What Were the Major Causes of the 2001 Recession?

What were the major causes of the 2001 recession you might ask? First, let's focus on the here and now. Anyone with access to media of any form has now likely had their curiosity aroused by the latest recession talks. We are most definitely falling into one, and it looks serious. Unrestrained capitalism and consumer spending has finally caught up with us and we are now paying the dues. What goes up must come down, and this is exactly what is happening with the extraordinary economic growth we have seen in the last couple decades. It has been said that we must learn from the past to avoid making the same mistakes again in the future. The previous, most recent recession that comes to mind was that which occurred in the earlier stages of this decade. What were the major causes of the 2001 recession?

The most glaring issue was the the collapse of the Dot-com bubble. Basically, too many companies entered into internet marketing with their eyes and judgment clouded by dollar signs. They viewed the internet as a sort of "money-multiplying" machine that you basically put $2.00 into in order to make $200.00. They got lazier and less creative with their marketing efforts. This whole philosophy turned out to be incorrect for the most part, and consumer spending online began to demonstrate this. Eventually, large numbers of these generic companies went bankrupt.

This Dot-com collapse triggered a collapse in the NASDAQ. The Dow Jones remained relatively unscathed by the NASDAQ collapse until September 11, 2001, when the terrorist attacks occured. In the following months, the market rebounded and collapsed repeatedly. It eventually crashed hard in the final quarters of 2002, causing a recession.

Some economists argue whether or not to even label this period of poor economic activity as a recession because of the fact that it did not last a full two consecutive cycles. Nonetheless, it still had a hard-felt impact on the American people. When discussing the major causes of the 2001 recession we are definitely obligated to consider the relevance to our current dire economic situation.

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If the economy's trend growth or a recession in 2010?

What is 2010? Here are some ideas and some ways, I think that the list took place in 2010. But rather than guess which end of the S & P 500 Index will be the number of analysts cut profit forecasts, which is a list of things in 2010 might be good or bad, than I imagined. But I think people want a way to one of the most important factor in the economy and markets so that they can plan and their own personal and business strategiesWe experienced a year.

1. Unemployment is not much better could be worse in 2010, because of the savings and debt reduction to consumers, rather than spending money, the key is the company is producing from the current level and the expansion of consumer demand.

2. To win the value of U.S. dollars, this year due to (risk) global uncertainty began what kind of improvement and disappearance of the U.S. economy later this year.

3. Is the "Tea Road" peopleWill continue to increase, while the Republican primaries in 2010 to make the appearance of a candidate.

4. More complex and competition rules, points out that the U.S. Congress will prove to be the restoration of roadblocks.

5. When the Federal Reserve and Ben Bernanke will raise interest rate concerns will be muted because the market will grow a few months before interest rate decision, the Fed and Bernanke, it is time to raise interest rates.

6. The central bank will continue to maintain a low interest rateContinue to print money, so that the next bubble, due to bad investments.

7. Housing may be more serious in 2010, and the sharing of foreclosures more and more millions of "toxic assets" of the bank's balance sheet. Commercial real estate will continue to decline, by 2011, due to the need to refinance "underwater" attribute. However, new investors will begin a fortune to buy these cheap properties.

8. These banks need to build the assets they currently owned assets to meet the toxicEncountered in books and new toxic assets to make up for 2010 and 2011. Hence, the banking credit crunch (and very little to keep credit-worthy borrowers.)

9. Corporate winners and losers (consumers and taxpayers have lost their health care ') legislation began in 2010, became apparent, and CEO and medical trade unions, was surprised to be involved with the executive departments, if they decide their "negotiated agreement" is not honored by the government.

10.The U.S. Congress passed another economic stimulus package, in order to restore and create employment opportunities. He will be great, but it will release a smaller package, so their spending bill passed by Congress can bring, there is no attention to a large number of concern and indignation.

11. Climate change hysteria, and the Congress in 2010 on a realistic energy plan, we have been waiting for in order to reduce the work since 1975 reward.

12. The company's sales will continue to be so serious, companies can increaseWill be conducive to (low-interest loans) to buy more mergers and acquisitions, sales and profitability.

13. Government debt is already high, will be greater and the Federal Reserve Board in order to finance these short-term bonds, long-term debt. Therefore, the Fed was not prepared to raise interest rates. Imagine the price (only 0.25% increase of 50% to 0.5%) because of your "cost", if you are interested in the hundreds of billions of U.S. dollar payment, based on the current debt.

14. ThisIs certainly a minority, but in 2010 the company's profits are too optimistic and will be lowered, with the second quarter, figures began.

15. Create a new investment areas and opportunities will you have a buyer, the seller and you, and vice versa.

Compared to our growth in China, India

China's economic growth in recent decades, a large scale. Although India's economic growth during this period can not be compared with the number of terns of the Asian countries. The two countries have 1300000000-1200000000, respectively, the largest population on earth. China has more than 1 billion more than the United States the third largest home.

China's economy grew by 10% per annum during the 20th century, 90 years, this growth continues to rise自从. It is currently the third largest economy after the United States and Japan, overtaking, and is expected to be in the next two years.

This happens, growth in China for several reasons. A population of only the existence of a considerable advantage, that is why it is such a rapid growth possible. The Government's stimulus to some extent help with a number of cash flows of infrastructure and transportation. There are many investment opportunities for foreign investors. AnotherThe main reason is the enterprise into the country of cheap labor. It is used by the major apparel companies, one in the country produced the world's largest apparel part number. Have made the biggest growth areas. This means that foreign companies can establish their own clothes to China cheaper, rather than in their own national production. Some companies have been criticized for the poorThe working conditions of workers, because it is not the same as in other parts of the same rigorous standards. The lower the cost of living in China, that the employee does not require the same wages, thereby reducing costs for enterprises.

