MPOB

RECESSION

SUBMITTED TO:-
MISS MALLIKA RANI
(M.P.O.B) SUBMITTED BY:-

ROLL NO :- A-59
SECTION :- R1003
REG. NO :- 11011219

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CONTENTS

INTRODUCTION
DEFINITION
OBJECTIVES
HISTORY OF RECESSION
RESEARCH METHODOLOGY
 REVIEW OF LITERATURE

CONCLUSION

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RECESSION
INTRODUCTION

People in industrialized nations are far wealthier than people

living in less developed countries. But still these wealthier
nations suffer most during the slowdown period. There was
boom in 2007 and then the slowdown started showing its
presence prominently in the year 2008. Before economies
could take it seriously, there was recession. This is what
explained by Business Cycle which says everything which goes
up is bound to come down. All these activities are studied
under macroeconomics which is concerned with the behavior of
economy as a whole. This is not the first time world economies
are facing slowdown, there has been 5 recessions in the last 30
years around the globe which includes the most remembered
“Great Depression”. Inflation, Employment Cuts, Price hike, low
demand etc is all characteristics of slowing down of the
economy. The main problem faced by the countries is not
nuclear threat but high inflation rates. Before starting with the
current slowdown of the world economies, lets have a look at
the scenarios of 1980’s and 1990-91 recessions. Lets observe
the policy mix taken by the economies like US and Europeans
at such situation.

 DEFINITION

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So what is a recession?
A recession is a decline in a country's gross domestic product
(GDP) growth for two or more consecutive quarters of a year. A
recession is also preceded by several quarters of slowing down.

 OBJECTIVES
There are some of the important objectives of the study-

• The first objective of the study is to know about the

recession and how it affects the business and economy of
any country.

• The second objective is to analyze the main causes of

recession.

• The third objective is to get some innovative ideas and

strategies to bear the recession.

HISTORY

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The 1980’s Recession and Recovery

Economic policies in the united states in the early 1980’s,
departed radically from the policies of the previous two decades.
First, tight monetary policy was implemented at the end of 1979
to fight an inflation rate and then, in 1981, an expansionary fiscal
policy was put in place of tax cuts and increased defense
spending.

In 1973, the US and rest of the world were hit by first oil shock, in
which the oil exporting countries more than doubled the price of
oil. This led to rising inflation which was extremely unpopular. In
October 1979, the Fed acted, turning monetary policy in a highly
restrictive direction. The monetary squeeze was tightening in the
first half of 1980, at which point the economy went into a mini
recession. The reason for the sharp decline on the activity was
tight money because inflation was still above 10% and money
stock was growing at only 5.1% in 1981, the real money supply
was falling. With a policy mix of easy fiscal and tight monetary
policies, it was found out a rise in interest rate was expected. With
investment subsidies increased, investment increased with
interest rates. This the fiscal expansion of 1984 and 1985 pushed
the recovery of the economy forward.

The Recession of 1990 – 91

The policy mix in early 1980’s featured highly expansionary fiscal
policy and tight money. The tight money succeeded in reducing
the inflation of late 1970’s and very early 1980’s, at the expense
of serious recession. Expansionary fiscal policies then drove a
recovery during which the real interest rates increased sharply. By
middle of 1990 it was clear that the economy was heading for the
recession.

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The price of oil jumped and for a time the Fed was faced with the
quandary of deciding whether to keep monetary policy tight while
holding interest rates up, in order to fight inflation, or pursue an
expansionary policy in order to fight the recession. The fiscal
policy was immobilized because the budget deficit was already
large and was expected to rise and thus no one was enthusiastic
about increasing it. From end of 1990, Fed began to cut interest
rates aggressively and the economy showed signs of recovery in
second quarter of 1991 but faltered in fourth quarter.Thus, Fed cut
the interest rate very sharply at the end of 1991. In retrospect,
this was sufficient to ward off a recession.

The Recession of 2008 onwards

The Credit Crisis began in August 2007, when interbank lending
markets in the US, UK and Europe began to seize up. These
markets had rarely received much public attention, and it was not
immediately obvious why this should have happened. But loans on
interbank markets, from overnight to several months, were not
just important in keeping the flow of credit circulating amongst
banks, and hence amongst almost all economic agents in a
market system, they were made without collateral being
necessary, and were increasingly important to the banking model
developing across market economies. That model relied to an
increasing extent on wholesale markets for supplies of capital,
rather than on the deposits of individuals or companies. At the
same time the degree of leveraging on capital was also
increasing. So with larger supplies of credit and greater leveraging
higher profits were possible. As were higher risks, as banks sought
out increasing rates of return to satisfy their shareholders and
those of their employees whose wages and bonuses were linked to
levels of business or profits. But the increasing levels of risk
seemed manageable by the device of securitisation, which
appeared to allow the securitising bank to simultaneously sell on

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the risk and replenish its capital. When a rapidly deflating housing
market bubble in the USA exposed weaknesses in this banking
model, and similar bubbles in Ireland, the UK, Australia and Spain
also began deflating, doubts about the location and value of
securitised assets led eventually to an evaporation of trust
between first banks, and then other financial and non-financial
companies.

