FROM YAHOO ANSWERS

who else thinks that we seem to be heading towards another depression?
with the gas prices going up at a steady pace, products are going to become more expensive and people are going to start buying less putting us into another economic crisis.
am i the only person thats worried about this?

Best Answer - Chosen by Voters
We're not going into a depression. Nor are we for sure in a recession. There is debate over whether we are or not. Even if we are it doesn't mean that we'll be in a depression. Things will get better. I heard a few projections that said that we'll bounce back by end of year.
http://money.cnn.com/2008/05/16/news/eco...

I think that we'll bounce back. If I'm wrong I'm sorry. But I have hope. The US has been through worse and bounced back. I think it can get back again

ANSWER2
In order to have a true depression. People would have to loose their faith in the economic system and in their currency. Only then people would avoid investing their money for business. And business, including employment would decline a lot as a result.

This is what happened in 1930's. People didn't trust the banks. A lot of people tried to convert their paper money into gold. And very few people were willing to risk their savings for business.

The same may happen again. But it won't happen on its own. It will depend on how the government reacts to the current economic crisis.

If the government tries to confiscate the purchasing power of people who have money by keeping the interest rate far below the inflation rate. Then these people will react the same way people reacted in 1930's. They will try to get out of paper money and go into gold and/or foreign currencies. And none of this money will be used productively for business and commerce.

ANSWER3
You should be scared. What people don't know is that every 75 years the U.s goes into a depression. Last time was 1930 so were basically in it right now.In 1970 nixon changed our gold standard to currency so that we can buil up debt wen we need to. Because of the war we are in debt because of debt are value of the dollar fell faster than imagined. Never in the history of the world has a currency ever survived in a economy the differece is that when we changed into a currency we convinced the whole world so if we fall as a nation the rest of the world will.If the U.s dollar keeps falling as it is now and gold reaches 1200 an ounce; we will be in a currency crisis which mean today a soda could be 1.50 2mmor it could be hundreads, thoudsands, millions and even billions of dollars (happened to germany in the 1930's) we are very close to the point of no return.
Thats y u see all those commercials about trade ur gold jewlry for cash; They are making millions

congress and wall street doenst see that because if the value of oil goes up then they invest in that and make millions. Thats why they dont see a recession. Thats why there are more bllionaires than ever. The middle class in the U.S will eventually be wiped out.

What you should do is invest in Gold.sliver.copper.oil
Peple need to get it inthier minds that our dollar is not money its a currency. Gold.sliver etc is money.

Will america bounce back? Possibly but we have to do it now or there is no chance

ANSWER4
I too join you in your worry. It is going to be a very tough fall and winter. We are beginning to purchase extra flour, corn meal and such and keeping it in the freezer to extend it s shelf life.....by winter will be down to eating beans and hot dogs. I also had to tell the orthodontist today that there was just no way that we could afford putting braces on our child at this time, because of the future economy.....I mean $5,000 can buy a great deal of food. Maybe when the government see's all the people and children who will be starving, and dying this winter, maybe then someone will have the balls to say enough is enough and finally do something about it......we may be one of the wealthiest nations...but that is our government.....not its people.....the poor and the elderly will suffer and many will die this winter.

Economic crisis? India's tide has turned

Economic crisis? India's tide has turned
T N Ninan

When the really bad news dominates the headlines, as the western financial crisis has done these past many weeks, the good news tends not to get noticed. We forget that, three months ago, the over-riding economic problem in India was inflation. So the good news is that the tide has turned. Not just because the weekly wholesale price index now reflects 11.99 per cent inflation (down only modestly from a peak of over 13 per cent), but because global prices are falling. Oil has been dipping steadily for weeks, and is now in the mid-90s when it comes to dollars per barrel. Almost all other commodities too have been slipping -- whether metals like steel and aluminium, or agri-commodities like rubber and palm oil. The prominent exception is gold, but that comes in a separate category.