India is not the case, because China's growth, but it has by increasing the cheap labor it provides. Several call center moved to the country in the past decade. Some companies have received criticism for several reasons. One of them is that itContinuously to help people lose their jobs elsewhere in the name of greater profits. Another reason is that it means the user does not speak in their own country people, that is, they do not speak of people to solve their direct inquiries.

Call center in China clothing company, which is equivalent to foreign companies when it comes to the use of county labor force. The main reason our economy than India, the tremendous technological advances in plantOccurred. It is in this respect between the two countries vary widely. India does not have the same public investment will not be. It is also still relatively rural areas, in China's urban mass migration. They are examples of in accordance with the West more and more with Beijing, Shanghai and other big industrial city. It was also suggested that the stability of our government played an important role in the economic situation does notBy political changes. Does this mean that democracy is the economy bad?

The recent global economic recession, but has affected to China. It is growing so fast, it needs to have a impact. However, it is faster than many other countries, once again, in part because of state intervention and partly because its economy has been so much.

© Andrew Marshall

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U.S. dollar losses will continue to decline?

Since 2001, the U.S. dollar has steadily declined. British pound against the dollar had risen to over £ 1 = 1.45 dollars to close to £ 1 = low down two U.S. dollars mark. U.S. dollar against the euro, the dollar has depreciated against the current 1 euro level from 0.85 to 1.35 U.S. dollars.

From the different points of view in the dollar seems to be running the following basic economic foundation and continue, and these imbalances, the dollar could fall further.

First, the U.S. current accountDeficits to maintain the highest level in history. Debt and other countries the exact amount expected to be approximately 710 billion U.S. dollars for 2006 [1]
Basically, this means that the U.S. imports more than exports, resulting in capital outflows. In recent years, this huge debt has been from Asia and other countries, are happy because the U.S. dollar as it as "buying stability and security of the state," to buy currency. However, there is increasing evidence Asian banks are not asConfidence in the U.S. economy. Therefore, they are looking to sell U.S. dollars and reduce the dollar reserves. As a result of this situation, the dollar must fall, because too few buyers, the U.S. debt [2].

Second, the future of economic growth is no longer doing so positive. Economic growth forecasts have been downgraded recently. The OECD lowered to 3.6% growth forecast to 2.4% of the U.S. economy. If Nu Beene Beene pessimistic about the global economy [2]Is expected that by mid-2007 in the United States recession. In economic growth is expected to decline in the important factor is the U.S. consumer confidence to decline.

Related to this is that the former gave a warm housing market may have bottomed out signal. While the new housing prices continue to rise. Old house prices fell 3.5 percent on average since last year. Although the 3.5% decline may not be big, it is the largest in history. Housing prices are the main factorsConsumer protection in recent years. Between individuals, the amount of debt the U.S. consumer is a new high. Consumer debt ratio of disposable income from 62% in 1980 to 127% in 2005 [3]

Therefore, falling house prices in other parts of the U.S. economy, the effectiveness of a powerful knock-on effect, as consumers struggle to refinance debt and meet. Another consequence of high level of consumer debt is that the U.S. economy should be particularly sensitive toTo raise interest rates. Rising interest rates will be a devaluation of the solution may require investors to finance the U.S. current account deficit. Although the distant prospect of the Fed to raise interest rates. Continued to decline in the dollar will lead to long-term interest rates rise on U.S. secutities.

However, some economists argue that the prospects for the dollar may be bad as some people predicted. First, as Anatole Kaletsky, that [4]Of globalization and financial market deregulation era, the trade deficit is not that difficult to finance, as it once was. As experience has shown that the trade deficit as a guide exchange rate fluctuations is not reliable. First of all, one of the few countries, the current account surplus is Japan. Your current account surplus has increased, but the yen fell against the dollar, one of a small number of currencies. [4]

Secondly, although the pace of U.S. economic growth slowingCurrently, not much worse off than the European Union and Japanese economies. 2, the gap between interest rates in the economic field is still only about 2%. Against the euro's strength and weakness against the dollar if there is good reason, there are many good reasons. Some American economists like Ben Bernanke the Federal Reserve to keep U.S. growth was only slightly below trend in controversy optimistic economic conditions.

However, it is important not to underestimate theThe importance of the general market confidence in U.S. economic outlook. For example, in Iraq's political problems also hurt the reputation of the United States as the world's leading economic and political level. More than 50 years, the United States has been the undisputed global economic power, but slowly changed my view they believe may be coming to an end the era of U.S. dollars. As the population migration in U.S. dollar assets could be to establish an investment banker to the strong leverage effectThey do not want to hold U.S. dollar assets.

The United States to a large extent the adjustment period can not be avoided because they are trying to solve the triple deficit, with the rest of the world, the trade deficit, consumer debt, the U.S. government debt. Whether the adjustment phase is gradual and painful things to start 2. First, how important is that U.S. housing prices and the resulting decline in consumer confidence. Second, will depend on the attitude of Asian banks, especially theChina. Because they hold so many dollar-denominated assets, they may try to gradually depreciate to manage the continuation of the past five years. However, can not be ignored, if the dollar's status as a reserve currency in the world, it may try to attack the United States creditors to increase their inspection cash. This will exacerbate the dollar's decline, so that genuine economic difficulties, the United States and the rest of the world.

The only certainty is that European consumers may be retainedSome in the U.S. real bargain shopping in a great future.

References

[1] http://www.cbsnews.com/stories/2006/01/12/business/main1203762.shtml

[2] http://www.economist.com/finance/displaystory.cfm?story_id=8361260

[3] can be http://www.federalreserve.gov/releases/Z1/Current/

[4] http://www.timesonline.co.uk/article/0, .630-2485597. The HTML - greatly exaggerated the demise of U.S. dollars