By the autumn of 2008 the lack of trust in the financial sector was
sufficiently great to almost completely seize up credit flows and
threaten the stability of the world financial system. The financial
system was in effect broken, and by October 2008 a coordinated
action by large numbers of central banks and countries was
needed to stabilise it. This involved giving widespread promises of
state protection to depositors, large injections of capital to banks,
vast liquidity supplies to gummed-up financial market and
increasing guarantees for all sorts of short term bond issues. Most
recently the Crisis moved into the realm of sovereign default, as
countries such Hungary and Ukraine struggle to refinance foreign
currency loans, bringing in international agencies such as the IMF
and the World Bank to provide assistance. At the same time the
Credit Crisis has spawned an international economic downturn,
and in some cases recession, the depth and severity of which
cannot at the moment be estimated. All of these responses have
public finance consequences – tax revenues and expenditures –
and risk and uncertainty consequences that are still growing and
evolving.Global economic meltdown has affected almost all
countries. Strongest of American, European and Japanese
companies are facing severe crisis of liquidity and credit. India is
not insulated, either. However, India’s cautious approach towards
reforms has saved it from possibly disastrous implications. The
truth is, Indian economy is also facing a kind of slowdown. The
prime reason being, world trade does not functions in isolation. All
the economies are interlinked to each other and any major
fluctuation in trade balance and economic conditions causes

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numerous problems for all other economies.

The causes of recession on the Indian

Economy are following –
* The recession when occurs tighten the growth and development
of the stock market by tightening the Indian economy.

* Jobless and Unemployed Students – When there is a slightly

increase in the unemployment level and jobless persons living in
the society then definitely we can judge that is a period of
recession. This is really bad for the Indian economy as resists the
National growth of country.

* Inflation of products and services – when the prices of production

or manufacturing of goods and services along with various
commodities are increased and the fossil fuels, petroleum also
gaining flames then it will automatically resists growth of various
industrial sectors.

* Decrease in prices of stocks – As mentioned above recession

have big impact on the Indian economy. Therefore, the prices of
various stocks associated with the field where the recession has
take place has decreased.

* Decrease in prices of property – It also decreases the price of

property because due to lack on financial funds or capital funds no
one is interested in purchasing any additional property or any
other agricultural land.

* Decrease in GDP – As GDP means Gross Domestic Production. It

is associated with the development and production of various
products and services in various sectors.

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* High supply and Low demand – with the recession, there is

random decrease in the demand of an particular product as the
supply is increasing at a rapid rate. This is really bad for the point
view of entrepreneur as it will make high loss of an industry or an
company.

* Fall of companies – The sales of majority of company decreases

which in turn decrease their profit statistics as compare to the
previous years and finally lead to the fall of the company.

* No empty vaccines for fresher – The pass outs from various

colleges or universities are getting jobs as jobs are given on the
basis of experience, therefore fresher don't have a job for
them. for example - In 2009 when the information technology
sector is declining there is also a decrease in job vaccines which
leads the more unemployment.

* Debit their savings – when the people debited their savings or

the investments in order to fulfill their day to day needs and
requirements then they definitely matured their saving funds.

* Kept under debt – The lower sections of society who have taken
loans or other financial fund from any organization will have in
trouble. The survival for them is very difficult as they have a
miserable condition.

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There are following points comes under research methodology-

 Research design

This research is basically exploratory research. This

research is also called as formulative research. The
objective of this research is to gain familiarity with a
phenomenon or to achieve new insights into it.

 Data collection method

In this research data is mainly collected through

secondary sources. Secondary sources are like books,
newspaper, journals, magazines and internet.

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REVIEW OF LITERATURE

 The Global Economy: Fed Leans Toward

New Aid to Economy.

