The late-2000s recession, by some called the Great Recession, is a severe ongoing global economic problem that began in December 2007 and took a particularly sharp downward turn in September 2008. The Great Recession has affected the entire world economy, with higher detriment in some countries than others. It is a global recession characterized by various systemic imbalances and was sparked by the outbreak of the late-2000s financial crisis.

There are two senses of the word "recession": a less precise sense, referring broadly to "a period of reduced economic activity", and the scientific sense used most often in economics, which is defined operationally, referring specifically to the contraction phase of a business cycle, with two or more consecutive quarters of negative GDP growth. By the economic-science definition of the word "recession", the Great Recession ended in the U.S. in June or July 2009. However, in the broader, layperson sense of the word, many people use the term to refer to the ongoing hardship (in the same way that the term "Great Depression" is also popularly used). In the U.S., for example, persistent high unemployment remains, along with low consumer confidence, the continuing decline in home values and increase in foreclosures and personal bankruptcies, an escalating federal debt crisis, inflation, and rising gas and food prices. In fact, a 2011 poll found that more than half of all Americans think the U.S. is still in recession or even depression, despite official data that shows a historically modest recovery.

Overview

According to the U.S. National Bureau of Economic Research (the official arbiter of U.S. recessions) the recession began in December 2007. The financial crisis is linked to reckless lending practices by financial institutions and the growing trend of securitization of real estate mortgages in the United States. The US mortgage-backed securities, which had risks that were hard to assess, were marketed around the world. A more broad based credit boom fed a global speculative bubble in real estate and equities, which served to reinforce the risky lending practices. The precarious financial situation was made more difficult by a sharp increase in oil and food prices. The emergence of Sub-prime loan losses in 2007 began the crisis and exposed other risky loans and over-inflated asset prices. With loan losses mounting and the fall of Lehman Brothers on September 15, 2008, a major panic broke out on the inter-bank loan market. As share and housing prices declined, many large and well established investment and commercial banks in the United States and Europe suffered huge losses and even faced bankruptcy, resulting in massive public financial assistance.

A global recession has resulted in a sharp drop in international trade, rising unemployment and slumping commodity prices. In December 2008, the National Bureau of Economic Research (NBER) declared that the United States had been in recession since December 2007. Several economists have predicted that recovery may not appear until 2011 and that the recession will be the worst since the Great Depression of the 1930s. Paul Krugman, who won the Nobel Memorial Prize in Economics, once commented on this as seemingly the beginning of "a second Great Depression." The conditions leading up to the crisis, characterized by an exorbitant rise in asset prices and associated boom in economic demand, are considered a result of the extended period of easily available credit, inadequate regulation and oversight, or increasing inequality.

The recession has renewed interest in Keynesian economic ideas on how to combat recessionary conditions. Fiscal and monetary policies have been significantly eased to stem the recession and financial risks. Economists advise that the stimulus should be withdrawn as soon as the economies recover enough to "chart a path to sustainable growth".

Pre-recession economic imbalances

The onset of the economic crisis took most people by surprise. A 2009 paper identifies twelve economists and commentators who, between 2000 and 2006, predicted a recession based on the collapse of the then-booming housing market in the U.S: Dean Baker, Wynne Godley, Fred Harrison, Michael Hudson, Eric Janszen, Steve Keen, Jakob Brøchner Madsen & Jens Kjaer Sørensen, Kurt Richebächer, Nouriel Roubini, Peter Schiff and Robert Shiller.

Among the various imbalances in which the U.S. monetary policy contributed by excessive money creation, leading to negative household savings and a huge U.S. trade deficit, dollar volatility and public deficits, a focus can be made on the following ones:

Commodity boom

The decade of the 2000s saw a global explosion in prices, focused especially in commodities and housing, marking an end to the commodities recession of 1980–2000. In 2008, the prices of many commodities, notably oil and food, rose so high as to cause genuine economic damage, threatening stagflation and a reversal of globalization.

In January 2008, oil prices surpassed $100 a barrel for the first time, the first of many price milestones to be passed in the course of the year. In July 2008, oil peaked at $147.30 a barrel and a gallon of gasoline was more than $4 across most of the U.S.A. The economic contraction in the fourth quarter of 2008 caused a dramatic drop in demand and prices fell below $35 a barrel at the end of the year. The high of 2008 may have been part of broader pattern of spiking instability in the price of oil over the preceding decade This pattern of spiking instability in oil price may be a product of Peak Oil. There is concern that if the economy was to improve, oil prices might return to pre-recession levels.

The food and fuel crises were both discussed at the 34th G8 summit in July 2008.

Sulfuric acid (an important chemical commodity used in processes such as steel processing, copper production and bioethanol production) increased in price 3.5-fold in less than 1 year while producers of sodium hydroxide have declared force majeure due to flooding, precipitating similarly steep price increases.

In the second half of 2008, the prices of most commodities fell dramatically on expectations of diminished demand in a world recession.

Housing bubble

By 2007, real estate bubbles were still under way in many parts of the world, especially in the United States, United Kingdom, United Arab Emirates, Italy, Australia, New Zealand, Ireland, Spain, France, Poland, South Africa, Israel, Greece, Bulgaria, Croatia, Canada, Norway, Singapore, South Korea, Sweden, Finland, Argentina, Baltic states, India, Romania, Russia, Ukraine and China. U.S. Federal Reserve Chairman Alan Greenspan said in mid-2005 that "at a minimum, there's a little 'froth' (in the U.S. housing market) ... it's hard not to see that there are a lot of local bubbles". The ''Economist'' magazine, writing at the same time, went further, saying "the worldwide rise in house prices is the biggest bubble in history". Real estate bubbles are (by definition of the word "bubble") followed by a price decrease (also known as a housing price crash) that can result in many owners holding negative equity (a mortgage debt higher than the current value of the property).

Inflation

In February 2008, Reuters reported that global inflation was at historic levels, and that domestic inflation was at 10–20 year highs for many nations. "Excess money supply around the globe, monetary easing by the Fed to tame financial crisis, growth surge supported by easy monetary policy in Asia, speculation in commodities, agricultural failure, rising cost of imports from China and rising demand of food and commodities in the fast growing emerging markets," have been named as possible reasons for the inflation.

In mid-2007, International Monetary Fund (IMF) data indicated that inflation was highest in the oil-exporting countries, largely due to the unsterilized growth of foreign exchange reserves, the term "unsterilized" referring to a lack of monetary policy operations that could offset such a foreign exchange intervention in order to maintain a country's monetary policy target. However, inflation was also growing in countries classified by the IMF as "non-oil-exporting LDCs" (Least Developed Countries) and "Developing Asia", on account of the rise in oil and food prices.

Inflation was also increasing in the developed countries, but remained low compared to the developing world.

