posted on Aug, 20 2011 @ 05:04 AM
How can a global recession happen?
Firstly, remember that a recession is not a complete cessation of trade and commerce. Clearly there are a number of variables that would contribute to
recessionary effects, but on a global basis, it would simply mean that the same factors contributing to a domestic or regional depression also effect
a global recession, probably measured on the production across all world economies.
We have some countries that are overheating such as China and Brazil, as I understand. These countries, and perhaps other developing countries, are
actually growing too quickly leading to high inflation while developed countries are seeing slowing and contracting economic growth. Developed
countries are counting on developing countries to facilitate economic recovery but because the former are overheating and having to slow economic
growth, the developed countries are going to have a hard time counting on exporting to these countries for economic growth (while trying to manage
massive sovereign debts and deficits). Some developing countries are also dependent upon developed countries for their economic and financial health
because they have invested quite heavily into these countries and stand to lose a lot if the developed countries go belly up.
Welcome to the global interdependent economy.