Lesson 2. “Maintain aggregate demand – avoid deflation.” This concern can be avoided by developing means of expansionary monetary (by providing liquidity to the system through low interest rates and applying some unconventional methods when the rates are close to zero) and fiscal policies. The exit time is also important because an early attempt can extend the crisis and a late attempt can lead to inflationary pressures and inefficient allocation of resources, which was the case from the 1970s after the first oil shock.
Lesson 3. “Maintain international trade – avoid protectionism”. This kind of measures caused in the Great Depression a fall in the World Trade and in the world production.
Lesson 4. “Maintain international finance – avoid capital account restrictions”. In the Great Depression there was a fall in the flow of capital at international level and because of the lack of cooperation some countries introduced controls of cross border capital flows, capital exports being denied leading to a worse situation.
Lesson 5. “Maintain internationalism – avoid nationalism.” As e could see from the forth lesson this idea is very important because otherwise the depression can get deeper, as it happened in the 1930s when a wave of national policies were adopted in order to solve first the domestic problems and which caused a decline in goods, services, capital and labour movements. Germany and Soviet Union were such extreme examples.
Root causes of the crisis
The financial crisis that affected the global economy since 2007 is the most severe in post-war economic history. Although its dimensions are impressive, the current crisis’s features are common within other past recession episodes. Before the crisis stroke, there was a period of rapid credit growth, abundant availability of liquidity, low risk premiums, strong leveraging, rising asset prices and development of bubbles in the real estate sector. “Over-stretched leveraging positions made financial institutions extremely vulnerable to corrections in asset markets.” As a result, a change in a relatively small segment of the financial system (the US subprime market) was enough to cause the falling of the whole structure. Such episodes occurred before (e.g. Japan and the Nordic countries in the early 1990s, the Asian crisis in the late-1990s). However, this is a more severe event because it has certain similarities with the Great Depression of the 1930s.
At the beginning, the crisis consisted of a serious deficiency of liquidity among financial institutions while they experienced harder market conditions for rolling over their debt. At that stage, worries concerning the solvency of the institutions were intensifying, but a general collapse was not taken into consideration. However, the general opinion suddenly changed when a major US investment bank (Lehman Brothers) went into bankruptcy in September 2008. Everybody lost confidence, investors widely liquidated their positions and stock markets went into a collapse. After that, the EU economy experienced the worst fall in record since the 1930s. The financial crisis affected the real economy rapidly due to credit restraint and weaker confidence affecting business investment and household demand, especially for consumer durables and housing. The transmission of the crisis across borders was also extremely fast because there were close connections with the financial system itself and with the supply chains in global product markets. Although there seemed to be evidence of recovery, this is expected to evolve in a slow pace due to the demand remaining low because of deleveraging across the economy and to severe adjustments in the industrial system.
Unless policies change significantly, potential output growth will be affected while parts of the capital stock are outdated and dislike concerning risks will influence capital formation and R&D.
Figure 3. Potential growth 2007-2013, euro area/ recently member states
Economic consequences of the crisis
The ongoing recession is thus likely to leave deep and long-lasting traces on economic performance and entail social hardship of many kinds.
Job losses can be contained for some time by flexible unemployment benefit arrangements, but eventually the impact of rapidly rising unemployment will be felt, with downturns in housing markets occurring simultaneously affecting (notably highly-indebted) households.
The unemployment rate in the European Union has risen sharply since the first quarter of 2008 as a result of the economic crisis. However, the increase has been much smaller than in the United States, where the rate has overtaken that of the EU despite having been much lower at the start of the crisis. Unemployment varies greatly across both Europe and the US.
Figure 4. Unemployment rates for EU27 and US, seasonally adjusted
The fiscal positions of governments will continue to deteriorate, not only for cyclical reasons, but also in a structural manner as tax bases shrink on a permanent basis and contingent liabilities of governments stemming from bank rescues may materialize. An open question is whether the crisis will weaken the incentives for structural reform and thereby adversely affect potential growth further, or whether it will provide an opportunity to undertake far-reaching policy actions.
GREECE
By the end of 2009, the Greek economy faced the highest budget deficit and government debt to GDP ratios in the EU. The 2009 budget deficit stood at 15.4% of GDP. This, and rising debt levels led to greater borrowing costs, resulting in a severe economic crisis.
