crm ppt (1)
TRANSCRIPT
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T.Y.B.Com Financial Markets
To-Kinjal Madam
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Pooja Chavan
Anam Lakhani
Pinal Malkan
Sagar Parmar
Arpit Shah
Paras Shah Vineet Thakkar
505
519
522
525
534
541 550
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PIIGS
Ireland, Italy and Greece
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In early 2010, fears of a sovereign debt crisis, the
2010 Euro Crisis developed concerning some
European states, including European Union members
Portugal,Ireland,Italy, Greece, Spain (sometimes
collectively referred to with the acronym PIIGS), and
Belgium.
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One of the obvious reasons for the bailout was not to
protect Greece, but to save the bond holders; most of
the bond holders are foreigners.Another factor to consider is that no government
wants to pay its debt in a stronger currency;
governments borrow money so that they can pay it
back with cheap currency.
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2 An acronym used to refer to the five Euro zone
nations, which were considered weaker economically
following the financial crisis: Portugal,Italy,Ireland,
Greece and Spain.2 Since the nations use the euro as their currency,
they were unable to employ independent monetary
policy in order to help battle the economic downturn.
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Portugal was hit by the desire to have high wages and the
inability to manipulate national fiscal/currency policy to restart
a failing economy.
Italy tried to pay high wages and had an under-competitive
economy, hence a budget deficit crisis.
Ireland had a bubble economy based on high wages,property
booms, stock markets booms, and tourism, which inevitably
collapsed.
Greece took out excessive overseas loans in the hope ofrestarting its national economy, especially after the slump in air
travel related tourism that came directly after September the
11th.
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The Greek economy was one of the fastest growing in
the euro zone during the 2000s; from 2000 to 2007 it
grew at an annual rate of4.2% as foreign capitalflooded the country.
The global financial crisis that began in 2008 had a
particularly large effect on Greece. Two of the
country's largest industries are tourism and shipping,
and both were badly affected by the downturn with
revenues falling 15% in 2009.
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Downgrading of debt
On 27 April 2010, the Greek debt rating was
decreased to the first levels of 'junk' status by
Standard & Poor's amidst fears of default by theGreek government.
Austerity and loan agreement
Danger of default
Without a bailout agreement, there was a
possibility that Greece would have been forced to
default on some of its debt.
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Italy has a capitalist economy with high
GDP per capita and developed
infrastructure. According to both
the International Monetary Fund and theWorld Bank, in 2009Italy was
the seventh-largest economy in the
world and the fourth-largest in Europe.
Italy is member of the Group ofEight (G8) industrialized nations,
the European Union and the OECD.
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Medium-sized companies more resilient
Stronger impact on small enterprises
Geographical areas worst affected
Sectoral impact
Reactions of social partners
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3The global crisis has taken its toll on Italys economy,
long-standing structural weaknesses and causing the
worst recession.
3The banking system has weathered the crisis relativelywell.
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The global economic crisis has hit a structurally weak
Italian economy.
The global crisis affected the economy mainly
through the trade, credit, and confidence channels. The slow recovery ofItalys major trading partners
and the significant competitiveness gap will limit
export growth.
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Debt management has been conducted prudently, by
lengthening the maturity of public debt and building
buffers.
The overarching goals should be to maintain fiscaldiscipline, reduce the burden of public debt, and raise
the economys long-term growth rate.
Evidence suggests that recoveries from economic
crises can serve as an opportunity for reforms.
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2 Expenditure-based fiscal consolidation: improving the
efficiency of the public sector.
2 The authorities intend to gradually reduce the deficit
to below 3 percent of GDP by 2012.2 Financial sector: addressing the challenges ahead
2 Italian banks will face a number of challenges over
the medium term.
2 Efforts to strengthen capitalization should thus
continue.
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g The expansion of government sponsored loan
guarantee schemes in support of SMEs was
appropriate.
g Structural reforms: unleashing growth potential.g A number of recent reforms have set the stage for
further progress.
g Despite substantial improvements over the past
decade, labor market performance still lags behind
that in other European economies.
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The 20082010Irish financial crises are a major
economic crisis in Ireland that is partly responsible for
the country falling into recession for the first time
since the 1980s. Background and causes
Impact
Anglo Irish Bank
Growth and unemployment
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G Property market
G Government responses
G Strikes and industrial unrest
G Government approval ratings
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Public demonstrations
Banking system supports
National Asset Management Agency
Increasing debt spiral
EU-IMF intervention
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UnderUS law, when a company declares bankruptcy,
its common stock holders lose all their investments.
The losers are: company employees, the stock holders,
the preferred stock holders and bond holders. In time, the stock may recover if the loss turns out to
be a minor one. If the company can make more money
from other portfolio to offset its lose on their
investment on the bankrupted company, the stock willrecover soon.
The countries are no different than companies.
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gTheir combined GDP is about $3.6 trillion,about 1/4 of that of the United States. Their
combined total debts are $3.9 trillion or about
110% of its combined GDP.
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GDP $350 Billion
Debt $236 billion
GDP $350 Billion
Debt $236 billion
GDP $350 Billion
Debt $236 billion
GDP $350 Billion
Debt $236 billion
GDP $350 BillionDebt $236 billion
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