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America has been facing multifaceted stage of economic recession over the last few decades.

The
unexpected crises during those recessions lowered the economic growth and contributed to
gradual decreasing of the citizens belief in USA government state control strategy. The effects of
American recessions crossed the local boundary and kept drastic economic crises in the other
countries also. Recessions continued to upward movement, as a result the economy of America
became very weak and brought a negative effect on it. Reasons behind the economic slowdown
are very long run motive which pushed the present condition of the economy into a future or
upcoming crises.
Causes of the recent recession: The causes and probable underlying reasons for the recent
American economic recession can be stated as described below.
Excessive debt levels as the cause: In order to counter the Stock Market Crash of 2000 and the
subsequent economic slowdown, the Federal Reserve eased credit availability and drove interest
rates down to lows not seen in many decades. These low interest rates facilitated the growth of
debt at all levels of the economy, chief among them private debt to purchase more expensive
housing. High levels of debt have long been recognized as a causative factor for recessions. Any
debt default has the possibility of causing the lender to also default, if the lender is itself in a
weak financial condition and has too much debt.
Government deregulation as a cause: In 1992, the Democratic-controlled 102nd Congress
under the George H. W. Bush administration weakened regulation of Fannie Mae and Freddie
Mac with the goal of making available more money for the issuance of home loans. The
Washington Post wrote: "Congress also wanted to free up money for Fannie Mae and Freddie
Mac to buy mortgage loans and specified that the pair would be required to keep a much smaller
share of their funds on hand than other financial institutions. Finally, Congress ordered that the
companies be required to keep more capital as a cushion against losses if they invested in riskier
securities. But the rule was never set during the Clinton administration, which came to office that
winter, and was only put in place nine years later. University have both argued that the GrammLeach-Bliley Act softened the impact of the crisis by allowing for mergers and acquisitions of
collapsing banks as the crisis unfolded in late 2008.
Over-leveraging, credit default swaps and collateralized debt obligations as causes: Another
probable cause of the crisisand a factor that unquestionably amplified its magnitudewas
widespread miscalculation by banks and investors of the level of risk inherent in the unregulated
Collateralized debt obligation and Credit Default Swap markets. Under this theory, banks and
investors systematized the risk by taking advantage of low interest rates to borrow tremendous
sums of money that they could only pay back if the housing market continued to increase in
value.

Credit creation as a cause: The central bank of the United States, led by Federal Reserve
Chairman Alan Greenspan, kept interest rates very low for a long period of time to blunt the
recession of the early 2000s. The resulting malinvestment and over-consumption of investors and
consumers prompted the development of a housing bubble that ultimately burst, precipitating the
financial crisis. This crisis, together with sudden and necessary deleveraging and cutbacks by
consumers, businesses and banks, led to the recession. Austrian Economists argue further that
while they probably affected the nature and severity of the crisis, factors such as a lack of
regulation, the Community Reinvestment Act, and entities such as Fannie Mae and Freddie Mac
are insufficient by themselves to explain it.
Oil prices: Economist James D. Hamilton has argued that the increase in oil prices in the period
of 2007 through 2008 was a significant cause of the recession. He evaluated several different
approaches to estimating the impact of oil price shocks on the economy, including some methods
that had previously shown a decline in the relationship between oil price shocks and the overall
economy. All of these methods "support a common conclusion; had there been no increase in oil
prices between 2007:Q3 and 2008:Q2, the US economy would not have been in a recession over
the period 2007:Q4 through 2008:Q3." Hamilton's own model, a time-series econometric
forecast based on data up to 2003, showed that the decline in GDP could have been successfully
predicted to almost its full extent given knowledge of the price of oil. The results imply that oil
prices were entirely responsible for the recession. Hamilton acknowledged that this was probably
not the entire cause but maintained that it showed that oil price increases made a significant
contribution to the downturn in economic growth.
Reverse Immigration: Reverse migration of illegal immigrants from the US back to Mexico
began in 2006, and this has reduced the overall population of the US. Approximately 0.5 million
dwellings have become permanently vacant as a result of a reduction in the illegal immigrant
population. The greatest impact has been on the California economy, where illegal immigrants
comprise approximately 1/3 of the total population. The reduced demand for housing created
permanent unemployment for hundreds of thousands of building contractors, realtors, and
mortgage brokers. UCLA research indicates illegal immigrants produce $150 billion of
economic activity equivalent to spending stimulus every year. Nearly every dollar earned by
illegal immigrants is spent immediately, and the average wage for US citizens is $10.25/hour
with an average of 34 hours per week, so approximately 8 million US jobs are dependent upon
economic activity produced by illegal immigrant activities within the US.
Other claimed causes: Many libertarians, including Congressman and former 2008 Presidential
candidate Ron Paul and Peter Schiff in his book Crash Proof, claim to have predicted the crisis
prior to its occurrence. Schiff also made a speech in 2006 in which he predicted the failure of
Fannie and Freddie. They are critical of theories that the free market caused the crisis and instead
argue that the Federal Reserve's expansionary monetary policy and the Community
Reinvestment Act are the primary causes of the crisis.