Causes

[[File:The Great Asset Bubble.svg|thumb|240px|The great asset bubble:

1. Central banks' gold reserves – $0.845 tn.
2. M0 (paper money) – - $3.9 tn.
3. traditional (fractional reserve) banking assets – $39 tn.
4. shadow banking assets – $62 tn.
5. other assets – $290 tn.
6. Bail-out money (early 2009) – $1.9 tn.

]]

Debate over origins

The central debate about the origin has been focused on the respective parts played by the public monetary policy (in the US notably) and by private financial institutions practices.

On October 15, 2008, Anthony Faiola, Ellen Nakashima, and Jill Drew wrote a lengthy article in ''The Washington Post'' titled, "What Went Wrong". In their investigation, the authors claim that former Federal Reserve Board Chairman Alan Greenspan, Treasury Secretary Robert Rubin, and SEC Chairman Arthur Levitt vehemently opposed any regulation of financial instruments known as derivatives. They further claim that Greenspan actively sought to undermine the office of the Commodity Futures Trading Commission, specifically under the leadership of Brooksley E. Born, when the Commission sought to initiate regulation of derivatives. Ultimately, it was the collapse of a specific kind of derivative, the mortgage-backed security, that triggered the economic crisis of 2008.

While Greenspan's role as Chairman of the Federal Reserve has been widely discussed (the main point of controversy remains the lowering of Federal funds rate at only 1% for more than a year which, according to the Austrian School of economics, allowed huge amounts of "easy" credit-based money to be injected into the financial system and thus create an unsustainable economic boom), there is also the argument that Greenspan's actions in the years 2002–2004 were actually motivated by the need to take the U.S. economy out of the early 2000s recession caused by the bursting of the dot-com bubble — although by doing so he did not help avert the crisis, but only postpone it.

Some economists - those of the Austrian school and those predicting the recession such as Steve Keen - claim that the ultimate point of origin of the great financial crisis of 2007–2010 can be traced back to an extremely indebted US economy. The collapse of the real estate market in 2006 was the close point of origin of the crisis. The failure rates of subprime mortgages were the first symptom of a credit boom turned to bust and of a real estate shock. But large default rates on subprime mortgages cannot account for the severity of the crisis. Rather, low-quality mortgages acted as an accelerant to the fire that spread through the entire financial system. The latter had become fragile as a result of several factors that are unique to this crisis: the transfer of assets from the balance sheets of banks to the markets, the creation of complex and opaque assets, the failure of ratings agencies to properly assess the risk of such assets, and the application of fair value accounting. To these novel factors, one must add the now standard failure of regulators and supervisors in spotting and correcting the emerging weaknesses.

Robert Reich believes the amount of debt in the US economy can be traced to economic inequality, where middle class wages remain stagnant while wealth concentrates at the top, and households "pull equity from their homes and overload on debt to maintain living standards."

Effects

Overview

thumb|right|International trade, 2000-2010. 2000=100. A plunge in the volumes of exchanges can be seen as of the second half of 2008.The late-2000s recession is shaping up to be the worst post-World War II contraction on record: Real gross domestic product (GDP) began contracting in the third quarter of 2008, and by early 2009 was falling at an annualized pace not seen since the 1950s.

Capital investment, which was in decline year-on-year since the final quarter of 2006, matched the 1957–58 post war record in the first quarter of 2009. The pace of collapse in residential investment picked up speed in the first quarter of 2009, dropping 23.2% year-on-year, nearly four percentage points faster than in the previous quarter.

US Domestic demand, in decline for five straight quarters, is still three months shy of the 1974–75 record, but the pace – down 2.6% per quarter vs. 1.9% in the earlier period – is a record-breaker already.

A report in 2009 by Bloomberg states that $14.5 trillion of value of global companies has been erased since the crisis began.

Political instability related to the economic crisis

Beginning February 26, 2009 an Economic Intelligence Briefing was added to the daily intelligence briefings prepared for the President of the United States. This addition reflects the assessment of United States intelligence agencies that the global financial crisis presents a serious threat to international stability.

Business Week in March 2009 stated that global political instability is rising fast due to the global financial crisis and is creating new challenges that need managing. The Associated Press reported in March 2009 that: United States "Director of National Intelligence Dennis Blair has said the economic weakness could lead to political instability in many developing nations." Even some developed countries are seeing political instability. NPR reports that David Gordon, a former intelligence officer who now leads research at the Eurasia Group, said: "Many, if not most, of the big countries out there have room to accommodate economic downturns without having large-scale political instability if we're in a recession of normal length. If you're in a much longer-run downturn, then all bets are off."

Globally, mass protest movements have arisen in many countries as a response to the economic crisis. Additionally, in some countries, riots and even open revolts have occurred in relation to the economic crisis.

For example, the Arab Spring revolts taking place in the Arab world since December 18, 2010 were ostensibly sparked by the self-immolation of an unemployed Tunisian man named Mohamed Bouazizi who was prevented from even selling produce from a cart. This act, combined with general discontentment about high unemployment, food inflation, corruption, lack of freedom of speech and other forms of political freedom, and poor living conditions led to the most dramatic wave of social and political unrest in Tunisia in three decades, resulted in scores of deaths and injuries, and an eventual regime change in Tunisia. To date, there have been revolutions in Tunisia and Egypt; a civil war in Libya; civil uprisings in Bahrain, Syria, and Yemen; major protests in Algeria, Iraq, Jordan, Morocco, and Oman, as well as on the borders of Israel; and minor protests in Kuwait, Lebanon, Mauritania, Saudi Arabia, Sudan, and Western Sahara.

In January of 2009 the government leaders of Iceland were forced to call elections two years early after the people of Iceland staged mass protests and clashed with the police due to the government's handling of the economy. Hundreds of thousands protested in France against President Sarkozy's economic policies. Prompted by the financial crisis in Latvia, the opposition and trade unions there organized a rally against the cabinet of premier Ivars Godmanis. The rally gathered some 10-20 thousand people. In the evening the rally turned into a Riot. The crowd moved to the building of the parliament and attempted to force their way into it, but were repelled by the state's police. In late February many Greeks took part in a massive general strike because of the economic situation and they shut down schools, airports, and many other services in Greece. Police and protesters clashed in Lithuania where people protesting the economic conditions were shot by rubber bullets. In addition to various levels of unrest in Europe, Asian countries have also seen various degrees of protest. Communists and others rallied in Moscow to protest the Russian government's economic plans. Protests have also occurred in China as demands from the west for exports have been dramatically reduced and unemployment has increased. Beyond these initial protests, the protest movement has grown and continued in 2011.

Policy responses

The financial phase of the crisis led to emergency interventions in many national financial systems. As the crisis developed into genuine recession in many major economies, economic stimulus meant to revive economic growth became the most common policy tool. After having implemented rescue plans for the banking system, major developed and emerging countries announced plans to relieve their economies. In particular, economic stimulus plans were announced in China, the United States, and the European Union. Bailouts of failing or threatened businesses were carried out or discussed in the USA, the EU, and India. In the final quarter of 2008, the financial crisis saw the G-20 group of major economies assume a new significance as a focus of economic and financial crisis management.