In the first weeks of 2010, Greece’s worry was the excessive national debt it had cumulated. It is one of the most affected countries by the financial crisis. It’s national debt is bigger than the country’s economy, reaching €300 billion, and the country’s deficit was 12.7 percent in 2010.
How did this happen?
A number of factors led to Greece's economic disaster. For the past years Greece has been spending money it did not have. The government took advantage of the economic good times to borrow money and spend it on pay-rises and ambitious projects such as the 2004 Olympics. Many employees were paid as though they'd worked a 14-month year, instead of 12, and had huge holiday bonuses. Because of this, many Greeks retired early, some even in their fifties. To make matters worse, tax evasion was embraced by most of the population.
Greece's credit rating - the assessment of its ability to repay its debts - has been downgraded to the lowest in the euro zone, meaning it will be viewed as a financial black hole by foreign investors. So too much spending and borrowing led Greece to have huge debts, some of them coming due in the near future. For example, in 2010 they had to pay €54 billion. And the only way to pay it is, of course, to borrow more money.
Effects of Greece’s Crisis
Standard & Poor's estimates that in the event of default investors would lose 30–50% of their money. In response to this announcement, the euro currency and stock markets worldwide declined. When the euro goes down, other currencies like the dollar get stronger. Exports from the United States become more expensive for Europeans, and Europeans exports become cheaper to Americans.
As a response to Greece’s situation, banks and credit rating agencies are on the lookout for other risks. This means they will charge more money from other countries with a high budget deficit. Portugal and Spain could be the ones facing problems next.
What is Greece doing about this?
On January 14 2010 Greece unveiled the stability program, which aims to cut its budget gap to 2.8 percent of GDP in 2012 from 12.7 percent. In the first year, Greece has pledged to bring its budget deficit down to 8.7 percent.
Unions had protested against this and had announced strikes. On May 5, a national strike was held in opposition to the planned spending cuts and tax increases. The protest turned violent in Athens, killing three people.
Greece says it's getting tough with its economic problems. Greek President George Papandreou pushed harsh spending cuts through, lowering salaries and raising the retirement age by 2 years. Other reforms include raising taxes for tobacco, fuel and alcohol and the introduction of new tax evasion regulations.
Despite all this, Greece is still drowning in debt, desperate for a bailout from its European neighbors.
All 16 countries, which make up the euro zone, have agreed a rescue plan for their neighbor. They will contribute an amount based on their GDP and population, meaning Germany and France would be the main contributors. The package may be worth somewhere around €20 billion. However, it is a last resort.
Greece has also reached an agreement with the International Monetary Fund (IMF), the European Commission, and the European Central Bank (ECB) on a focused program to stabilize its economy with the support of €110 billion.
CHINA
Looking at the current situation, from different perspectives we can say that China is currently less influenced by the financial crisis than other countries, due to its more closed financial system. People now start to think that the position as a world leader goes to China, and not to the United States. Because of the financial crisis China now has a unique opportunity to strengthen this trend. The superpower of the East is in a very safe position because it has $1.9 trillion in foreign currency reserves. Nonetheless, the obvious economic recovery of China is due to the fact that there has not been the same credit driven overconsumption as it was the case with many other areas.
On September 27, 2008, Chinese Premier, Wen Jiabao, stated that “what we can do now is to maintain the steady and fast growth of the national economy, and ensure that no major fluctuations will happen. That will be our greatest contribution to the world economy under the current circumstances.”
China’s Stimulus Program
On November 10, 2008, China declared a 4 trillion Yuan ($586 billion) stimulus package. The aim was to encourage economic growth and domestic consumption in ten areas of Chinese society which included infrastructure investment, environmental protection and disaster rebuilding. The purpose of this package was to mix together short-term stimulus with long-term objectives of developing infrastructure in poor areas of the country and boosting consumption.
Housing: The purpose was to build more affordable and low-rent housing and to speed the clearing of slums. A main program was implemented to rebuild rural housing. Through different encouraging programs the government has been supporting migrants to settle down.
