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O Fahad Abbas Bm-
Bm-25078
O Ayesha Munawwar Mirza Bm-
Bm-25067
O Noor
Noor--us-
us-Saba Bm
Bm--25052
O Murad Suleman Bm-
Bm-25175
 @eason for Choosing This Topic
O The reason for choosing this topic is that it has a direct
relationship with the poverty, unemployment, literacy,
wealth distribution and also with the increased level of
terrorism in Pakistan.
O Financial crisis in 2008-
2008-09 which are still on the go, they
actually started from the 20th century and they have been
increasing since then. In the end of 20th century the U.S
housing prices after a multiyear started declining
 -hat is an Economic @ecession?
O This occurs when there is a significant decline in
the economy which usually lasts for months.
O This is visible in terms of consumer spending,
employment, industrial production, real income
and wholesale trade.
O Experts say that an economic recession is normal
because it is part of the business cycle and things
usually improve within 16 to 18 months.
 D

  
 


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å
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 D
 
 

O The Iranian @evolution sharply increased the

price of oil around the world in 1979, causing
the 1979 energy crisis.
 D
 
 

O Industrialproduction and manufacturing-

manufacturing-trade
sales decreased in early 1991. .
 D 




O Thecollapse of the dot-

dot-com bubble, the
September 11th attacks, and accounting scandals
contributed to a relatively mild contraction in the
North American economy.
R




Ayesha Munawwar Mirza

 
     
D 
 

m It can be difficult to predict the causes of

economic recession.

m Economists believe the Index of Leading

Indicators may be a useful tool for determining
@ecession.
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ë Many businesses across all sectors suffer a serious decline in
sales turnover and their profits shrink.
ë Borrowers default on repayment of loans and credit card
liabilities.
ë Banking system breaks down as borrowers are not in a position
to repay loans.
ë The rate of job loss becomes far too alarming.
ë Prices of food, fuel and other essential
commodities shoot up .
ë Companies offer voluntary retirement programs
to reduce their workforce and cut wages
ë People foreclose their fixed-
fixed-term deposits, and
sell off other assets to meet their day-
day-to
to--day
expenses.
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O The -orld Economy is Mired in the -orst
Financial Crisis Since the Great Depression.
It All Start in U.S:-
U.S:-
O Boom in Housing Sector.
O Collapse of banks & financial institutions
O Freezing of Liquidity
O @ippleEffect in all over the world
ë Fundamental mispricing in the capital markets
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R




Noor--us-
Noor us-Saba Bm
Bm--25052
 ÿ   

O -orld Economy is shrinking after ---
---II
O Economic Growth is expected to be 0.5%
O Advanced Economies are expected to contract by
2%.
O @ecession is likely to continue throughout 2009
and 2010.
  


Housing Sector of America
A combination of Low Interest @ates & Large
Inflows of Foreign Funds Created Easy Credit
Conditions for People to Take Home Loans
O Created a BOOM in Housing Sector
O ThisIn turn Created Demand for Property &
Fueled the Home Prices
O The
Greed Factor to Earn More & More Profit
-as Driving Every one During Period of
Housing Market.

O Lending to Sub-
Sub-Prime Market

O NINJA (No Income, No Job, No Assets)

Assets)
O Housing Bubble -as Burst Eventually.
O Over Building of Houses During The Boom
Period Finally Led to Surplus Inventory of
Homes.
O Caused Decline in The Prices of Houses

From Summer 2006

O As a @esult People Began to Default.

O Provided an Incentive to -alkway Then to Pay

the Mortgage.
O Foreclosures Increased and During 2007 1.3
Million of U.S Housing Properties were Subject
to Foreclosures.
‡ Supply of Housing
Inventor Further
increased to such
Extent Nearly 4
Million Unsold Homes
were for Sale Including
2.9 Million That Were
Vacant.
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"
O MBS (Mortgage Based Securities)
Securities)
O CDOS (Collateralized Debt Obligations).
O BigAmerican & European Banks Bought These
Sub--Prime loan Portfolios From Original
Sub
Lenders.
O TheProblem -hich -as to @emain -ithin The
Confines of U.S.A Propagated into -orlds
Financial Market.
R




Murad Suleman
O TheProblem et -orsened as MBS, -hich by that
Time Had Become Part of CDOS of Major
American & European Banks Lost their Value.

O Falling Prices of CDOS dented the Banks

Investment Portfolios and Destroyed Banks
Capital.

O Inter bank Lending was Stopped

O Estimated Loss was $512
$512
512Billion
Billion in Sub-
Sub-Prime
O Largest Hits Take By CITI G@OUP(($55.1
Billion)
O Merrill Lynch ($52.2
( Billion))
O U.S Based Firms Suffered an Over all $260
billion.
O -hile European Firms Suffered ($227
( Billion))
O ($24 Million)) By Asian Banks.

O Lehman Brothers-
Brothers-File Bankruptcy.
O Freddie Mac & Fannie Mae -ere Nationalized
By U.S
O Banks Stopped Capital Finance

O 160,000 People Lost There Jobs In U.S

O It @esults Declining in Spending.

O Thus American Imports are Decline.

   |

O Depends upon Exports to United States.

O TheEffect on China -ill be Felt by Number of

Neighboring Countries -hich are Major
Suppliers of Parts and Components.
  #
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O Europe's Biggest Economy Shrinking by 2.5%

O Britain Suffer -ith G.D.P Contracting 2.8%

O Ice land -hich -on the UN·s ´Best Country to Live

inµ Award Just Last Year -itnessed The Collapse and
Nationalized Major banks.
O Unemployment is expected to reach 11% This Year. As
Compared to 0.8% last year .
 !

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#
O Oil
Prices are considered as a Barometer of the
-orld Economy.
O OilPrices -hich Peaked at $147.30 Barrel in
2008 Fell below $35 at the End of 2008
July2008
July 2008..
O ThisSlow Down the Economies of Middle
Eastern Countries Especially
O U.A.E,QATA@,BAH@AIN,KU-AIT & SAUDI
A@ABIA
   


O TheIndustrial Sector of Pakistan Especially
Textile and Leather Goods Largely Affected.
O @emittances

O Pakistani
economy is Facing some other
Problems That are Peculiar to it and not Part of
Global Financial Melt down. These Include
O Terrorism,Law & Order Situation ,Energy Crisis
and Political Instability.