IMF recommendation

The IMF stated in September 2010 that the financial crisis would not end without a major decrease in unemployment as hundreds of millions of people were unemployed worldwide. The IMF urged governments to expand social safety nets and to generate job creation even as they are under pressure to cut spending. Governments should also invest in skills training for the unemployed and even governments of countries like Greece with major debt risk should first focus on long-term economic recovery by creating jobs.

United States policy responses

The Federal Reserve, Treasury, and Securities and Exchange Commission took several steps on September 19 to intervene in the crisis. To stop the potential run on money market mutual funds, the Treasury also announced on September 19 a new $50 billion program to insure the investments, similar to the Federal Deposit Insurance Corporation (FDIC) program. Part of the announcements included temporary exceptions to section 23A and 23B (Regulation W), allowing financial groups to more easily share funds within their group. The exceptions would expire on January 30, 2009, unless extended by the Federal Reserve Board. The Securities and Exchange Commission announced termination of short-selling of 799 financial stocks, as well as action against naked short selling, as part of its reaction to the mortgage crisis.

Market volatility within US 401(k) and retirement plans

The US Pension Protection Act of 2006 included a provision which changed the definition of Qualified Default Investments (QDI) for retirement plans from stable value investments, money market funds, and cash investments to investments which expose an individual to appropriate levels of stock and bond risk based on the years left to retirement. The Act required that Plan Sponsors move the assets of individuals who had never actively elected their investments and had their contributions in the default investment option. This meant that individuals who had defaulted into a cash fund with little fluctuation or growth would soon have their account balances moved to much more aggressive investments.

Starting in early 2008, most US employer-sponsored plans sent notices to their employees informing them that the plan default investment was changing from a cash/stable option to something new, such as a retirement date fund which had significant market exposure. Most participants ignored these notices until September and October, when the market crash was on every news station and media outlet. It was then that participants called their 401(k) and retirement plan providers and discovered losses in excess of 30% in some cases. Call centers for 401(k) providers experienced record call volume and wait times, as millions of inexperienced investors struggled to understand how their investments had been changed so fundamentally without their explicit consent, and reacted in a panic by liquidating everything with any stock or bond exposure, locking in huge losses in their accounts.

Due to the speculation and uncertainty in the market, discussion forums filled with questions about whether or not to liquidate assets and financial gurus were swamped with questions about the right steps to take to protect what remained of their retirement accounts. During the third quarter of 2008, over $72 billion left mutual fund investments that invested in stocks or bonds and rushed into Stable Value investments in the month of October. Against the advice of financial experts, and ignoring historical data illustrating that long-term balanced investing has produced positive returns in all types of markets, investors with decades to retirement instead sold their holdings during one of the largest drops in stock market history.

Loans to banks for asset-backed commercial paper

During the week ending September 19, 2008, money market mutual funds had begun to experience significant withdrawals of funds by investors. This created a significant risk because money market funds are integral to the ongoing financing of corporations of all types. Individual investors lend money to money market funds, which then provide the funds to corporations in exchange for corporate short-term securities called asset-backed commercial paper (ABCP). However, a potential bank run had begun on certain money market funds. If this situation had worsened, the ability of major corporations to secure needed short-term financing through ABCP issuance would have been significantly affected. To assist with liquidity throughout the system, the US Treasury and Federal Reserve Bank announced that banks could obtain funds via the Federal Reserve's Discount Window using ABCP as collateral.

Federal Reserve lowers interest rates

1.75% -0.25% -0.75% -0.25% -0.50% -0.75%

colspan=6	Federal reserve rates changes (Just data after January 1, 2008 )
Calendar date	Date !! Discount rate !! Discount rate !! Discount rate !! Fed funds !! Fed funds rate
! !! !! Primary !! Secondary !! !!
! !! rate change !! new interest rate !! new interest rate !! rate change !! new interest rate
October 8, 2008*	-0.50%	|	2.25%	-0.50%	1.50%
April 30, 2008	|	2.25%	2.75%	-0.25%	2.00%
March 18, 2008	|	2.50%	3.00%	-0.75%	2.25%
March 16, 2008	|	3.25%	3.75%
January 30, 2008	|	3.50%	4.00%	-0.50%	3.00%
January 22, 2008	|	4.00%	4.50%	-0.75%	3.50%

– * Part of a coordinated global rate cut of 50 basis point by main central banks.

– See more detailed US federal discount rate chart:

Legislation

The Secretary of the United States Treasury, Henry Paulson and President George W. Bush proposed legislation for the government to purchase up to US$700 billion of "troubled mortgage-related assets" from financial firms in hopes of improving confidence in the mortgage-backed securities markets and the financial firms participating in it. Discussion, hearings and meetings among legislative leaders and the administration later made clear that the proposal would undergo significant change before it could be approved by Congress. On October 1, a revised compromise version was approved by the Senate with a 74–25 vote. The bill, HR1424 was passed by the House on October 3, 2008 and signed into law. The first half of the bailout money was primarily used to buy preferred stock in banks instead of troubled mortgage assets.

In January 2009, the Obama administration announced a stimulus plan to revive the economy with the intention to create or save more than 3.6 million jobs in two years. The cost of this initial recovery plan was estimated at 825 billion dollars (5.8% of GDP). The plan included 365.5 billion dollars to be spent on major policy and reform of the health system, 275 billion (through tax rebates) to be redistributed to households and firms, notably those investing in renewable energy, 94 billion to be dedicated to social assistance for the unemployed and families, 87 billion of direct assistance to states to help them finance health expenditures of Medicaid, and finally 13 billion spent to improve access to digital technologies. The administration also attributed of 13.4 billion dollars aid to automobile manufacturers General Motors and Chrysler, but this plan is not included in the stimulus plan.

These plans are meant to abate further economic contraction, however, with the present economic conditions differing from past recessions, in, that, many tenets of the American economy such as manufacturing, textiles, and technological development have been outsourced to other countries. Public works projects associated with the economic recovery plan outlined by the Obama Administration have been degraded by the lack of road and bridge development projects that were highly abundant in the Great Depression but are now mostly constructed and are mostly in need of maintenance. Regulations to establish market stability and confidence have been neglected in the Obama plan and have yet to be incorporated.

Federal Reserve response

In an effort to increase available funds for commercial banks and lower the fed funds rate, on September 29, 2008 the U.S. Federal Reserve announced plans to double its Term Auction Facility to $300 billion. Because there appeared to be a shortage of U.S. dollars in Europe at that time, the Federal Reserve also announced it would increase its swap facilities with foreign central banks from $290 billion to $620 billion.

