Global Meltdown

Topics: Financial crisis, Monetary policy, Economics, Inflation, Macroeconomics, Investment / Pages: 11 (2647 words) / Published: May 30th, 2013
Global Meltdown and its Impact on Indian Economy

In 2007 end, the Organisation for Economic Co-operation and Development (OECD) commented that "the current economic situation is in many ways better than what we have experienced in years. Our central forecast remains indeed quite benign".

Three months later, the financial crisis began: the US stock market started its long decline and house prices fell. Financial institutions began to resemble tenpins rather than the pillars of society they had once been and economies all over witnessed the Global Meltdown.

What is Global Meltdown?

The term Global Meltdown refers to a sudden change in the economic stability in an economy, a situation where some of the huge economic institutions suddenly lose a large part of their assets. It may be due to the down turn of banking institutions or stock market crashes or bubble or huge inflation or sovereign default. The economic crisis and associated recession originated in the US in early 2008, spread to Europe and engulfed most of the economies in both developed and developing world. The various economic activities such as production, employment, saving, investment and consumption were badly affected and thereby the economy of the country as well as an individual did undergo a downturn during the crisis. Historically, the world economy witnessed several economic crises in the past few decades- the most severe being the Great Depression of the 1930s. Later on the world witnessed the OPEC oil crises of the 1970s, loan crisis of the 1980s which made an economic downturn in the Japanese economy in the 1990s and the Asian economic crisis in the latter part of 1990s. All these recessionary trends had been accompanied by shocks to the economies of one or more markets and it took several years of concerted economic and regulatory policy adjustments for the affected markets to return to stability.

The Beginning of The Crisis

Beginning with bankruptcy of Lehman

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