Entries Tagged 'economics' ↓

A recession is characterised as a period of negative economic growth for two consecutive quarters. In a recession, unemployment will rise, output fall and government borrowing increase.

A depression is a recession much more severe and long lasting. There is no agreed upon definition of a depression. But, generally a depression would have some of the following characteristics.

Decline in output for a prolonged period e.g. greater than 2 years.

A drop in output of 10% or greater.

Unemployment rate touching 20% (rather than the 10% rate associated with recessions)

One popular definition of the difference between recession and depression is:

. “A recession is when your neighbor loses his job; a depression is when you lose yours.”

It was first used in print by Teamsters Union President Dave Beck (1894-1993) It is widely attributed to Henry Trueman who began using it shortly after in 1954.

See also: Definition of Depression

The financial system has taken a real battering with the threat of financial meltdown hanging over markets.

These are reasons for financial meltdown being a real possibility

Credit Crunch – Why banks stopped lending to each other and the impact this had on financial markets and the wider economy

Failure of Lehman Brothers – The failure of $600bn Lehman Brothers pushed the markets closest to bankruptcy that we have ever seen

Financial Crisis explained

Boom and Bust in US housing Market – Why the US property crash, starting in 2006, caused so many problems

Subprime crisis – the problems stemming from the subprime mortgage fiasco in the US was at the heart of many financial problems

• A humorous look at subprime crisis
• Books on credit crisis