As of December 24, 2008, the Federal Reserve had used its independent authority to spend $1.2 trillion on purchasing various financial assets and making emergency loans to address the financial crisis, above and beyond the $700 billion authorized by Congress from the federal budget. This includes emergency loans to banks, credit card companies, and general businesses, temporary swaps of treasury bills for mortgage-backed securities, the sale of Bear Stearns, and the bailouts of American International Group (AIG), Fannie Mae and Freddie Mac, and Citigroup.

Asia-Pacific policy responses

On September 15, 2008 China cut its interest rate for the first time since 2002. Indonesia reduced its overnight repo rate, at which commercial banks can borrow overnight funds from the central bank, by two percentage points to 10.25 percent. The Reserve Bank of Australia injected nearly $1.5 billion into the banking system, nearly three times as much as the market's estimated requirement. The Reserve Bank of India added almost $1.32 billion, through a refinance operation, its biggest in at least a month. On November 9, 2008 the 2008 Chinese economic stimulus plan is a RMB¥ 4 trillion ($586 billion) stimulus package announced by the central government of the People's Republic of China in its biggest move to stop the global financial crisis from hitting the world's third largest economy. A statement on the government's website said the State Council had approved a plan to invest 4 trillion yuan ($586 billion) in infrastructure and social welfare by the end of 2010. The stimulus package will be invested in key areas such as housing, rural infrastructure, transportation, health and education, environment, industry, disaster rebuilding, income-building, tax cuts, and finance.

China's export driven economy is starting to feel the impact of the economic slowdown in the United States and Europe, and the government has already cut key interest rates three times in less than two months in a bid to spur economic expansion. On November 28, 2008, the Ministry of Finance of the People's Republic of China and the State Administration of Taxation jointly announced a rise in export tax rebate rates on some labor-intensive goods. These additional tax rebates will take place on December 1, 2008.

The stimulus package was welcomed by world leaders and analysts as larger than expected and a sign that by boosting its own economy, China is helping to stabilize the global economy. News of the announcement of the stimulus package sent markets up across the world. However, Marc Faber January 16 said that China according to him was in recession.

In Taiwan, the central bank on September 16, 2008 said it would cut its required reserve ratios for the first time in eight years. The central bank added $3.59 billion into the foreign-currency interbank market the same day. Bank of Japan pumped $29.3 billion into the financial system on September 17, 2008 and the Reserve Bank of Australia added $3.45 billion the same day.

In developing and emerging economies, responses to the global crisis mainly consisted in low-rates monetary policy (Asia and the Middle East mainly) coupled with the depreciation of the currency against the dollar. There were also stimulus plans in some Asian countries, in the Middle East and in Argentina. In Asia, plans generally amounted to 1 to 3% of GDP, with the notable exception of China, which announced a plan accounting for 16% of GDP (6% of GDP per year).

European policy responses

Until September 2008, European policy measures were limited to a small number of countries (Spain and Italy). In both countries, the measures were dedicated to households (tax rebates) reform of the taxation system to support specific sectors such as housing. The European Commission proposed a €200 billion stimulus plan to be implemented at the European level by the countries. At the beginning of 2009, the UK and Spain completed their initial plans, while Germany announced a new plan.

On September 29, 2008 the Belgian, Luxembourg and Dutch authorities partially nationalized Fortis. The German government bailed out Hypo Real Estate.

On 8 October 2008 the British Government announced a bank rescue package of around £500 billion ($850 billion at the time). The plan comprises three parts. The first £200 billion would be made in regards to the banks in liquidity stack. The second part will consist of the state government increasing the capital market within the banks. Along with this, £50 billion will be made available if the banks needed it, finally the government will write away any eligible lending between the British banks with a limit to £250 billion.

In early December German Finance Minister Peer Steinbrück indicated a lack of belief in a "Great Rescue Plan" and reluctance to spend more money addressing the crisis. In March 2009, The European Union Presidency confirmed that the EU was at the time strongly resisting the US pressure to increase European budget deficits.

Global responses

Most political responses to the economic and financial crisis has been taken, as seen above, by individual nations. Some coordination took place at the European level, but the need to cooperate at the global level has led leaders to activate the G-20 major economies entity. A first summit dedicated to the crisis took place, at the Heads of state level in November 2008 (2008 G-20 Washington summit).

The G-20 countries met in a summit held on November 2008 in Washington to address the economic crisis. Apart from proposals on international financial regulation, they pledged to take measures to support their economy and to coordinate them, and refused any resort to protectionism.

Another G-20 summit was held in London on April 2009. Finance ministers and central banks leaders of the G-20 met in Horsham on March to prepare the summit, and pledged to restore global growth as soon as possible. They decided to coordinate their actions and to stimulate demand and employment. They also pledged to fight against all forms of protectionism and to maintain trade and foreign investments. They also committed to maintain the supply of credit by providing more liquidity and recapitalizing the banking system, and to implement rapidly the stimulus plans. As for central bankers, they pledged to maintain low-rates policies as long as necessary. Finally, the leaders decided to help emerging and developing countries, through a strengthening of the IMF.

Countries maintaining growth or technically avoiding recession

Poland is the only member of the European Union to have avoided a decline in GDP, meaning that in 2009 Poland has created the most GDP growth in the EU. As of December 2009 the Polish economy had not entered recession nor even contracted, while its IMF 2010 GDP growth forecast of 1.9 per cent is expected to be upgraded. Analysts have identified several causes: Extremely low levels of bank lending and a relatively very small mortgage market; the relatively recent dismantling of EU trade barriers and the resulting surge in demand for Polish goods since 2004; the receipt of direct EU funding since 2004; lack of over-dependence on a single export sector; a tradition of government fiscal responsibility; a relatively large internal market; the free-floating Polish zloty; low labour costs attracting continued foreign direct investment; economic difficulties at the start of the decade which prompted austerity measures in advance of the world crisis.

While China, India and Iran have experienced slowing growth, they have not entered recession.

South Korea narrowly avoided technical recession in the first quarter of 2009. The International Energy Agency stated in mid September that South Korea could be the only large OECD country to avoid recession for the whole of 2009. It was the only developed economy to expand in the first half of 2009. On October 6, Australia became the first G20 country to raise its main interest rate, with the Reserve Bank of Australia deciding to move rates up to 3.25% from 3.00%.

Australia has avoided a technical recession after experiencing only one quarter of negative growth in the fourth quarter of 2008, with GDP returning to positive in the first quarter of 2009.

Countries in economic recession or depression

Many countries experienced recession in 2008. The countries/territories currently in a technical recession are Estonia, Latvia, Ireland, New Zealand, Japan, Hong Kong, Singapore, Italy, Russia and Germany.

Denmark went into recession in the first quarter of 2008, but came out again in the second quarter. Iceland fell into an economic depression in 2008 following the collapse of its banking system. (''see Icelandic financial crisis'')

The following countries went into recession in the second quarter of 2008: Estonia, Latvia, Ireland and New Zealand.

