Financial Recovery

Definition:
Financial recovery is the rising price of an asset. For example, following an extended decline in the price of precious metals (gold & silver), investor expectations of future inflation may generate recoveries in gold and silver prices. It is also the use of depreciation or tax credits to receive a refund for what one pays in taxes in a year. Recovery will sometimes be reported as taxable income for the next year. Financial recovery in the stock market has shown an eerily similar trend throughout its history. Many times, it has nothing to do with whether or not that individual company itself is doing, rather how the market around it is doing.


October 29, 1929: “Black Tuesday” Stock Market Crash, Beginning of the Great Depression

• Pecora Commission was set up in 1932 in order to study the depression

Feb. 13, 2009:  The American Recovery and Reinvestment Act of 2009 is passed

Results:

• Create new jobs and save existing ones
• Spur economic activity and invest in long-term growth
• Foster unprecedented levels of accountability and transparency in government spending

Methods:

• Providing 288 billion dollars in tax cuts for millions of working families and small businesses
• Increasing federal funds for education and health care as well as entitlement programs (such as extending unemployment benefits) by $224 billion
• Making $275 billion available for federal contracts, grants and loans
• Requiring recipients of Recovery funds to report quarterly on how they are using the money. All of the data is posted on Recovery.gov  so the public can track the Recovery funds.

Roadblocks to Recovery:

• Crisis Start: One chain of events leads to another. For example, when a big company (Lehman Brothers) announces Chapter 11 bankruptcy, people panic and sell their stocks, and the market value goes down (whether by crashing in a day or overtime).

• Economic system complicated enough to

http://www.cbn.com/cbnnews/finance/2011/March/Bernanke-Oil-Prices-a-Threat-to-Recovery/

Crisis in developing countries:
http://news.bbc.co.uk/2/hi/business/7886334.stm

Over 40 % of the 107 developing countries in the world will be highly exposed to the financial recovery act. There were over 46 million people below the absolute poverty line (1.25 $ / day). Eventually the G7 meeting (meeting btw the world’s richest countries), came to be.

"Poor people in Africa should not pay the price for a crisis that originated in America".