Abstract (Summary)

Purpose: The purpose of reading the officials thought it unlikely

the U.S. economy would fall into recession again, but several
were concerned that growth would not be strong enough to
reduce unemployment for some time. Since the Federal Open
Market Committee meeting on Sept. 21, data has continued to
paint the picture of a sluggish economy

Autho Luca Di
r(s): Leo

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 Economy sheds more jobs, but signs of

recovery multiply

Abstract (Summary)

Expectations for their own industries are also downbeat, with

about 28 percent of CEOs anticipating an improvement in the
months ahead, down from 43 percent last quarter. Since
Congress has little appetite to spend more to aid the economy,
the focus is now on the Federal Reserve.

Autho Kevin G.
r(s): Hall

 In times of recession, think big, but build

small
Abstract (Summary)
If the author could go back to the beginning, he would invest only during recessions, when almost
everything costs 50% to 90% less than it does during boom times. This would be good for him as an
investor, and the economy would benefit from the investment. Not everyone is an entrepreneur. If you
want to find out if you have what it takes, save your experiments for evenings and weekends. If you
have a secure job, now is certainly not the time to hand in your notice unless you're absolutely certain
that you have a brilliant idea.

Autho Richard
r(s): Branson

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 If You Build It ...; Now's the time to invest in

infrastructure.
Abstract (Summary)
Due to the recession, construction materials are cheap.
Unemployment in the construction sector is at 17 percent--and
that doesn't even count the construction workers who've given
up looking for jobs.

Autho Ezra
r(s): Klein

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 U.S. News: Recession-Hit Areas Lag for Years

Afterward
Abstract (Summary)
In regions that suffered disproportionately in the recession of
the early 1980s, for example, average earnings have risen at a
quarter of the rate of the rest of the U.S. Employment grew
more slowly, young people left the region, population growth
slowed and, as a result, demand for housing weakened.

Autho Sara
r(s): Murray

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 Where the Jobs Are; Hint: they're not where

the workers are.
Abstract (Summary)
Answering this question is the key to American prosperity over
the next decade. Some conservatives squawk that
unemployment isn't budging from 9.5 percent because of
higher-than-usual benefits being paid out to jobless workers, or
the fact that wages haven't come down as much as they should
have, given how many people are out of work.

Autho Rana
r(s): Foroohar

 Home help in India

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Abstract (Summary)
In November 2008. the company received approval from India's
Directorate General of Civil Aviation for its commercial MRO
services in Hosur, a city in the southern state of Tamil Nadu.
That made it die first die country's first independent airline
MRO, and allowed it to perform services such as line and base
maintenance, aircraft painting, structural repairs, cabin
upgrades, and avionic upgrades. Air Works also offers
component repairs and spare parts sourcing

Autho Siva
r(s): Govindasam
y

 Influencing India
Abstract (Summary)
While the world enters the throes of one of the worst recessions
in modern history, at least one nation is bucking the trend --
India, with a projected growth rate of 6.9%. Consumer
confidence isn't dented either, with India topping the Nielsen

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Global Consumer Confidence Index. Many global brands in the

past have entered India by cloning their international
strategies. At Law & Kenneth, the inspiration to partner
marketers and build brands stems from absorbing the many
expressions that drive people. Brands that give wings to a
better life find success. Indian FMCG giants such as ITC have
built powerful brands by continuously tapping into this intrinsic
Indian insight

Autho Anil
r(s): Nair

 Message from Delhi: don't cut too soon

Abstract (Summary)
In India we follow this extremely closely and with concern. Our
anxiety about an austerity drive in industrialised countries is
clear. Manmohan Singh, prime minister, warned in Toronto that
while concerns about debt sustainability normally suggested a
need for fiscal contraction, "circumstances are not normal". The
recovery is still fragile. Contractionary policies, if followed by
many industrialised countries, could provoke a double-dip
recession with "very negative effects on developing countries".
He went on to say the situation calls for careful co-ordination
among the G20 countries.

For developing countries the need for the G20 to co-ordinate

policies is paramount but past experience is not encouraging.
In 2006, the International Monetary Fund tried to get the US,
Germany, Japan, Saudi Arabia and China to co-ordinate their
policies to deal with the build-up of current account
imbalances. As Raghuram Rajan, then IMF chief economist,
writes in his book Fault Lines , each country recognised there

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was a problem, but each felt others must act differently, and
that its own policies were just right.

The quality of fiscal correction is equally important. The G20

has spoken of "growth friendly" consolidation. For fiscal
correction to be politically acceptable domestically, it must be
seen to be fair. Each country has to handle this problem as best
as it can. Structural reforms that enhance productivity must be
a critical element of any strategy to ensure sustainable growth
in industrialised countries.