To the extent that domestic inflation in 2008 has been driven primarily by imported inflation, this means that the government spokesmen who have been forecasting a drop in the inflation rate by the end of the year are probably right. And when one looks at the domestic supply scene, the fact that the 2008 monsoon has been a good one augurs well for inflation control in the coming months. To be sure, one man's inflation is the next man's income, so there will be producers who will look askance at this new trend. Steel companies, for instance, will have to prepare for a new revenue scenario. But in terms of the overall impact on the economy, this is good news that will now stay with us for some months.

The second bit of good news is how well the economy has held up in the wake of the storms that have been blowing around us. Whether it is the export numbers for August (up 27 per cent), or industrial growth in July (up 7.1 per cent), or even advance collection of corporate taxes (up a handsome 34.5 per cent till September), the signs point to an economy that has surprising momentum. To be sure, the stock market has taken a beating and has dropped lower than its index level two years ago; but it was only to be expected that the price bubbles in stocks and real estate would be pricked. Meanwhile, the fact that the rupee has dipped quite sharply against the dollar (by 15 per cent in the last 12 months) means that all those who worried about what an expensive rupee would do to exports can now quit worrying --exporters have a new price incentive, since the currency movement has helped them.

The third bit of good news is that the system has plenty of defences available, should the financial crisis hit India's shores. The Reserve Bank has far more dollar reserves than the total foreign portfolio holdings in the Indian stock market as well as short-term overseas debt combined, so no one need fear a currency crisis. There could be a domestic liquidity problem if foreign institutional investors flee en masse and want to take out dollars in exchange for rupees, but the market stabilisation bonds that the RBI had issued can be bought back in order to pump rupees into the system. In addition, the fact that India's banks are so well-capitalised, in comparison with both American and European banks, imparts its own stability to the system.For many commentators (yours truly among them!) who had predicted dire times for the economy because of the multiple problems coming together, all this has come as a pleasant surprise. What one can hope as the second quarter corporate results start trickling in, is that the system continues to surprise us on the upside.

Compare with 1930's crisis

In 1929 world banks are damaged like today.To secure the agriculture and industry most of the countries take controll in import. US is started this process.Lastly world trade is stopped.Gvot. could not do anything to face this crisis.

But today all of yhe countries take controll together.Around 250000 crores Rupees is imported in Banking sector only.In 1930 each country took action by its own. But today all acountries take discussions to face this challenge.

Experts say that it is not 'V' mdel graph.That means no suddenly regain.Famous financial expert Styglis says that the graph of this crisis is 'L' shaped.That means there is no recently regain.

CRISIS DONOT EFFECT ADSENSE

RECENT ECONOMIC CRISIS DO NOT EFFECT THE MAJOR SEARCH ENGINE "GOOGLE".

SO THE ADSENSE INCOME IS INCREASING DAY TODAY.MOST OF THE PEOPLE IN US FORSEE THE CRISIS.SO THEY RESIGNED FROM THEIR JOB AND EARN WITH ADSENSE. YOU CAN ALSO FROM ADSENSE. THE FOLLOWING SITE WILL HELP YOU TO EARN MINIMUM $100 (Rs 4000-5000) PER MONTH.

http://successfromadsense.blogspot.com/

ECONOMIC TIMES REPORT

The current financial turmoil is rooted to the sub prime crisis. During boom years, mortgage brokers enticed by the lure of big commissions, talked buyers with poor credit into accepting housing mortgages with little or no down payment and without credit checks.

Banks and financial institutions often repackaged these debts with other high-risk debts and sold them to world-wide investors creating financial instruments called CDOs or collateralised debt obligations. The serious sub prime mortgage crisis began in June of 2007 when two Bear Stearns hedge funds collapsed.

Federal Reserve Bank and European Central Bank dumped $100-billion in liquidity into the system that calmed the market down for a short period. However the sub prime crisis continued to be solid as long as the housing market continued to escalate and interest rates didn’t go up.

