“ RECESSION ”

For those who are unaware of this word “RECESSION” let me first describe it for you, it means “A general slowdown in economic activity over a long period of time”.




Now the second thing which strikes our mind is “What is REASON behind it??” , so I should tell you , the basic reason for recession was the damned "Deregulation" of all financial activities in the US and worldwide.
• The sub-prime loan (what is SUB-PRIME??Discussed below) crisis has affected the economy worldwide.



IS INDIAN ECONOMY FACING A GREAT THREAT FROM THIS RECESSION??
One positive point in favour of India is the fact that Indian Banks are more or less secured from the ill-effects of sub-prime mess (what is SUB-PRIME??Discussed below) . A glance at Indian banks’ balance sheets would show that their exposure to complex instruments like CDOs is almost nil.
In India, still the major banking operations are in the hands of Public Sector Banks who exercise extreme cautions in disbursing loans to needy people/companies. As a result, we are not likely to see a repeat of sub-prime crisis in India. Though there have been a presence of big US/European Banks in India and even some Indian banks (like ICICI) have some foreign subsidiary with stake in the sub-prime losses, their presence is miniscule as compare to the overall size of Indian banking industry. So at least on this major front ‘we need not worry much’.

SUB-PRIME means ” Anything which is not part of prime. ” talking in details – In U.S. there was a great boom in ‘Property and housing sector’, The low interest rates and some other favourable factors helped to create conditions where it became quite easy for people to take home loans. As more and more people took home loans, the demands for property increased and which raises the home prices further. As there was enough money to lend to potential borrowers, the loan agencies started to distribute loans and that too with easy loan conditions.
Since it was a good time and property prices were soaring, the only aim of most lending institutions was to give loans to as many potential customers as possible. Since almost everybody was driving by the greed factor during that housing boom period, the common sense practice of checking the customer’s repaying capacity was also ignored in many cases. As a result, many people with low income & bad credit history were given housing loans.
These types of loans were known as sub-prime loans as those were are not part of prime loan market. (as the repayment from the borrowers was doubtful).

CONSEQUENCES OF RECESSION.....

• The economy has weakened.
• Unemployment has risen sharply.
• Profit reduction for companies, etc.


“No Body Exactly Knows -When We Will Get Rid Of This ‘RECESSION’?”

Let’s Just Hope To Get Rid Of It As Early As Possible.......