The following countries/territories went into recession in the third quarter of 2008: Japan, Sweden, Hong Kong, Singapore, Italy, Turkey and Germany. As a whole the fifteen nations in the European Union that use the euro went into recession in the third quarter, and the United Kingdom. In addition, the European Union, the G7, and the OECD all experienced negative growth in the third quarter.

The following countries/territories went into technical recession in the fourth quarter of 2008: United States, Switzerland, Spain, and Taiwan.

South Korea "miraculously" avoided recession with GDP returning positive at a 0.1% expansion in the first quarter of 2009.

Of the seven largest economies in the world by GDP, only China and France avoided a recession in 2008. France experienced a 0.3% contraction in Q2 and 0.1% growth in Q3 of 2008. In the year to the third quarter of 2008 China grew by 9%. This is interesting as China has until recently considered 8% GDP growth to be required simply to create enough jobs for rural people moving to urban centres. This figure may more accurately be considered to be 5–7% now that the main growth in working population is receding. Growth of between 5%–8% could well have the type of effect in China that a recession has elsewhere. Ukraine went into technical depression in January 2009 with a nominal annualized GDP growth of −20%.

The recession in Japan intensified in the fourth quarter of 2008 with a nominal annualized GDP growth of −12.7%, and deepened further in the first quarter of 2009 with a nominal annualized GDP growth of −15.2%.

Major economies affected by the recession. {| |- |align="left" |

Country			! Recession length (number of quarters)
align="left">	-0.40%	1
align="left"	<		-1.00%
align="left">	-1.21%
align="left"	<		-1.69%
align="left">	-2.65%
align="left"	<		-2.85%
align="left">	-3.25%
align="left"	<		-3.36%
align="left">	-3.37%
align="left"	<		-3.44%
align="left">	-3.45%
align="left"	<		-3.68%
align="left">	-3.87%
align="left"	<		-4.11%
align="left">	-4.14%
align="left"	<		-4.23%
align="left">	-4.58%
align="left"	<		-4.89%
align="left">	-4.94%
align="left"	<		-5.29%
align="left">	-5.44%
align="left"	<		-6.14%
align="left">	-6.15%
align="left"	<		-6.62%
align="left">	-6.76%
align="left"	<		-7.05%
align="left">	-7.41%
align="left"	<		-7.43%
align="left">	-7.62%
align="left"	<		-8.06%
align="left">	-8.32%
align="left"	<		-8.34%
align="left">	-8.47%
align="left"	<		-8.95%
align="left">	-9.71%
align="left"	<		-9.96%
align="left">	-10.00%
align="left"	<		-10.86%
align="left">	-12.24%
align="left"	<		-12.82%
align="left">	-15.07%
align="left"	<		-16.95%
align="left">	-20.33%
align="left"		-25.14%

|- |}

Official forecasts

On March 2009, U.S. Fed Chairman Ben Bernanke said in an interview that he felt that if banks began lending more freely, allowing the financial markets to return to normal, the recession could end during 2009. In that same interview, Bernanke said Green shoots of economic revival are already evident. On February 18, 2009, the US Federal Reserve cut their economic forecast of 2009, expecting the US output to shrink between 0.5% and 1.5%, down from its forecast in October 2008 of output between +1.1% (growth) and −0.2% (contraction).

The EU commission in Brussels updated their earlier predictions on January 19, 2009, expecting Germany to contract −2.25% and −1.8% on average for the 27 EU countries. According to new forecasts by Deutsche Bank (end of November 2008), the economy of Germany will contract by more than 4% in 2009.

On November 3, 2008, according to all newspapers, the European Commission in Brussels predicted for 2009 only an extremely low increase by 0.1% of the GDP, for the countries of the Euro zone (France, Germany, Italy, etc.). They also predicted negative numbers for the UK (−1.0%), Ireland, Spain, and other countries of the EU. Three days later, the IMF at Washington, D.C., predicted for 2009 a worldwide decrease, −0.3%, of the same number, on average over the developed economies (−0.7% for the US, and −0.8% for Germany). On April 22, 2009, the German ministers of finance and that of economy, in a common press conference, corrected again their numbers for 2009 downwards: this time the "prognosis" for Germany was a decrease of the GDP of at least −5%, in agreement with a recent prediction of the IMF.

On June 11, 2009, the World Bank Group predicted for 2009 for the first time a global contraction of the economic power, precisely by −3%.

Comparisons with the Great Depression

On April 17, 2009, head of the IMF Dominique Strauss-Kahn said that there was a chance that certain countries may not implement the proper policies to avoid feedback mechanisms that could eventually turn the recession into a depression. "The free-fall in the global economy may be starting to abate, with a recovery emerging in 2010, but this depends crucially on the right policies being adopted today." The IMF pointed out that unlike the Great Depression, this recession was synchronized by global integration of markets. Such synchronized recessions were explained to last longer than typical economic downturns and have slower recoveries.

The chief economist of the IMF, Dr. Olivier Blanchard, stated that the percentage of workers laid off for long stints has been rising with each downturn for decades but the figures have surged this time. "Long-term unemployment is alarmingly high: in the US, half the unemployed have been out of work for over six months, something we have not seen since the Great Depression." The IMF also stated that a link between rising inequality within Western economies and deflating demand may exist. The last time that the wealth gap reached such skewed extremes was in 1928-1929.

In the United States

Although some casual comparisons between the late-2000s recession and the Great Depression have been made, there remain large differences between the two events. The consensus among economists in March 2009 was that a depression was not likely to occur. UCLA Anderson Forecast director Edward Leamer said on March 25, 2009 that there had not been any major predictions at that time which resembled a second Great Depression:

"We've frightened consumers to the point where they imagine there is a good prospect of a Great Depression. That certainly is not in the prospect. No reputable forecaster is producing anything like a Great Depression."

Differences explicitly pointed out between the recession and the Great Depression include the facts that over the 79 years between 1929 and 2008, great changes occurred in economic philosophy and policy, the stock market had not fallen as far as it did in 1932 or 1982, the 10-year price-to-earnings ratio of stocks was not as low as in the '30s or '80s, inflation-adjusted U.S. housing prices in March 2009 were higher than any time since 1890 (including the housing booms of the 1970s and '80s), the recession of the early '30s lasted over three-and-a-half years, and during the 1930s the supply of money (currency plus demand deposits) fell by 25% (where as in 2008 and 2009 the Fed "has taken an ultraloose credit stance"). Furthermore, the unemployment rate in 2008 and early 2009 and the rate at which it rose was comparable to most of the recessions occurring after World War II, and was dwarfed by the 25% unemployment rate peak of the Great Depression.

Nobel Prize winning economist Paul Krugman predicted a series of depressions in his ''Return to Depression Economics'' (2000), based on "failures on the demand side of the economy." On January 5, 2009, he wrote that "preventing depressions isn't that easy after all" and that "the economy is still in free fall." In March 2009, Krugman explained that a major difference in this situation is that the causes of this financial crisis were from the shadow banking system. "The crisis hasn't involved problems with deregulated institutions that took new risks... Instead, it involved risks taken by institutions that were never regulated in the first place."

