of buyers. Now whether these were worthy or not is the question.
On the other side good and smart investment bankers started packing these loan receivables into the what they call as CDO where the underlying receivables of the loans was the main security for the firm who bought these CDO's .
Update 2009 : If you need to know more about Short refinance then here is the excellent resource for HAFA Streamline Short Sale Program
Everyone Got greedy and that was the nemesis.
Everyone got greedy and nobody wanted to be a whistle blower even though there were firms who absolutely never wanted to get into this business but seeing how much money other firms they went right ahead.
Even the rating agencies got ahead and never checked if this all thing had the basis and in fact gave AAA ratings to all the spurious looking bonds.
hell Broke loose
Then one day all hell broke loose as there were no way for a lot of people to repay their loans as they had taken home loans to buy property for investments and there were no buyers for the property.
the real estate market went bonkers and in turn all CDO's turned into worthless sheet of paper.
There was no one who knew how much they lost.
Look at AIG they thought wanted a bailout to the tune of $20 billion but then they were bailed out at $75 and then they finally settled they wanted another $75 billion and even now that final is not final.
The year 2009 is appearing to be not rosy picture from president Barack Obama being put into the presidential chair. What him and his team will do is not known at this time.
here's hoping Obama and Summers and several others bring some light and cheer into the houses where jobs have been lost.
Tip: For some humour during these tough times enjoy some recession humor
Cheers and welcome to year 2009. Welcome year 2009 from Ritiesh and here is hoping for a very good economy.
Showing posts with label economic recession. Show all posts
Showing posts with label economic recession. Show all posts
Monday, December 29, 2008
Will Barack Obama be able to jump start the economy ?
Barack Obama and his Economy team
Barack Obama has already announced his team of advisers and named to various important posts and these posts are
Lawrence Summers - head of White House National Economic Council
Timothy Giethner - Treasury Secretary currently New York Federal Reserve President
Christina Romer - Director of Council of Economic Advisors
Melody Barnes - Director Domestic Policy Council
Source : http://money.cnn.com/2008/11/24/news/economy/obama_economic_team/
Barack Obama and his Plan
Barack Obama will need about 675 billion dollars to 775 billion dollars to jump start the economy. He intends to use these for long term infrastructure projects as well as several job creation projects.
Job creation projects will include rebuilding kids classrooms as well making sure that the public libraries are up to the mark plus the focus will shift away from the short term spending of consumers which as the main focus of George W. bushes economic plan.
Update Mar 2010 - if you need to know more about business and economy then this place is the best read.
He gave tax cuts which will result in money in the hands of the people and then they will spend that in turn helping retailers and manufacturers and hence increase the growth rate of the economy .
The down side is that once that money dried up there was no way you can then make sure that economy will survive or go down.Obama is backing the long term view and in this is recessionary world people are willing to listen as there is nothing to much form here. Everything anyway has been lost.
Come January 20th I am going to wait and watch what is in store for us as well as for the all the Indian Americans specifically the Indian IT workers who depend on the US for their jobs.
The positive side is that enterpreneurs come out with stylish innovations like Obama merchandising as well as Obama Commemorative coin
Caveat : These are my own views expressed here and it is not the opinion of my employer as this is my personal blog.
Barack Obama has already announced his team of advisers and named to various important posts and these posts are
Lawrence Summers - head of White House National Economic Council
Timothy Giethner - Treasury Secretary currently New York Federal Reserve President
Christina Romer - Director of Council of Economic Advisors
Melody Barnes - Director Domestic Policy Council
Source : http://money.cnn.com/2008/11/24/news/economy/obama_economic_team/
Barack Obama and his Plan
Barack Obama will need about 675 billion dollars to 775 billion dollars to jump start the economy. He intends to use these for long term infrastructure projects as well as several job creation projects.
Job creation projects will include rebuilding kids classrooms as well making sure that the public libraries are up to the mark plus the focus will shift away from the short term spending of consumers which as the main focus of George W. bushes economic plan.
Update Mar 2010 - if you need to know more about business and economy then this place is the best read.
He gave tax cuts which will result in money in the hands of the people and then they will spend that in turn helping retailers and manufacturers and hence increase the growth rate of the economy .
The down side is that once that money dried up there was no way you can then make sure that economy will survive or go down.Obama is backing the long term view and in this is recessionary world people are willing to listen as there is nothing to much form here. Everything anyway has been lost.
Come January 20th I am going to wait and watch what is in store for us as well as for the all the Indian Americans specifically the Indian IT workers who depend on the US for their jobs.
The positive side is that enterpreneurs come out with stylish innovations like Obama merchandising as well as Obama Commemorative coin
Caveat : These are my own views expressed here and it is not the opinion of my employer as this is my personal blog.