Rural infrastructure: The aim was to speed up rural infrastructure construction, to improve roads and power grids in the countryside, to ensure the purity of drinking water, to reinforce deteriorating reservoirs and to increase water conservation in large-scale irrigation areas.
Transportation: The main goal here was to accelerate the expansion of railways, to increase the construction of airports in the western part of China and to build more subway lines and roads.
Health and education: In this area the government wants to invest more in health care services in rural areas, to increase spending on education by building more junior high schools in rural areas in central and western China and also to increase the construction of special education and cultural facilities. The plan attempts to extend basic coverage to most of the population by 2011.
Environment: The purpose was to improve environmental protection by intensifying the construction of sewage and waste treatment facilities and to prevent water pollution in key areas by accelerating natural forest planting programs.
Industry: Here the Chinese wanted to focus on improving innovation and industrial restructuring and on supporting the development of the high-tech and service industries.
Disaster rebuilding: Because of the earthquake which hit Sichuan Province on May 12, 2009, they wanted to speed the reconstruction on these areas.
Incomes: In this area they made some significant chances that included raising the average incomes in rural and urban areas, increasing subsidies for low-income urban residents and increasing the number of pension funds for company employees and allowances for those receiving special services. The main purpose is to narrow the gap in living standards between rural and urban citizens (as well as between coastal and western regions of the country). For example, since February 2009, an estimated 900 million Chinese rural residents have been eligible to receive a 13% rebate for purchase of home appliances.
Taxes: Extended reforms in the value-added tax rules to all industries, which could cut the tax corporate burden by 120 billion yuan (about 17.6 billion U.S. dollars) and allow all companies in China to deduct spending on capital equipment.
Finance: The Chinese government has increased bank credit for priority projects, rural areas, and small businesses. They achieved this goal by transferring production to create economic efficiency through mergers and acquisitions.
The Chinese government has made concrete investment with existent available money. We can say that China saved up for hard times and now, that the time has come, they can rely on their resources.
“The world's Policemen might be Occidental but the world's teacher, as it has for millennia, still resides in the Orient.”
GROUPON – Case Study
How Ideas Turn to Gold in Time of Crisis
Barely an idea dating from three years ago, Groupon is now one of the biggest household names for worldwide markets. The startup Forbes called the "fastest growing company ever", Groupon is a “deal-of-the-day” website with annual revenues estimated at more than $2 billion.
How Does It Work?
Every day, the company renders one “Groupon” (“group coupon”) in each local market it operates. The Groupon is based on the assurance contract using “The Point’s” platform: if the number of people signing up for the offer meets the desired demand, then the deal is on tap for everyone; if the predetermined minimum is not provided, then the deal is annulled. Consequently, retailers’ risk is decreased, and they can use these coupons both as quantity discounts and sales promotion instruments. Groupon earns profit by getting the 50% cut of the money paid by the customer for the coupon.
Groupon made its first deal –two pizzas for the price of one- in October 2008, in Chicago. Now, it supports about 650 deals per day, of which more than 95% tip. An increasing number of 26 million Groupons have been sold all over the world, saving customers hundreds of millions of dollars.
How Did They Do It?
Groupon experienced high interest coming from investors. Since its $1 million “seed money” from Eric Lefkofsky, the company has sky-rocketed to earnings of over $173 million in the previous three years, mostly consisting of post-economic crash profits, i.e. after 2008.
While the majority of the companies have been severely affected by the “great recession”, with customers and sales dropping consistently and ending the way towards tangible economic growth, Groupon has managed to create the proper service at the right time: no new patents or technologies, no inauguration of manufacturing plants, any merger or huge profits.
What it did consisted in simple, efficient and profitable service for the common consumer: a local-based coupon for everyone to use.
“Built Virality Inside the Product”
To begin with, Groupon was created as a “cloud-based” facility that could provide access to all users from a single, shared “application”, available from any common browser. Due to the limited availability of the offers (one-day time span), the level of excitement and involvement in the customers is elevated, thus forging a feeling of importance.
Evidently, it is of the utmost importance for customers to reach the minimum eligible number. What is there to do? Spread the information regarding the deal to their friends.