On November 15, 2008, author and Southern Methodist University economics professor Ravi Batra said he is "afraid the global financial debacle will turn into a steep recession and be the worst since the Great Depression, even worse than the painful slump of 1980–1982 that afflicted the whole world". In 1978, Batra's book ''The Downfall of Capitalism and Communism'' was published. His first major prediction came true with the collapse of Soviet Communism in 1990. His second major prediction for a financial crisis to engulf the capitalist system seems to be unfolding since 2007 with increasing attention being paid to his work.

On February 22, 2009, NYU economics professor Nouriel Roubini said that the crisis was the worst since the Great Depression, and that without cooperation between political parties and foreign countries, and if poor fiscal policy decisions (such as support of zombie banks) are pursued, the situation "could become as bad as the Great Depression." On April 27, 2009, Roubini expressed a more upbeat assessment by noting that "the bottom of the economy [will be seen] toward the beginning or middle of next year."

On April 6, 2009 Vernon L. Smith and Steven Gjerstad offered the hypothesis "that a financial crisis that originates in consumer debt, especially consumer debt concentrated at the low end of the wealth and income distribution, can be transmitted quickly and forcefully into the financial system. It appears that we're witnessing the second great consumer debt crash, the end of a massive consumption binge."

In his final press conference as president, George W. Bush claimed that in September 2008 his chief economic advisors had said that the economic situation could at some point become worse than the Great Depression.

A tent city in Sacramento, California was described as "images, hauntingly reminiscent of the iconic photos of the 1930s and the Great Depression" and "evocative Depression-era images."

In the United Kingdom

On 22 August 2008, the Office for National Statistics reported that the economy had reached a standstill, with 0% growth, during the second quarter of that year.On 24 October, statistics for the third quarter of the year showed the first contraction in the national economy for 16 years.With further contraction in the final quarter of 2008, the recession was officially declared on 23 January 2009.

On 10 February 2009, Ed Balls, Secretary of State for Children, Schools and Families of the United Kingdom, said that "I think that this is a financial crisis more extreme and more serious than that of the 1930s and we all remember how the politics of that era were shaped by the economy." On 24 January 2009, Edmund Conway, Economics Editor for ''The Daily Telegraph'', had written that "The plight facing Britain is uncannily similar to the 1930s, since prices of many assets – from shares to house prices – are falling at record rates [in Britain], but the value of the debt against which they are held remains unchanged."

On 23 October 2009, it was reported that the British economy had contracted for six successive quarters - the longest run of contraction since quarterly figures were first recorded in 1955.The end of the recession was declared on 26 January 2010, when it was reported that the economy had grown by 0.1% in the final quarter of 2009.

Fears of a double-dip recession were sparked on 25 January 2011 when it was reported that the economy had contracted by 0.5% during the final quarter of 2010 following a full year of growth, although this was largely blamed on the severe weather which affected the nation in late November and almost all of December.These fears were eased on 27 April 2011 when it was reported that the economy had grown by 0.5% in the first quarter of 2011,and then on 26 July 2011 when 0.2% growth was reported for the second quarter of the year.

In Ireland

Ireland entered into an economic depression in 2009. The ESRI (Economic and Social Research Institute) predict an economic contraction of 14% by 2010, however this number may have already been exceeded with GDP dropping 7.1% quarter on quarter during the fourth quarter of 2008, and a possible greater contraction in the first quarter of 2009 with the fall in all OECD countries with the exception of France exceeding the drop of the previous quarter. Unemployment is up 8.75% to 11.4%. Government borrowing and the financial bailout and Nationalisation of one of Ireland's banks which were loaded with debt due to the Irish property bubble.

Job losses and unemployment rates

Many jobs have been lost worldwide following the onset of a recession in 2007. So far, the job losses have been demonstrably less than during the Great Depression of the 1930s, when US unemployment peaked at 25% of the labour force. The United States entered into recession in December 2007 when job losses began. Unemployment increased drastically starting in September 2008 following the bankruptcy of Lehman Brothers. In March 2009, U-3 unemployment had risen to 8.5%. In March 2009, statistician John Williams "argue[d] that measurement changes implemented over the years make it impossible to compare the current unemployment rate with that seen during the Great Depression". By December 2010, the official U.S. unemployment rate had increased to 9.8%.

See also

Financial crisis of 2007–2010

2008 Chinese economic stimulus plan

2008 United States bank failures

2008–2009 Keynesian resurgence

2008–2009 Latvian financial crisis

2008–2009 Russian financial crisis

American Recovery and Reinvestment Act of 2009

Automotive industry crisis of 2008–2009

Bankruptcy of Lehman Brothers

Bear Stearns subprime mortgage hedge fund crisis

Federal takeover of Fannie Mae and Freddie Mac

Great Depression

List of entities involved in 2007–2008 financial crises

Statistical Arbitrage Events of summer 2007

Subprime crisis impact timeline

United States bear market of 2007–2009

United States housing bubble

United States housing market correction

2000s commodities boom

References

Further reading

Cohan, William D., ''The Last Tycoons. The Secret History of Lazard Frères & Co.''. New York, Broadway Books (Doubleday), 2007. ISBN 9780385521772

Cohan, William D., ''House of Cards: A Tale of Hubris and Wretched Excess on Wall Street'', [a novel]. New York, Doubleday, 2009. ISBN 9780385528269

Fengbo Zhang: 1.Perspective on the United States Sub-prime Mortgage Crisis , 2.Accurately Forecasting Trends of the Financial Crisis , 3.Stop Arguing about Socialism versus Capitalism .

Funnell, Warwick N. ''In government we trust: market failure and the delusions of privatisation'' / Warwick Funnell, Robert Jupe and Jane Andrew. Sydney: University of New South Wales Press, 2009. ISBN 9780868409665 (pbk.)

Harman, Chris ''Zombie Capitalism: Global Crisis and the Relevance of Marx'' / London: Bookmarks Publications 2009. ISBN 9781905192533

Paulson, Hank, ''On the Brink''. London, Headline, 2010. ISBN 9780755360543

Read, Colin. ''Global financial meltdown: how we can avoid the next economic crisis'' / Colin Read. New York: Palgrave Macmillan, c2009. ISBN 9780230222182

Woods, Thomas E. ''Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse'' / Washington DC: Regnery Publishing 2009. ISBN 1596985879

External links

Tracking the Global Recession accurate and useful information from the Federal Reserve Bank of St. Louis

Federal Reserve Bank of St. Louis, "What Caused the Crisis", collection of papers

Economic Crisis and Stimulus from ''UCB Libraries GovPubs''

Stimulus Watch – U.S. government responses to the financial and economic crisis

Global Outlook, Uri Dadush, "International Economics Bulletin", June 2009.