BOUNCED CHEQUES
Lehman Brothers Lehman’s slow collapse began as the mortgage market crisis unfolded during the summer of 2007. Its stock began a steady fall from a peak of $82 a share. The fears were based on the fact that the firm was a major player in the market for sub prime and prime mortgages.
Lehman managed to avoid the fate of Bear Stearns, the other of Wall Street’s small fries, which was bought by JP Morgan Chase at a bargain basement price under the threat of bankruptcy.

Lehman and Bear Stearns had a number of similarities. Both had relatively small balance sheets, they were heavily dependent on the mortgage market, and they relied heavily on the “repo” or repurchase market, most often used as a short-term financing tool.

On June 9, 2008, Lehman announced a second-quarter loss of $2.8 billion, far higher than analysts had expected. The situation became worse after the government on announced on September 8 a take-over of Fannie Mae and Freddie Mac. Lehman’s stock plunged as the markets wondered whether the move to save those mortgage giants made it less likely that Lehman might be bailed out.

Treasury Secretary Henry M. Paulson Jr. and Federal Reserve officials did encourage other financial institutions to buy Lehman, but by the end of the weekend the two main suitors, Barclay’s and Bank of American, had both said no. Lehman had reached the end of the line. AIG Investment banking is an intrinsically cyclical business, but Wall Street’s greedy-and-aggressive top management forgot about that as they chased profits and bonuses during a stretch in which money was always easy to obtain.

AIG shouldn’t have had problems as it’s primarily an insurance company. However, when you look at AIG’s balance sheet, it has also made a speciality of speculative trading in derivatives. That was an attractive business for many years but like other businesses has recently run into trouble, it also followed suit.

Merrill Lynch Shortly after Lehman Brothers filed for bankruptcy, Merrill Lynch complained of suffering from a similar disease, and before the effects could become devastating, it cut a deal with the Bank of America for $50b, far below its value.

IMPACT IN INDIA
IT Cos: With nearly half of their revenues coming from banking and financial services segments, India’s top software exporters are closely monitoring the financial crisis spreading across markets.
The IT giants which had all these investment banks as their clients are TCS, Wipro, Satyam and Infosys Technologies. HCL seems to have escaped the loss as neither Lehman nor ML were their clients.

Banks: The government is worried the ongoing crisis would have an adverse impact on Indian banks. Lehman Brothers and Merrill Lynch had invested substantially in the stocks of Indian banks. The banks, in turn, have invested in derivatives, which might have exposure to these investment bankers.
PSU banks like Bank of India, Bank of Baroda have exposure towards derivatives. ICICI bank is the worst hit as of now. With Lehman Brothers filing for bankruptcy in the US, the country’s largest private bank ICICI Bank is expected to lose approximately $80 million (Rs 375 cr), invested in Lehman’s bonds through the bank’s UK subsidiary. The meltdown is also expected to hit Axis bank but the impact is not clear yet.

Real estate: Lehman Brothers Real Estate Partners had given Rs 740 crore to Unitech Ltd, for its mixed-use development project in Santa Cruz. Lehman had also signed a MoU with Peninsula Land Ltd-a Ashok Piramal real estate company-to fund the latter’s projects to the tune of Rs 576 crore. Another major real estate organisation whose valuations are affected by this meltdown is DLF Assets in which it had invested $200 million.

Bailout Package
The White House gave a package of over $500 bn which came as a lifeline to sinking equity markets around the world. US President George W Bush said the administration’s new rescue plan to revive the credit markets and restore market liquidity will ease pressure on the balance sheets of banks and other financial institutions. He said that America’s economy was facing unprecedented challenges, and they were responding with unprecedented action.
Meanwhile in India, finance minister P Chidambaram assured that PSU banks had virtually no exposure to Lehman Brothers. Although the credit crunch globally will impact credit availability in the Indian market, there is no cause for any alarm that any Indian bank is vulnerable, the FM said.