Hi,

Good to hear from you. You are thought about quite often, without envy as the days grow shorter and colder over there.

Recession is simply slowing down of growth. The bottom line of this is that jobs are lost, and it pretty much was caused by the financial crisis--and that seems to have been caused by irresponsible loans on a large scale. The reason for it spreading is simply that a lot of companies -- and individuals -- invest overseas, or the banks in which individuals invest in also invest overseas. There is good and bad in this -- investments in stronger economies will help cover the bad loans or whatever in the U.S. But as companies cut back their investment in order to cope with their bad loans, overseas investment also declines.

This is the best I can do, as I hate trying to understand all this stuff and that is why I moved from being a macroeconomist to a microeconomist who deals in labour/poverty/inequality/gender, but of course it is all related as people lose jobs when companies cut back investment. If, however, you go back to the Karaththa Yugaya and the economy consists of plucking coconuts and jak fruits, then the financial crisis has less of an impact on you!

Cheers

Manori