Global Recession ongoing coverage from BBC News

Global Recession ongoing coverage from The Guardian

ILO Job Crisis Observatory

UN DESA - Financial and economic crisis

Financial Transmission of the Crisis: What’s the Lesson? Shimelse Ali, Uri Dadush, Lauren Falcao, "International Economics Bulletin, June 2009.

Some of aspects of state national economy evolution in the system of the international economic order.

A Spectral Analysis of World GDP Dynamics: Kondratieff Waves, Kuznets Swings, Juglar and Kitchin Cycles in Global Economic Development, and the 2008–2009 Economic Crisis.

The Regulated Depression

The Second Wave of the Global Crisis? On mathematical analyses of some dynamic series

Category:Late-2000s financial crisis Category:2000s economic history Category:2010s economic history Category:Economic disasters Category:Recessions

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The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth; they do not directly result in changes in the real economy unless a recession or depression follows.

Many economists have offered theories about how financial crises develop and how they could be prevented. There is little consensus, however, and financial crises are still a regular occurrence around the world.

Types of financial crisis

Banking crisis

When a bank suffers a sudden rush of withdrawals by depositors, this is called a ''bank run''. Since banks lend out most of the cash they receive in deposits (see fractional-reserve banking), it is difficult for them to quickly pay back all deposits if these are suddenly demanded, so a run may leave the bank in bankruptcy, causing many depositors to lose their savings unless they are covered by deposit insurance. A situation in which bank runs are widespread is called a ''systemic banking crisis'' or just a ''banking panic''. A situation without widespread bank runs, but in which banks are reluctant to lend, because they worry that they have insufficient funds available, is often called a credit crunch. In this way, the banks become an accelerator of a financial crisis.

Examples of bank runs include the run on the Bank of the United States in 1931 and the run on Northern Rock in 2007. The collapse of Bear Stearns in 2008 has also sometimes been called a bank run, even though Bear Stearns was an investment bank rather than a commercial bank. The U.S. savings and loan crisis of the 1980s led to a credit crunch which is seen as a major factor in the U.S. recession of 1990–91.

Speculative bubbles and crashes

Economists say that a financial asset (stock, for example) exhibits a ''bubble'' when its price exceeds the present value of the future income (such as interest or dividends) that would be received by owning it to maturity. If most market participants buy the asset primarily in hopes of selling it later at a higher price, instead of buying it for the income it will generate, this could be evidence that a bubble is present. If there is a bubble, there is also a risk of a ''crash'' in asset prices: market participants will go on buying only as long as they expect others to buy, and when many decide to sell the price will fall. However, it is difficult to tell in practice whether an asset's price actually equals its fundamental value, so it is hard to detect bubbles reliably. Some economists insist that bubbles never or almost never occur.

Well-known examples of bubbles (or purported bubbles) and crashes in stock prices and other asset prices include the Dutch tulip mania, the Wall Street Crash of 1929, the Japanese property bubble of the 1980s, the crash of the dot-com bubble in 2000–2001, and the now-deflating United States housing bubble.

International financial crises

When a country that maintains a fixed exchange rate is suddenly forced to devalue its currency because of a speculative attack, this is called a ''currency crisis'' or ''balance of payments crisis''. When a country fails to pay back its sovereign debt, this is called a ''sovereign default''. While devaluation and default could both be voluntary decisions of the government, they are often perceived to be the involuntary results of a change in investor sentiment that leads to a sudden stop in capital inflows or a sudden increase in capital flight.

Several currencies that formed part of the European Exchange Rate Mechanism suffered crises in 1992–93 and were forced to devalue or withdraw from the mechanism. Another round of currency crises took place in Asia in 1997–98. Many Latin American countries defaulted on their debt in the early 1980s. The 1998 Russian financial crisis resulted in a devaluation of the ruble and default on Russian government bonds.

Wider economic crises

Negative GDP growth lasting two or more quarters is called a ''recession''. An especially prolonged recession may be called a ''depression'', while a long period of slow but not necessarily negative growth is sometimes called economic stagnation. Since these phenomena affect much more than the financial system they are not usually considered financial crises as such though there are clearly links between the two.

Some economists argue that many recessions have been caused in large part by financial crises. One important example is the Great Depression, which was preceded in many countries by bank runs and stock market crashes. The subprime mortgage crisis and the bursting of other real estate bubbles around the world also led to recession in the U.S. and a number of other countries in late 2008 and 2009.

Some economists argue that financial crises are caused by recessions instead of the other way around, and that even where a financial crisis is the initial shock that sets off a recession, other factors may be more important in prolonging the recession. In particular, Milton Friedman and Anna Schwartz argued that the initial economic decline associated with the crash of 1929 and the bank panics of the 1930s would not have turned into a prolonged depression if it had not been reinforced by monetary policy mistakes on the part of the Federal Reserve, a position supported by Ben Bernanke.

Causes and consequences of financial crises

Strategic complementarities in financial markets

It is often observed that successful investment requires each investor in a financial market to guess what other investors will do. George Soros has called this need to guess the intentions of others 'reflexivity'. Similarly, John Maynard Keynes compared financial markets to a beauty contest game in which each participant tries to predict which model ''other'' participants will consider most beautiful.

Furthermore, in many cases investors have incentives to coordinate their choices. For example, someone who thinks other investors want to buy lots of Japanese yen may expect the yen to rise in value, and therefore has an incentive to buy yen too. Likewise, a depositor in IndyMac Bank who expects other depositors to withdraw their funds may expect the bank to fail, and therefore has an incentive to withdraw too. Economists call an incentive to mimic the strategies of others ''strategic complementarity''.

It has been argued that if people or firms have a sufficiently strong incentive to do the same thing they expect others to do, then ''self-fulfilling prophecies'' may occur. For example, if investors expect the value of the yen to rise, this may cause its value to rise; if depositors expect a bank to fail this may cause it to fail. Therefore, financial crises are sometimes viewed as a vicious circle in which investors shun some institution or asset because they expect others to do so.

Leverage

''Leverage'', which means borrowing to finance investments, is frequently cited as a contributor to financial crises. When a financial institution (or an individual) only invests its own money, it can, in the very worst case, lose its own money. But when it borrows in order to invest more, it can potentially earn more from its investment, but it can also lose more than all it has. Therefore leverage magnifies the potential returns from investment, but also creates a risk of bankruptcy. Since bankruptcy means that a firm fails to honor all its promised payments to other firms, it may spread financial troubles from one firm to another (see 'Contagion' below).

The average degree of leverage in the economy often rises prior to a financial crisis. For example, borrowing to finance investment in the stock market ("margin buying") became increasingly common prior to the Wall Street Crash of 1929.

