1. The Great Recession, 2008--? Marc A. Zabicki, Market strategy viewpoint – July 21, 2009.; http://budgeting- investing.ameriprise.com/planning-and-budgeting/financial-analysis/market- strategy-viewpoint/2009-07-21.asp

2. How did it happen? Assume global economic growth Assume increasing global opportunities Assume companies are making money Everyone then assumes it will last forever

3. A Simple Model The goal: make more profit So Build factories Invest in new products, new ideas $$$$ Create BusinessesProducts Jobs Customers Profit/Investments

4. Circulation Newmann gets paid!!!!! Newmann gets paid!!!!!!!!!!!! Employee Newmann enrolls buys bagels, at VCU Chinese food, Pat Metheny CD, sneakers Employee decides Employees of he/she can pay businesses for college near VCU get paid

5. Add Some Complexity: The Financial World Assume economic growth will continue So Borrow money to make more investments Financial investments are seen as more profitable than producing products Borrow $$$$ Investment firms/funds Borrow Other investment firms/funds ProfitJobs/Products

6. “Financialization” of the US Manufacturing and Financial services as % of GDP From Kevin Phillips. American Theocracy (New York: Penguin Books, 2006), p. 267. 1950196019701980199020002003 Manufacturing29.326.923.820.816.314.512.7 Financial Services 10.913.614.015.018.019.720.4

7. Debt: Phase One Private sector debt: borrowing by private companies and individuals Trillions of $$$$$$$$

8. Collapse of a Bubble Economy Pay back loans Loans Pay back Loans Banks Financial Institutions Companies and Individuals for homes

9. What if No One Can Pay Back What they Borrowed? Economies Crash Banks and Financial Institutions collapse Businesses Close People lose their job Governments can – Let everyone lose their money and jobs – Bail people and businesses out

10. Debt: Phase Two Public Sector Debt: Money that governments borrow OECD Debt Figures

11. US Debt From: An Analysis of the President’s Budgetary Proposals for Fiscal Year 2011: http://www.cbo.gov/ftpdocs/112xx/doc11280/03-24-apb.pdf

12. Impact on Developing Nations Drop in exports Withdrawal of foreign investment Currency decreases in value – As foreign investment declines – Imports become more expensive – (but exports become cheaper, so people may buy them again)

13. Solutions The G-20 Argentina Australia Brazil Canada China European Union France Germany India Indonesia Italy Japan Mexico Russia Saudi Arabia South Africa Republic of Korea Turkey United Kingdom USA