World Economic Crisis

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A Report on

World Economic crisis
Have the world economies revived from the crisis?

Members:
1. 2. 3. 4. 5. N. Sesha Sathya Krishna N. Suganya Aswini Vishwanath J.R.Siddharth Elizabeth Thomas

ASB-Bangalore 07.12.2012

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Table of Contents:
Abstract 3 I.Introduction 4 II.Economic Crisis in USA 4 2.1 Dot-Com Bubble 4 2.1.1 Overview 4 2.1.2 Making Bubble Bigger 5 2.1.3 The Burst 5 2.2 Housing Bubble 6 2.2.1 Initial phase of Housing Bubble 6 2.2.2 Wall-Street‘s plan 7 2.2.3 CDO 7 2.2.4 Sub-Prime Mortgages 9 2.2.5 Burst of Bubble 10 2.3 Recession-2008 11 2.3.1 Overview of Recession 11 2.3.2 Effects of Recession 12 2.3.3 Federal Government response to crisis 13 2.3.4 After Effects of excessive spending 14 III. Euro Crisis 15 3.1 Overview 15 3.2Understanding the Crisis 15 3.3 Outlook for individual countries affected by crisis 19 3.3.1 Greece 19 3.3.2 Spain 21 3.3.3 Portugal 22 3.3.4 Ireland 23 3.3.5 Italy 23 3.4 Countries less affected by crisis 24 IV. The impact of global financial crisis on India 24 4.1 Offshoot of Globalized Economy 25 4.2 Reverse flow of Foreign Institutional Investment 25 4.2 Impact on various fields 26 Conclusion 34 Appendix 35 Reference 41

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Abstract

This paper is an attempt to throw light on major economic crises that world has faced by revealing their relation to each other. An honest effort has been put in this paper to bring out a clear picture of present economic situation of the world. In the vast arena of global economics, three major powers namely United States of America, European Union and India are considered to make the understanding process simple. The paper is structured as a literature with the goal of answering the following questions, 1. What is the reason for the different crises faced by these countries? 2. How were these countries affected by those crises? 3. What was the degree of damage caused to the society by those crises? 4. What were the response and measures taken by the Governments to recover from crises? 5. Are we going to face a Global Economic Crisis?

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I. Introduction:
The United States is the epicenter of the global financial crisis. The federal government is the epicenter of responsibility for the crisis, and the federal government is the epicenter of the governmental responses to the crisis. This is about all the agreement one can find in the United States about this crisis. Virtually everything else is a matter of dispute. There is no disagreement that the federal government is the epicenter of responsibility for the crisis. No one blames the states, but there is deep disagreement over the nature of federal responsibility for the crisis. Banks play the initiation role for all the crises faced by the world. The irregularity of rules and irresponsibility of authorities is the major reason for the worst financial scenario that the world is facing.

II. Economic Crisis in USA: 2.1 Dot-Com Bubble: 2.1.1 Overview: The dot-com bubble is considered to be the starting point of the entire economic crisis experienced by United States of America. It is also referred to as the dot-com boom, the Internet bubble and the Information Technology Bubble. The history of Dot-com bubble started roughly by 1997 and came to an end by 2000. During initial phase of this period stock markets in industrialized nations saw their equity value rise rapidly from growth in the internet sector and related fields. While the latter part was a boom and bust cycle, the Internet boom is sometimes meant to refer to the steady commercial growth of the Internet.1 A bubble occurs when speculators note the fast increase in value and decide to buy in anticipation of further rises, rather than because the shares are undervalued. Typically many companies thus become grossly overvalued. When the bubble "bursts," the share prices fall dramatically, and many companies go out of business.2 The period from late 1996 to 2000 was marked by the arrival of a group of new...
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