Therefore, Groupon delivered the “Daily Deals” via Facebook thus facilitating the access of over 15 millions subscribers to promote offers on their home pages on Facebook and Twitter, e.g. the case of the Prell shampoo concept of telling two-friends-who-tell-two-friends and so on and multiply it by 1000. Also, Groupon managed to enhance the availability of its service on mobile devices in order for its customers to access all deals at any moment from everywhere.
Furthermore, the leaders of the company decided to scan the marketplace and spot an existing, pressing need to be met with the help of emerging technologies.
Nevertheless, newspaper-delivered coupons are expensive to print and are constantly disregarded by modern consumers. Thus, the gap detected by the entrepreneurs was filled by Groupon: a platform created in order to satisfy an existing necessity. As a result, the city of Chicago recovered from its dreadful unemployment rates by the big success of Groupon: in the past two years over 900 people became part of this fast growing enterprise.
“Alternative to Traditional Advertising for Local Businesses”
While most retailers are on the verge of financial collapse, Groupon managed to offer them a hand in need.
Groupon made good use of the disruptive strength of the new technologies and social networks in order to design a new industry model which under normal circumstances would have proven expensive or unfeasible, especially in the case of small or middle-sized companies a few years back.
Figure 6. Groupon’s visits on the site.
(Source: http://primitus.com/blog/whats-the-secret-success-of-groupon/)
In conclusion, exploiting the good coverage of the internet networking sites in order to facilitate the acquisition of cheaper goods or services where the user wins (from existing statistics the company has managed to place in its users pockets around $800 million), the vendor wins (the site becomes a facile, highly regarded and effective
marketing tool) and Groupon wins (seeing that it afforded to refuse $5 billion in Google-dollars), this startup bucked the recession and also became a savior for local companies: “What we're trying to do is fundamentally change the way that people buy
from local businesses in the same way that e-commerce has changed the way that people buy products,” says Mr. Mason. “When consumers are buying these half-off deals, they don't realize it, but they're playing their part in revitalizing their local economy and reversing the trend of people spending a larger amount of time in front of the computer screen and forgetting what it means to go out and experience life. People just think they're getting a deal, but they're getting so much more. At least, we rationalize it that way.”
THE CRISIS IN THE CAR INDUSTRY: Case Study ‘Car industry begs for budget boost from Alistair Darling’
(07/04/09 – guardian.co.uk)
‘Manufacturers and dealers want UK to follow Europe into scheme to give cash to drivers who scrap old cars to buy new.
The government was facing renewed pleas to bail out Britain's ailing motor industry yesterday as figures showed sales of new cars had dropped by almost a third year on year. Only 313,912 cars were registered in March - a 30.5% fall in sales from this time last year, figures from the Society of Motor Manufacturers and Traders (SMMT) showed, prompting fresh calls for the government to pay motorists to trade in their old cars for new ones. The motor industry and lobby groups are hoping this month's budget will include a scrappage scheme, under which car owners are given a financial incentive of about £2,000 to swap their old vehicle for a new greener model. (…)A scrappage scheme in Germany - which offers car owners €2,500 (£2,263) for getting rid of any vehicle over nine years old - has attracted more than half a million buyers, with sales soaring 40% there in March. (…)Manufacturers in the UK have also been hit, with factories such as Honda's plant at Swindon mothballed and thousands of jobs cut.
Last month's decline in sales follows falls of 30.9% in January 2009 and 21.9% in February. March, when new number plates are issued, is a key period for the industry and traditionally accounts for nearly a fifth of annual sales. If things do not improve, the SMMT is forecasting that only 1.72m new vehicles will be sold in 2009, compared with 2.13m in 2008. (…)"A scrappage scheme will provide the incentive needed and the evidence is clear that schemes already implemented across Europe do work to increase demand. The UK is the only major European market not to implement a scheme." (…)’
The automotive industry crisis of 2008–2010 was a part of a global financial downturn. The industry was weakened by a substantial increase in the prices of automotive fuels linked to the 2003-2008 energy crisis which discouraged purchases of sport utility vehicles (SUVs) and pickup trucks, which have low fuel economy. With fewer fuel-efficient models to offer to consumers, sales began to slide. By 2008, the situation had turned critical as the credit crunch placed pressure on the prices of raw materials.
