Recession

One thing i know for sure is that the economy is loosing the trust it had ,everyone looks at each other with a sense of doubt .Maybe this is called recession ,were people are afraid to invest.

so how did it work before recession???

Before recession we had credit agencies which used to rate company on their chances of defaulting on a loan .which helped you on deciding the financial acumen of the company.Pension funds were granted permission to invest in private firms so that there return could be maximized.Bank rules were liberalized which help the people in subprime category to take loan ,engage into mortgages etc. This time it was a property boom ,like the blue chip boom we had in 2000.

so dont we have those agencies now???

Well we have them very much ,but inspite of these agencies people started investing in company without looking at their balance sheets. They took huge loans invested in these company entered into speculation, which was later drained off. Pension funds invested in these companys and their money wiped off :( . unemployment started ,loans started defaulting , production decreased ,stagflation took to the roads and rest is history with its fangs prepared to bite the present and future. Tough road ahead with lot of peace bound to loose.