Auth Montek
or: Singh

 A Tale of Two RPLs; The Ambanis revive the

equity cult their father pioneered.
Abstract (Summary)
The numbers are huge on both sides (the brothers had reached
a settlement to go their own ways in June'05). Consider the
projects in the respective pipelines: [Mukesh] raised the funds
to bankroll a 29 million tonnes per annum greenfield refinery at
Jamnagar that calls for a total investment of Rs 27,000 crore.
[Anil Ambani] has power projects totally some 24,200 mw that
will need a little under Rs 32,000 crore to execute. Both issues
were oversubscribed big-time--the refinery one, 52 times and
the power one, 73 times. But it's the price at which Anil's RPL
lists that could decide which RPL really rocks. At the time of
writing, the RPL with the refinery had a market capitalisation of
around Rs 90,000 crore. At an offer price of Rs 450, the power
RPL will have a market value of a little over Rs 1 lakh crore. The
listing price will of course widen the gap. If the grey market
price of close to Rs 900 is indeed going to be the price at which
Anil's RPL lists, it could boast a mind-boggling market cap of Rs

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2 lakh crore. And don't forget: The promoters hold 90 per cent
of the power RPL (See RPL vs RPL).

Despite that the markets thumbed down top-line IT stocks. At

the time of writing, the Infosys scrip had touched a 52-week low
of Rs 1,305, while TCS was not too far from its own 52-week low
of Rs 811.25. Macquarie Securities Technology Analyst, Suveer
Chainani, says: "The results this time were a non-event.
Perhaps the markets are looking for a trigger beyond just good
results." Perhaps a trigger like the extension of a tax holiday
beyond 2010--something that seems unlikely as of now. The
possibility of a recession in the US, a spillover effect on IT
spending in Europe coupled with the ever-appreciating rupee
(IT appreciated 2 per cent in the last quarter) acting as
spoilers. For now, the IT companies are sticking to a 'wait and
watch line' and flaunting a robust deal pipeline. "There is
nothing in the environment from project cancellations or
pricing or something like that to panic about...we have been
able to sustain momentum," commented S. Gopalakrishnan,
CEO, Infosys. Similarly, TCS which bagged nine large deals
during the last quarter, including a $1.2 billion Nielsen deal,
says it has several large deals. "We are pursuing 25
deals in the $50-100 million range," says N. Chandrasekaran,
COO, TCS. Dalal Street of course isn't listening.

So will 2008 mark the return of general entertainment channels

(GECs), which had lost advertising ground to news
channels in 2006 and 2007? The opinion is divided among
media planners. "There will be certain elasticity for GECs
depending on content, and viewership can go up. GECs might
also grow by eating into the share of movies and news," says
Basabdatta Chowdhuri, CEO, Madison Media Plus. "It doesn't
have to be an either-or scenario," says G. Krishnan, Executive
Director & CEO, TV Today Network. "The news genre has grown
exponentially in the last few years because we have been able
to grow the audience base." Other broadcasters also say that
dramatic changes are unlikely. "The large audience viewership
patterns are already in place. None of our channel or genre is
affected by any of this," says Paritosh Joshi, President, Ad Sales
& Distribution, Star India.

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Autho Anand Adhikari, Mahesh Nayak, T.V. Mahalingam, K.R.

r(s): Balasubramanyam, Shamni Pande, Amit Mukherjee,
Manu Kaushik, Rishi Joshi, E. Kumar Sharma, Kapil
Bajaj And Deepti Khanna Bose

Headline- New Givex Uptix(TM) Ticket Technology

Helps Teams Beat the Recession
Abstract (Summary)
In research the author has been concluded with the sentence
“teams may just be scratching the surface but are already
seeing big returns. Since the San Francisco Giants started their
program in early 2009, fans have expressed their approval by
increasing season ticket renewals by over 30%, despite the
recession”.

 HOW TO BEAT THE RECESSION

Abstract (Summary)
This research shows how the several executives shared their
strategies on how to beat the recession. By his own estimate,
Joseph Mimran, chairman and CEO of Toronto-based Joe Mimran
& Associates, has braved several "traumatic" downturns since

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launching his Canadian fashion empire in the late 1970s. Still,

his businesses have resisted recessionary pressures, thanks, he
says, to consistent investment in marketing. But during the
1990-1991 recession, the entrepreneur who is now the "Joe" in
Loblaws' Joe Fresh Style fashions turned his attention to
strategic acquisitions. Meanwhile, wealth is never lost -- it just
transfers hands, says Michael Glazer, CEO of Montreal-based
mystery-shopping service Premier Service Inc. That knowledge
helped him and his business partner maintain the optimism
required to establish their mystery-shopping firm in the depths
of the early 1990s recession. With that attitude, the pair
focused on educating retailers in how mystery shopping could
help them increase their sales during the downturn.

