Nobel prize winner Paul Krugman predicts that there is a chance for a recession again in America.
He says that the main reason for this is the policies taken by the Obama government is not up to the mark.
In USA the price for houses go down, Production rate decreases, Recruitment decreases.
Obama says that the current problems in US economy is due to the competition with China.
Next important thing which may affect the European Economy is that Greece may default at any time.
In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract.
So if Greece became default, then the entire European Economy will face financial crisis.
The after effect of that will affect US economy and of course our Indian Economy
If a country became International default, then the credibility of that country will go down.
Nobody will make investments in that country, nobody will sanction loan for that country. As a result of all these the entire financial system of that country will go down.
Note that in 1990-91 the similar situation happened in India also. That time we solved the issue by taking loan from Bank of England by giving gold biscuits of RBI as security.
That situation changed from 1991 on wards when the prime minister Narasimha Rao with finance minister Manmohan Singh introduced the New Economic Policy.
Regards Hari " लोका समस्ता सुखिनो भवन्तु "
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