The article “Car industry begs for budget boost from Alistair Darling” found on the web page of The Guardian discusses the effects of the current recession on the car industry, particularly in the UK. The article states that according to the SMMT a fall of 30% in sales was registered and that in order to take a first step in solving the problem the motor industry hopes to impose the scrappage scheme.
The drop of demand for cars during the recession creates an example of the laws of demand and supply.
The problem for the car retailers is that consumers being aware of the recession will rather save their money than spend it on luxury purchase. The fall in income due to the recession has, according to the laws of supply and demand and assuming that all other things stay equal (Caeteris Paribus), caused the fall of demand.
Although the article doesn’t state a percentage of the fall in income of the population, the income elasticity of demand for vehicles can be described as, at least, unitary if not elastic, the examples will make an attempt to prove this.
Income elasticity of demand measures the proportionate response of quantity demanded to a proportionate change in income. The article gives two proves for that:
First, the thought of the coming recession has already made people stop buying cars by 30.5% from one year to the other. People won’t buy any luxury goods in bad times. And second, subsidising car buyers by about 2000£ (scrappage scheme) will increase the purchases in a month by 40%.
The fall in demand will also cause an excess supply even if the motor industry stops production directly. All car producers will hence have a massive amount of cars that are just not being bought because there is no demand. According to the rules of supply and demand, as demand falls, quantity supplied decreases as well. In this particular case, the quantity supplied decreases as well, but probably not as much as it could to find a new equilibrium, the price at which supply equals demand. Why this is the case will be explained after the following graph.
The following graph will show how a fall in demand will cause the demand curve to shift to the left and, therefore a fall in the quantity supplied of cars to find a new equilibrium. It can be seen that cars sales fell by nearly 25 % from 2008 to 2009.
Figure 7. Fall in demand consequences
As stated above, this development is not quite what happens in reality. According to the rules of unemployment, which is a lagging factor, the demand for labour depends on the demand for, in this case, cars. That means that it started to rise some time after the recession began. This is because of several reasons such as firms that want to keep skilled workers and will delay redundancies hoping for things to get better. Since firms want to keep skilled workers they would also have to keep up the production to a certain extend. Of course, production will decrease, which will cause cyclical employment, but to a certain extend production will be kept up to occupy the workers. Figure 8. Rise in demand-effects
The term cyclical unemployment can be defined as the moment when the economy is growing more slowly than estimated as the demand for labour is interdependent on the demand for goods and services.
This situation can’t be kept up for long because firms will lose money if they spend them on workers rather than on strategies that can be implemented to bring them actual profit threough sales. Therefore, companies may go bankrupt if the recession will continue, or if they are not being subsidized by the government.
Hence, the motor industry searches for ways of pushing demand. A possible solution could be the scrappage scheme which encourages motorists to swap their old cars against new ones by giving the buyer about 2000£ directly.
The effect of the scheme on the demand for cars can be seen in the following diagram:
Demand rises again due to the encouragement, thus shifting the demand curve to the right.
In conclusion, it can easily be seen that the law of supply and demand is displayed in the real world too. The article “Car industry begs for budget boost from Alistair darling” clearly shows how recession affects the demand for cars and how the demand for labour depends on the demand for, in this case, cars.
THE CRISIS IN THE RETAIL SECTOR - Case study ‘Carrefour Romania’
Approaching the Crisis in an Offensive and not Defensive Way
The World Economy is facing the worst crisis since the Great Depression (The 1930s economic crisis). Indicators signal a deeper and more synchronized downturn in the Global Economy. The economic and financial crisis affected all the economic sectors, spreading all over the world. In Romania, the crisis was being felt in the late of 2008. The retail sector had to adapt to its customers’ needs, wants and preferences, which “change in time of financial crisis”. Carrefour Group is Europe’s largest retailer and the second worldwide. In Romania, it includes 33 supermarkets and 23 hypermarkets. Despite the constantly rising number of stores in Romania, Carrefour did not succeed in increasing its revenues over the last two years. The company earned €1.13 bn in 2010, a 0.4% reduction in comparison with the previous year and 5% less than 2008, its record year in terms of sales.
