recession

I know, I know, I know (panting). This is an issue I should've been posted as early as possible, as early as December 07'? As I searched for some facts about the R word, I first (and only refer to this) stumble upon Wikipedia entry about it. From it, I gain knowledge that recession is "a general slowdown in economic activity in a country for a sustained period of time." (2)

I wanted to add to the meaning of the preferably avoided R word so that we know how to appreciate the world as we were'nt. Recession root word is recess which, if we refer to the world economic growth, means the world is taking a break from its hectic transaction occurs around the globe. I mean, give it a break news channel! Don't overhype about what's going to happen to us, normal person, there's still hope out there. I know real estate growth is bound to be hit real bad as this is evident for the case of Donald Trump (one of the people whom invest quite alot in this sector).

Slowly but surely, the world economy is going to be at full throttle again, so be it happen five to ten years from now. And when this happen, it will take at least twice the times it hit us i.e 2 years recession will be supersede by at least 4 years of healthy economic growth, thank god.

There are six cause of recession, namely: currency crisis, energy crisis, war, underconsumption, overproduction and financial crisis. I'll briefly explain each and every one of them as I myself is never an expert in economic analyses, let alone explaining economic term so deep.

First off, currency crisis which occurs when the currency value is unstable (changes quickly). This will undermine the currency value as a medium of exchange.

The second point is energy crisis. As we all may or may not know, the reason behind the US government imposing war on SOME countries may due to their lack of energy supply, namely fossil fuel. The lack of energy stored in their country leads to a price hike in energy, such that one barrel of crude oil has sometimes hit $120.

While I'm building upon the second point, the point of war become apparent. Evidently, war helps the country which spend more on R&D and production of war materials to prosper economically.

Underconsumption, which results from consumer's demand dropped lower than the goods produced, also contribute towards the stagnation of economy. In contrast to the preceding point, overproduction refers to the creation of goods that is much higher than 'the products being offered to the market.' (1) Thus, goods must be produced at an optimum level such that it does not go beyond nor below market demands.

The last point that I mentioned is financial crisis. A phenomenon which occurs whence the value of the financial institutions or assets shrinks hugely. Although this is a regular occurrence in the world of debt-it or leave-it, the timing of this whole criterion cannot be any more convenient for the world to suck itself towards recession.

References:
1. The Whole Nine Yards, retrieved May 8th, 2009. http://richkyoung.wordpress.com/2008/11/18/recession-proof-businesses-myth-or-reality/
2. Recession, retrieved May 8th, 2009. http://en.wikipedia.org/wiki/Recession