Impact of US eoconomic Recession in Bangladesh


Impact of financial crisis on share market
The global financial crisis is only 25% complete, says a recent study by one of theworlds
biggest hedge funds. A study by Bridgewater Associates estimates that totalcredit crisis losses
will amount to $1.6 trillion worldwide. A far cry from the nearly $400 billion lost already. The
people at Agora Financial certainly seem to think so and that isreportedly what Bridgewater
Associates seem to be predicting. "The funds call was based in particularly simple reality bean
counters at Bridgewater estimate financialshandle around $26.6 trillion in debt-based assets. If
such assets were valued at todaysmarket rates, around $1.6 trillion would be instantly lost. ET
voila Bridgewater thinkswere only a quarter of the way through. "Thus, well join with Agora
Financial to tack on another prediction onto their write-down rundown.
Impact of financial crisis on manufacturing industry
There are many factors that cause global economic crisis. If one believes in freemarkets then, it
is said that institutional polices that attempt to exploit the market can cause serious fluctuations
on the global scale. According to most "free market" theorists,the market is an exchange between
two constituents, who agree on a price without of need of an "arbitrary agent". This creates a
natural supply and demand defined by their agreed price. The situation that occurs is that this
model is affected by economic events such as weather; availability of resources, institutional
policies and technology, which allcan be either positive or negative..
Impact of financial Crisis on travel Industry
The travel industry is influenced by the crisis in the economy worldwide. The soaring price of
crude oil led to increased cost for airlines, trains, cruise lines, and buslines. The travel industry
had no option but to pass on their increased costs to consumersin the form of higher ticket prices.
This was at the same time that consumers had lessdiscretionary income for travel. Even though
the price of oil has dropped tremendously,the airlines still predict multi-million dollar losses in
2009 due to the expected three percent drop in passengers. Because of the banking crisis, carriers
who were having financial difficulties have been unable to get the credit necessary to weather
the economicstorm. The British travel industry began to feel the impact when tour operator travel
scope and carrier MAXjet Airways collapsed at the end of the year in 2007. Thisillustrates one
consideration that travelers have when making reservations: is the carrier going to be in business
still when it's time to travel? Many travelers are postponingmaking arrangements until the last
minute, hoping that they will get a deal on last-minutefares, and ensuring that the carrier will be
in business.
Impact of financial crisis on food sector: Spiraling food prices have pushed an estimated four
million Bangladeshis belowthe poverty line despite the country's strong economic growth. "Food

price inflation has caused enormous hardship in Bangladesh by eroding purchasing power of the
poor.".
"If there was no food crisis, the poverty numbers would have looked very different in 2008.
In its annual report,issued this week, the Consumer Association of Bangladesh said the price of
food andother essentials had risen 45.5 percent in the past year. The latest data reported
inflationat 10.14 percent for the month of June. However, many financial experts say the
actualfigure is about 20 percent. "Increasing productivity is the only option where every
year over two million people are added to the population, while the availability of
cultivatableland is decreasing by one percent.
Bangladesh, which has a population of 144 million, isone of the world's poorest countries. It is
building a stock of 2.5 million tones of rice thisyear to protect the country from natural disaster
or further global price hikes.
Impact of financial crisis in banking sector: By allowing banks to open new branches & set up
ATM machines without taking prior permission of RBI leads to the development of the banking
system in Bangladesh.As our 70% of the population resides in rural Bangladesh, it is beneficial
for both the banking industry & the public at large
Impact of financial crisis on remittance: Remittance inflows have recorded a 34 percent rise in
the first five months of the currentfiscal year, which runs counter to the World Bank's gloomy
forecastabouttheto be remitted by Bangladeshi workers abroad. From July to November, Banglad
eshrecorded$3.75 billion in remittances, up from $2.80 billion in the year-earlier
period.Remittance inflows increased to $767 million in November, recording a rise from $64836
million a month ago. The remittances in November followed a usual upward curve,driven by the
rising inflow of money ahead of the Eid-ul-Azha in December. In October- November of the last
fiscal year, the country recorded $559 million and $617 millionrespectively, according to the data
provided by the central bank. In a recent press briefingon "Global financial crisis and its likely
impact on Bangladesh", the World Bank said thecurrent fiscal-year remittances are likely to fall
by 20 percentage points from fiscal 2007-08. For the current fiscal year, the WB projected
remittances at $9.2 billion, which means16.8 percent growth. In the worst-case scenario, the
figure will hover around $8.9 billionwith 12.4 percent growth.
The above mentioned effects are derived from the gradual recessions of US economy which have
be worlde wide since its orgination. Though Bangladesh Government took some precausion to
impede the bad effect of recessio but the there are loop holes which eakens the strategy taken by
the govt such as unskilled expertise, lack of far reaching steps, and the unstable economic uos
and dows etc.