Notes from good books

What is recession? Where did recession start? How America became the problem of the world? How is it going to affect us Indians?

R
ecession if you haven’t heard this word until now in your life you must be toddler. The impact that this word has brought upon our life is unimaginable. Print media, television, the Obama’s and everyone is speaking about this new phenomenon. The corporate world in the US especially those from the financial and automotive sectors are in queue for getting a Bailout because of recession.
I first heard about recession during the end of year 2007 I thought, “I am in the Software engineering it is something that is not related to me”. Later One of my friend who was working in a project for the mortgage industry told that his project has been shelved because of recession in US. Then it dawned on me that one day or the other it is going to get me.
I came to know more about this trend from the web and magazines (http://www.thuglak.com/) written by Industry experts. Earlier I used to think economics as a wasteful human expenditure. I used to infer the charts, graphs and pie diagrams that they show as an art form rather than information. However, this quest for knowledge changed my notion about economics.
The Oxford dictionary explains Recession as “a period of temporary economic decline during which trade and industrial activity are reduced”. Economy goes into this cycle due to various reasons like famine, flood and war. What is the reason for the current Recession?
This is the gift of Globalization to the world economy. Due to globalization the recession which started in the US during the mid 2006 has transformed into a world crisis. How come recession started in the US in the first case? Recession in the US was the result of another phenomenon called Sub-Prime Mortgage crisis.

Sub means lower in Importance and Prime means Main. So, Sub-prime mortgage plainly translates to money lent to a person who, in simple terms, is unfit to borrow. (Quoted from www.Gurumurthy.net). The world is yet to come into terms of how much money was really lost due to this. The losses suffered by US due to sub-prime mortgage crisis have dawned on the heads of banks from different parts of the world. The Swiss bank UBS alone has written off $13.5 billion dollars till date (write off: - a cancellation from an account of a bad debt or worthless asset). The negligence and mismanagement of funds by the US has put the world economy into a toss. I may sound anti-American but that is the truth. I will explain this later, for the time being, let us be stuck up with sub-prime mortgage crisis