Recession or Correction?

The points mentioned are very valuable. You have brought into notice of everyone, to think as it should be, rather than simply saying growth is hampered, we are not getting what is due, etc, etc.

Justifiable points and thanks for the detailing.....

Dear Paul,

My earlier post generally gives the answer to your question. You being in tech environment, I believe you are not endowed with the economic factors leading to your doubts. Any way I shall try to make it simple once more.

You, me and everyone living here need to be considered as agents or economic agents. Our economy was basically Marxian socialism with it manifesting signs of Oligiarchs like Communist Russia. Even now when we are trying change forward, we maintain the old flavor of M Socialistic functions.

In fact I think you too think little in terms of socialistic prerogatives when you ask about asset pricies increasing. In Radner economies I explained which most of the developed nations adorrr the equilbrium is stated as a function of two variables, 1) asset prices 2) endowments. So unless the asset prices are maintained at higher levels as the economy grows then the future expectations of the agents are dwarfed which can have diminishing effect on the economy. I am not saying that one should artificialy raise prices, but asset prices should generaly depict the economic reality. If one tampers with the asset prices the result will be catstrophic. We are slowly changing to better economic processes so these things still need to be worked out.

I will suggest if you may try to find out why Indian companies are managed by those who own them(corporates). It is like betting on your own Horse for unlimited payoffs, where in Radner economies one has to bet against ones own horse for equilibrium distribution of aggregate risk.

Why our environment or processes don't increase the utility of the consumer. This again has explanations.

I tried to be simple, hope I succeeded a little bit. It will get complicated for the non-practitioner, but there is answer to all your doubts and quieries.

The most significant advantage of this correction is that it could bring public awareness that everything is not hunky dory in Corporate functionings, which is as bad as or even worse than the Government units and establishments. 

Many will think twice before advocating that persons with high profile Corporate experience should be at the helm of affiars in governance of the country and public establishments.

How can the like of those stalwarts incapable of running a bank or a car factory, can run a government  and its public establishments of a Country of a billion and odd people? 

Well, if we just focus on India...n Indian economy....we are better off....simply becoz we are not as yet take a direct hit like America and European countires. It is categorically clear from the sudden impact and collectie governmental anxiety, that there is sudeen impact of recession and best of the companies of the world, with billion dollar brand value have goen down under. There is a panic. Indian economic model shall and can scape thru of this economic tsunami. If we go little deeper, we feel that our economic model, with all its flows is better then Chinise model in terms of prosperity reaching the middle class and lower middle class, certainly not enitirely, but at least part of. So, there is no sudden sharp loss of demand. Secomdly, per capita saving in India is robust and can withstand temporary recession. But let us not be in an illusion....we are at least surrounded by global recession. Latest news, an iconic company like Infosys have sacked 2100 employees...it shud be eye-opener..

Good to see many are in support of my argument.

As far as the situation in Indian Industries, it is becoming evedient that there have been no major change in the fundamentals. The share market melt down seen is due to much needed correction to streamline and regularize the market by correcting the unethical approach of the few business houses as well as the traders whose main aim is profit taking by creating chaos in the share market.  Let us hope that this correction will enable share market to settle down with right valuation of shares and moderate annual growth of invetsment.    

fully agreed with you sir. Its correction only.

Sir i support your argument.This is the Time When Indian Enteprenure Can lead the world with new vision in IT & Technology.

Sir i support your argument.This is the Time When Indian Enteprenure Can lead the world with new vision in IT & Technology.

ya its correction ad very well defined by abraham sir

It's slowdown not recession as of now in India. A correction on prices of services and commodities will take place during this time as the demand to them suffers. The same will happen in Recession too, correction beyond a level is called deflation.

Hi All,

I say it is correction for the time being as the demand has slowed down, to an extent it is beneficial to the end user. However things can change drastically and suddenly everyone will start talking about recession.

Points mentioned by Abraham Paul are certainly to think about, but only mere discussion is not going to help resolve the present situation. We need to come on a agreeable consenses to sort these points one by one...

I definitely support that the current situation is correction and not a recession as clearly mentioned by abraham and praveen.

it is the correction, because indian economy is dependent upon the agricuture or its related goods and material,so it is not a recession

Definitely what we are going through is a much overdue Correction, of the mis doings of Global economic processes.  Un-bridled greed of industrialists, Bankers and Fund Managers could be few of the many reasons of it.

Please also see my posting 'Correction not Recession" in this space .  

Such a correction caused pain to many, especially the retail investors in Company Shares, Mutual funds, Bonds, Real estate etc. The consolation can be that this Correction will lead to some recovery, and at the least stop total loss.

Your house is damaged in a flood which affected the entire town- Your town fell into a recession.

Your house is on auction to repay your wife's loan for purchasing diamonds - Time for correction.

Let us keep our fingers crossed.  

I agree that is a correction and not a recession.. and it was required  at this stage...

Hi george, Abraham is right, it is a overdue correction. Correction term is not only belonging to stock market.

by the way, nice debate you formed. congrats

Hi George...

In my opinion, we’re in a correction period, not a recession. The economy is still growing by one or two per cent, but it is still growth and we are not in a technical recession. The economic environment has become tougher and more competitive but we are in a period of adjustment and correction. And the thing about all the recession worry is that it feeds on itself. If everyone thinks there's going to be a recession, it will probably happen. Investors become reluctant to put their money at risk, and businesses become reluctant to expand. It will be good to know what other thinks......

It is a fact that every rise has a fall and every fall has a rise. Whenever an economy gets heated it requires correction. Still it is the correction happening now just to remove the excess flab that certain industries have generated like IT, Real Estate etc....