Economc Crisis, Recession, what does it mean?
With these words being the buzz words during lunch times and around the dinner table, I would want to know how does it affect the average Joe Bloggs (thats people like you and I)
To an average person, they really don't care about billion, trillion or gazillions of dollars being pumped in the financial markets, the markets are a bottomless pit built up on peoples confidence level.
The minute the confidence is shattered, people start pulling their hard earned money out.
Long story short, I want to know how does it affect you, does it affect our spending habits? will the bank turmoil reach our savings account?
(Somewhat financially free) mojo1981
I always liked analogies, we too in Australia are going through the same set of hurdles, its our unwanted inheritence.
Normally the aussies have always been extremely careful as to where they invest and all, but this time around they have breached their own conservative limits and have become part of this.
I do hope that none of us are financially affected and happy and prosperous times to all of us.
mojo1981
Try living in the UK, then you will know...UK in near into recession or it is already! It affects us all!
There is no cash in the market my friend...
normally companies dont have any cash, they relay on bank credits (always) - lets do an example, imagine you are working for a little company (putting briks) that works for a qatari company building flats.
Qataris normally pay (lets say for instance at 90 days).
You make a work, company invoice the qataris, at the end of the month you want your salary, but your company has no money (not yet) so they go to bank, and they got a loan to get cash, only for 90 days, until qatari money is in their pocket... lets say 2% of interest for the money, not a big deal... they pay you, after 90 days they receive the money, qataris are happy, bank is happy, everyone is happy.
With the money you receive, you pay your rent, that is the building flats qatari company, for instance...
That was the past...
Nowadays...
You put the bricks and at the end of the month you ask for your salary, your company goes to bank and they say: "mmm! we dont enough money to let you... come tomorrow"
So your company cannot pay you (or pay the bricks to continue working next month) so you lose your job, so your not going to pay the rent so the qatari company cannot get money to pay your company next month either, you have lost your job, your company goes to close, and the bank is losing the bussiness because they cannot make money with the interest they charge the companies for the loans...
All this above is an extreme simplification.
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Not so extreme.
If you have money in the bank you will notice that banks are going to pay more and more for the deposits because they are desperately looking for money. If you have money in your pocket these are good days for you.
If you have variable interest loans (typical mortgage) or you need a loan to change car. You will notice that banks are asking for more and more interest to let you money. If you dont have money in your pocket these are tought days for you.
Normally your company has no money, so dont ask for a salary rise these days.
Normally the services companies in general have no money, so you will notice that prices will rise for them to afford the loans that they have...
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Wow! Too long and very unclear...
sorry its too early in the morning for me...
War looking for peace,
is like fornication looking for virginity.
Economic crisis is the downturn of the economy of a country or world wide.. which affected by high prices of commodities including oil, gas in the market, food stuffs,and global inflation, substantial credit crisis leading to bankruptcy of banks, increased unemployment, and possibility of recession.
Recession is the contraction phase of the business, meaning the decline of the economic activity across to economy, this may last for weeks, months or even years which lead to depression (sustained recession).Result of falling demands and may be associated to falling of prices (deflation ) or sharply rising prices (inflation)and stagnant of economic growth ( stagflation).
Ex: The Economic crisis happening in U.S. which affecting the overseas migrant workers which can lead to unemployment.
I had no idea about this....thanks for the history piece.
mojo1981
Ekonomikrisis is a fat Labanese trader who owns a merchant ship