Because our country was strongly hit by the crisis, consumers’ behaviour has considerably changed. They are not only economically affected, but also psychologically. People start to worry about their future and do not enjoy shopping anymore. They become more money minded and only buy necessities, switch to cheaper brands and have a more rational view on promotion. Like any retailer, which has direct competitors, Carrefour had to develop the marketing strategies in order to fulfill people’s needs and preferences. The goal of the strategy is to create competitive advantage. As being asked about their position regarding the crisis, Patrice Lespagnol, the Executive Director of Carrefour Romania, said in an interview for a newspaper: “We have responded to the crisis in a positive and not defensive manner, seeking new ways to attract a greater number of clients. We have relied on aggressive promotions, our own brand which includes over 1000 articles (a similar quality being at least 20% cheaper compared to national brands) and on the improved services for customers”.
Carrefour adapted its strategy to what Romanian consumers want: an aggressive price discount policy (the lowest prices everyday), its purpose being to increase the purchasing power of the consumers; a superior quality of all fresh products; innovation; top level client services; modernity and a wide range of products – over 55.000 articles which represents a big step in the evolution of the Romanian market in terms of variety and quality.
According to several studies, “consumers want competitive prices and a wide range of products from which to choose”. Carrefour Romania tries to develop its own brand such that to reach a weight of 20% of its turnover and a number of 3500 products under the Carrefour name. For the Carrefour brand products, the company has signed partnership with 40 suppliers, mostly from Romania, including Farmec, VASCAR, European Drinks, Orkla Foods and Danone. Carrefour brand products are divided into 400 non-food products, made in China and 800 food products made in Romania, France and Poland.
Along with the development of Carrefour brand products, they have also introduced aggressive promotions to attract customers. The most successful promotions they have offered are: VAT refund- after paying their purchases, the customers received a voucher with a sum of money representing the VAT, which was available only in Carrefour chain of stores, within two weeks; Buy-Back- promotion regarding the appliances bought from Carrefour; they offered significant reductions in exchange of a similar used device to being recycled; Raffle with great prizes: apartments, travels, appliances, electronics; Tasting and Samplings- customers tasted and received samples for the new products in order to gain confidence and buy them; Mono-Islands products with very low prices; Exhibitions with different themes, Product Launches inside the stores.
Another part of the strategy is the development of the supermarkets side. In 2010, Carrefour opened 10 supermarkets and only one hypermarket. In case of a supermarket, both, the consumer and the retailer benefit: a smaller sales area is required (in comparison with a hypermarket), less employees and the prices are the same with those from a hypermarket. This and also the media influence are regarded as effective ways of fighting against the crisis.
To keep and gain the market share in a changing environment, the company had to head its strategies to what consumers require. According to a study presented by Kieth Roberts (2003), organizations that keep or even increase their marketing spending during an economic downturn do not make any significant loss during the crisis, on the contrary they make profit and gain market share much faster after the downturn than the companies that cut their costs.
The results of this study reveal that Carrefour Company has recognized and understood the changes in its customer buying behavior and adapt its strategies to these tumultuous times. Also, it has maintained a constant relationship with its customers in order to be able to convince them. In times of economic recession, people need information about the products they buy, and not imaginary commercials; they want to be able to trust the company and the services it offers before buying.
Economic crisis survey in Romania
Has The Economic Recession Affected You?
Taking into consideration the results of survey, a few conclusions can be drawn:
76.12 % of the people who had completed the survey were affected by the recession, stating that few things have changed for them, but it has not passed unnoticed. However, a small group of people had to change their lifestyle completely (get a job to sustain themselves or even become unemployed).
Considering the decrease of foreign investments in the country, alongside with the increase of the foreign debt and unfriendly fiscal system most of the international companies have withdrawn from the local market. Therefore, job opportunities are fewer, salaries are lowered and standards have decreased. The gross margins of most companies diminished year by year, which conducted to the lack of benefits for the employees.
People who claim that nothing changed for them have a strong financial background, or work for companies, which are not affected by the crisis, or did everything possible to prevent the effect of the recession on their business.
CONCLUSION
Through the crash of the Lehman Brothers in September 2007 as a trigger for the economic crisis, a bundle of new challenges evolved for Europe.