Autho Chris Atchison,

r(s): Susanne Ruder

Headline- MULTI-MANAGEMENT: Henderson uses barbell strategy to

beat recession

Abstract (Summary)
The researcher concluded with the sentence “(Henderson) New
Star head of equities Bill McQuaker says Japan is a cyclical
market that typically performs well when the global economy is
up but did not follow the pattern last year due to the election
and a stronger than anticipated yen. He says the region has a
lot of catching up to do this year, along with cyclical parts of
the UK market such as aerospace. McQuaker says this sector
did not pay handsomely last year but he expects 2010 to be

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better and is holding Henderson's UK equity income for

exposure to aerospace and other cyclical industries”.

Headline- Beat the Recession Blues

Abstract (Summary)
A survey done by Harris Interactive found that 42 percent of
18- to 24-year-olds and 33 percent of those 35 to 44 years old
are at least somewhat interested in receiving opt-in mobile
alerts from their favorite businesses. They were particularly
keen on hearing from restaurants, mentioned by 53 percent of
the surveyed group. Respondents also wanted to receive offers
in the separate categories of pizza, fast food and happy hour or
bar and nightclub offers. Bryce Marshall, director of strategic
services for Knotice, an Akron company providing software and
services for direct digital marketing, discusses how restaurants
should approach direct digital marketing. Meanwhile, Jon
Gordon, a speaker, consultant and author, discusses eight
strategies for boosting morale and engagement in the current
economy. And Bridget Grams, a principal with the real estate
and financial restructuring firm Huntley, Mullaney, Spargo &
Sullivan, suggests taking a look at a third cost category:
occupancy.

Autho Megan
r(s): Rowe

 Fast, Affordable Strategy Services To Help Businesses Beat

Recession

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Abstract (Summary)
This research is done by a strategy advisory company in New
York. The name of that company is Cerebella’s LLC. This
research mainly focuses on the strategy bites which are
designed to overcome the two biggest barriers to crafting and
executing sound business strategy: time and money , "With
these new offerings, we can serve companies of virtually any
size that are looking for real-time business impact.

 Emerging Strategies To Beat The Slowdown

Abstract (Summary)
This research is done by the Harvard Business. Smart
companies in emerging markets spotted the downturn early
and reacted quickly. To improve profitability during the
slowdown, some companies have chosen to go up the value
chain. At the other end of the spectrum, several Brazilian
companies are pursuing the country's populous low-income
class. This is very much helpful and innovative strategy to beat
the recession.

 Salon strategy to beat recession

Abstract (Summary)

This research is mainly focuses on the health and beauty

salons. Not only did ICO Salon Performance's first business
event sell out, but was met by enthusiasm and
participation from salon owners and senior staff delegates.
The day offered solutions to the economic downturn
including a financial planning strategy session, talk on PR
and marketing and retail guidance.
The research also saw the launch of the company's office
management system, the Virtual Partner Area, to help manage
staff salaries, incentives, performance and profits.

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 Sauflon offers scheme to beat the recession

Abstract (Summary)
According to Sauflon UK sales director, Bradley Wells, a 'unique'
aspect of this service is the availability of an option for
practitioners whereby contact lenses and solutions can be
packaged together to meet each patient's requirements.

 Exports of manufactured goods rose to highest

level in 16 months

Abstract (Summary)
Strong foreign demand for American goods by developing
countries - such as China, India, Russia and Brazil - is helping
to cushion the adverse effects of the slowdowns in the
domestic economy and in most of the industrial nations, which
are besieged by financial turmoil, collapsing housing markets
and rising energy costs.

Autho Evangelos Otto

r(s): Simos

 CONCLUSION

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The global recovery is in full swing,but most employers are still

in a state of panic and continuing to lay off staff when they
should be doing the opposite.Now is the time when employers
need to be thinking ahead and repositioning themselves for the
next phase of growth. This next growth cycle, particular within
Asia, could last longer than most analysts are predicting.
History shows us that unemployment normally peaks right after
a recession has ended and if we look at what is going on
around us it stands to reason that now is in fact not too
dissimilar to previous recessions. Let's follow some tried and
tested methods for "recession-testing" to gauge whether we
really are coming out of the recession. If all the boxes have
been ticked, then it's pretty safe in our view to say that this
recession is coming to an end if not in fact it has ended
already.The case still remains that most countries don't
actually know they're out of recession until the official numbers
are produced.As official numbers are generally crunched in
arrears, then most countries typically have moved out of
recession already by time the numbers are released to the
public. It also works in reverse if we look at what happened
when the recession begun.

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