Sunday, December 28, 2008
The Recession In US and its Effect on me
As I begin to write this very first blog of mine I am kind of tired and sick of the endless news stream flowing from US to India and for that matter everywhere in the world about what a mess those bunch of investment bankers and loan companies have got us into.
The difference between US Economy and Indian Economy
The US economy is far more free and transparent(Now I have my doubts ) than we have it in India.
The banks and bankers and the of course the Fed thinks that the companies by way of the market forces are forced into competition and hence these have a good mount of self regulation.
But the big question now is whether that was enough as you can see that the big companies were merely blind in search of profits and the booming housing market and that meant that since all the firms were doing that it was OK.
Now it seems the government will be playing a larger role than ever with companies like AIG and what not have the government stake in it as well as a lot of taxpayers money with it.
Please take care of it Mr Obama and best of luck
The Indian Economy
The Indian economy in that sense is much much regulated and that means that these firms are not allowed a lot of leeway the way the US companies are allowed to do so and that in turn means that you have a sort of less than absolute free economy.
In today's world that has turned out to be very good as that has meant that banks as well as other investment firms have not played away unabashedly with the stock market, the housing market as well as the derivatives market or the new set of havoc wreaking instruments like the CDO's . Thank Goodness for that ! The stock market news has been bad for a year now with no end in sight.
We Depend on the US economy
But the story does not end here as we as in most of the companies especially those in the IT sector or the export oriented units for textiles as well big refineries like Reliance Petroleum do have US as the main market .
So if our main customer is not spending then what we as service providers do but rather be out of job.
The Vicious Cycle Of Economic Recession and Downturn
A lot of people in the US have been laid off or as they call it let go which means that they will not spend which in tun means that lot of US companies in retail and manufacturing do not have customers and hence they stop the major IT development projects and that way more people get laid off in software firms as well as a lot of outsourcing firms in India get impacted.
Since consumers are not buying that means that means that a lot of export oriented units in India and China and other countries like Vietnam get impacted and hence the workers employed in these firms also get impacted .
So now there are less consumers everywhere and then there is economic recession is everywhere.
Note 2009 : For people who want to understand more about economics and trading and then make sure that you subscribe to global macro newsletter
Government Spending.. The Big Push
Who has the money now and of course it is the big brother or the Government and they can stimulate the economy by pouring money onto infrastructure projects as well as other projects to break the hold of the vicious cycle. The best way is to start a web business and get away from the effect of recession
wishing you a very happy new year so that we go in a less severe recession from where the Economy recovers fast.
The difference between US Economy and Indian Economy
The US economy is far more free and transparent(Now I have my doubts ) than we have it in India.
The banks and bankers and the of course the Fed thinks that the companies by way of the market forces are forced into competition and hence these have a good mount of self regulation.
But the big question now is whether that was enough as you can see that the big companies were merely blind in search of profits and the booming housing market and that meant that since all the firms were doing that it was OK.
Now it seems the government will be playing a larger role than ever with companies like AIG and what not have the government stake in it as well as a lot of taxpayers money with it.
Please take care of it Mr Obama and best of luck
The Indian Economy
The Indian economy in that sense is much much regulated and that means that these firms are not allowed a lot of leeway the way the US companies are allowed to do so and that in turn means that you have a sort of less than absolute free economy.
In today's world that has turned out to be very good as that has meant that banks as well as other investment firms have not played away unabashedly with the stock market, the housing market as well as the derivatives market or the new set of havoc wreaking instruments like the CDO's . Thank Goodness for that ! The stock market news has been bad for a year now with no end in sight.
We Depend on the US economy
But the story does not end here as we as in most of the companies especially those in the IT sector or the export oriented units for textiles as well big refineries like Reliance Petroleum do have US as the main market .
So if our main customer is not spending then what we as service providers do but rather be out of job.
The Vicious Cycle Of Economic Recession and Downturn
A lot of people in the US have been laid off or as they call it let go which means that they will not spend which in tun means that lot of US companies in retail and manufacturing do not have customers and hence they stop the major IT development projects and that way more people get laid off in software firms as well as a lot of outsourcing firms in India get impacted.
Since consumers are not buying that means that means that a lot of export oriented units in India and China and other countries like Vietnam get impacted and hence the workers employed in these firms also get impacted .
So now there are less consumers everywhere and then there is economic recession is everywhere.
Note 2009 : For people who want to understand more about economics and trading and then make sure that you subscribe to global macro newsletter
Government Spending.. The Big Push
Who has the money now and of course it is the big brother or the Government and they can stimulate the economy by pouring money onto infrastructure projects as well as other projects to break the hold of the vicious cycle. The best way is to start a web business and get away from the effect of recession
wishing you a very happy new year so that we go in a less severe recession from where the Economy recovers fast.
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