Economically, the crisis put a heavy debt burden on Europe’s economy everywhere in the European Union, even in Poland where the crisis was handled best. Together with the increasing social security needs due to the ageing population, the debt will put its weight on the public budgets.
The differences in the severity of the crisis in the different countries can be attributed to the following factors: the condition of the housing market, the export dependency, the budgetary position and the size of the financial sector and its exposure to high risk assets.
The concrete political consequences of the crisis are not clear until now. They are depending on the way the Union intervenes in order to safeguard the Greeks from bankruptcy. However, it seems already clear that at least the Euro-zone will get closer.
Policy responses to the crisis
The current crisis has demonstrated the importance of a coordinated framework for crisis management.
It should contain the following building blocks:
- Crisis prevention - to prevent a repeat in the future. This should be mapped onto a collective judgment as to what the principal causes of the crisis were and how changes in macroeconomic, regulatory and supervisory policy frameworks could help prevent their recurrence. Policies to boost potential economic growth and competitiveness could also bolster the resilience to future crisis.
- Crisis control and mitigation - to minimize the damage by preventing systemic defaults or by containing the output loss and easing the social hardship stemming from recession. Its main objective is thus to stabilize the financial system and the real economy in the short run. It must be coordinated across the EU in order to strike the right balance between national preoccupations and spillover effects affecting other Member States.
- Crisis resolution to bring crisis - to a lasting close, and at the lowest possible cost for the taxpayer while containing systemic risk and securing consumer protection. An orderly exit strategy from expansionary macroeconomic policies is also an essential part of crisis resolution.
References
- China and The Financial Crisis by Andrew Hughes, December 17, 2008;
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by Hubert Fromlet, February 2010;
- China’s Response to the Global Financial Crisis by Lisa Chiu;
- Financial Crisis by John Truman Wolfe, February 2011;
- China and the Global Financial Crisis: Implications for the United States by Wayne M. Morrison, June 3, 2009;
- China and The Financial Crisis by Andrew Hughes, December 17, 2008.
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- ‘Car industry begs for budget boost from Alistair Darling’ Retrieved on April, 9th 2011.
- Marta-Christina Suciu, P.(2010). ECONOMICS (Macroeconomics), second edition, Chapter 3: Alternative economic systems. Crisis And Crisis Management
- Ang, S. H., Leong, S. M., & Kotler, P. (2000). The Asian apocalypse: crisis marketing for consumers and businesses. Long Range Planning
- Carrefour Ziarul Financiar, January 28, 2011
- Ferrell, O.C & Hartline, M.D. (2002). Marketing Strategy 4th Edition. Thomson South-Western, United States of America.
- http://mcir.doingbusiness.ro/en/retail/hypermarkets/866/carrefour
http://ec.europa.eu/economy_finance/publications/publication15887_en.pdf
China and The Financial Crisis by Andrew Hughes, December 17, 2008;
China’s Response to the Global Financial Crisis by Lisa Chiu;
China and the Global Financial Crisis: Implications for the United States by Wayne M. Morrison, June 3, 2009;
Explanation of China’s $586 billion dollar Stimulus program by Lisa Chiu;
China and The Financial Crisis by Andrew Hughes, December 17, 2008.
Retrieved on March, 26th 2011
Retrieved on April, 4th 2011
Retrieved on April, 4th 2011
Retrieved on April, 4th 2011
Retrieved on April, 4th 2011
Retrieved on April, 4th 2011
Retrieved on April, 4th 2011
Retrieved on April, 4th 2011
Retrieved on April, 10th 2011
- ‘Car industry begs for budget boost from Alistair Darling’ Retrieved on April, 9th 2011
Marta-Christina Suciu, P.(2010). ECONOMICS (Macroeconomics), second edition, Chapter 3: Alternative economic systems. Crisis And Crisis Management
Ang, S. H., Leong, S. M., & Kotler, P. (2000). The Asian apocalypse: crisis marketing for consumers and businesses. Long Range Planning
Carrefour Ziarul Financiar, January 28, 2011
Ferrell, O.C & Hartline, M.D. (2002). Marketing Strategy 4th Edition. Thomson South-Western, United States of America.