Asset-liability mismatch

Another factor believed to contribute to financial crises is ''asset-liability mismatch'', a situation in which the risks associated with an institution's debts and assets are not appropriately aligned. For example, commercial banks offer deposit accounts which can be withdrawn at any time and they use the proceeds to make long-term loans to businesses and homeowners. The mismatch between the banks' short-term liabilities (its deposits) and its long-term assets (its loans) is seen as one of the reasons bank runs occur (when depositors panic and decide to withdraw their funds more quickly than the bank can get back the proceeds of its loans). Likewise, Bear Stearns failed in 2007–08 because it was unable to renew the short-term debt it used to finance long-term investments in mortgage securities.

In an international context, many emerging market governments are unable to sell bonds denominated in their own currencies, and therefore sell bonds denominated in US dollars instead. This generates a mismatch between the currency denomination of their liabilities (their bonds) and their assets (their local tax revenues), so that they run a risk of sovereign default due to fluctuations in exchange rates.

Uncertainty and herd behavior

Many analyses of financial crises emphasize the role of investment mistakes caused by lack of knowledge or the imperfections of human reasoning. Behavioral finance studies errors in economic and quantitative reasoning. Psychologist Torbjorn K A Eliazonhas also analyzed failures of economic reasoning in his concept of 'œcopathy'.

Historians, notably Charles P. Kindleberger, have pointed out that crises often follow soon after major financial or technical innovations that present investors with new types of financial opportunities, which he called "displacements" of investors' expectations. Early examples include the South Sea Bubble and Mississippi Bubble of 1720, which occurred when the notion of investment in shares of company stock was itself new and unfamiliar, and the Crash of 1929, which followed the introduction of new electrical and transportation technologies. More recently, many financial crises followed changes in the investment environment brought about by financial deregulation, and the crash of the dot com bubble in 2001 arguably began with "irrational exuberance" about Internet technology.

Unfamiliarity with recent technical and financial innovations may help explain how investors sometimes grossly overestimate asset values. Also, if the first investors in a new class of assets (for example, stock in "dot com" companies) profit from rising asset values as other investors learn about the innovation (in our example, as others learn about the potential of the Internet), then still more others may follow their example, driving the price even higher as they rush to buy in hopes of similar profits. If such "herd behavior" causes prices to spiral up far above the true value of the assets, a crash may become inevitable. If for any reason the price briefly falls, so that investors realize that further gains are not assured, then the spiral may go into reverse, with price decreases causing a rush of sales, reinforcing the decrease in prices.

Regulatory failures

Governments have attempted to eliminate or mitigate financial crises by regulating the financial sector. One major goal of regulation is transparency: making institutions' financial situations publicly known by requiring regular reporting under standardized accounting procedures. Another goal of regulation is making sure institutions have sufficient assets to meet their contractual obligations, through reserve requirements, capital requirements, and other limits on leverage.

Some financial crises have been blamed on insufficient regulation, and have led to changes in regulation in order to avoid a repeat. For example, the Managing Director of the IMF, Dominique Strauss-Kahn, has blamed the financial crisis of 2008 on 'regulatory failure to guard against excessive risk-taking in the financial system, especially in the US'. Likewise, the New York Times singled out the deregulation of credit default swaps as a cause of the crisis.

However, excessive regulation has also been cited as a possible cause of financial crises. In particular, the Basel II Accord has been criticized for requiring banks to increase their capital when risks rise, which might cause them to decrease lending precisely when capital is scarce, potentially aggravating a financial crisis.

International regulatory convergence has been interpreted in terms of regulatory herding, deepening market herding (discussed above) and so increasing systemic risk. From this perspective, maintaining diverse regulatory regimes would be a safeguard.

Fraud

Fraud has played a role in the collapse of some financial institutions, when companies have attracted depositors with misleading claims about their investment strategies, or have embezzled the resulting income. Examples include Charles Ponzi's scam in early 20th century Boston, the collapse of the MMM investment fund in Russia in 1994, the scams that led to the Albanian Lottery Uprising of 1997, and the collapse of Madoff Investment Securities in 2008.

Many rogue traders that have caused large losses at financial institutions have been accused of acting fraudulently in order to hide their trades. Fraud in mortgage financing has also been cited as one possible cause of the 2008 subprime mortgage crisis; government officials stated on September 23, 2008 that the FBI was looking into possible fraud by mortgage financing companies Fannie Mae and Freddie Mac, Lehman Brothers, and insurer American International Group. Likewise it has been argued that many financial companies failed in the recent crisis because their managers failed to carry out their fiduciary duties.

Contagion

''Contagion'' refers to the idea that financial crises may spread from one institution to another, as when a bank run spreads from a few banks to many others, or from one country to another, as when currency crises, sovereign defaults, or stock market crashes spread across countries. When the failure of one particular financial institution threatens the stability of many other institutions, this is called ''systemic risk''.

One widely-cited example of contagion was the spread of the Thai crisis in 1997 to other countries like South Korea. However, economists often debate whether observing crises in many countries around the same time is truly caused by contagion from one market to another, or whether it is instead caused by similar underlying problems that would have affected each country individually even in the absence of international linkages.

Recessionary effects

Some financial crises have little effect outside of the financial sector, like the Wall Street crash of 1987, but other crises are believed to have played a role in decreasing growth in the rest of the economy. There are many theories why a financial crisis could have a recessionary effect on the rest of the economy. These theoretical ideas include the 'financial accelerator', 'flight to quality' and 'flight to liquidity', and the Kiyotaki-Moore model. Some 'third generation' models of currency crises explore how currency crises and banking crises together can cause recessions.

Theories of financial crises

Marxist theories

Recurrent major depressions in the world economy at the pace of 20 and 50 years (often referred to as the business cycle) have been the subject of studies since Jean Charles Léonard de Sismondi (1773–1842) provided the first theory of crisis in a critique of classical political economy's assumption of equilibrium between supply and demand. Developing an economic crisis theory become the central recurring concept throughout Karl Marx's mature work. Marx's law of the tendency for the rate of profit to fall borrowed many features of the presentation of John Stuart Mill's discussion ''Of the Tendency of Profits to a Minimum'' (Principles of Political Economy Book IV Chapter IV). The theory is a corrollary of the ''Tendency towards the Centralization of Profits''.

In a capitalist system, successfully-operating businesses return less money to their workers (in the form of wages) than the value of the goods produced by those workers (i.e. the amount of money the products are sold for). This profit first goes towards covering the initial investment in the business. In the long-run, however, when one considers the combined economic activity of all successfully-operating business, it is clear that less money (in the form of wages) is being returned to the mass of the population (the workers) than is available to them to buy all of these goods being produced. Furthermore, the expansion of businesses in the process of competing for markets leads to an abundance of goods and a general fall in their prices, further exacerbating ''the tendency for the rate of profit to fall''.

The viability of this theory depends upon two main factors: firstly, the degree to which profit is taxed by government and returned to the mass of people in the form of welfare, family benefits and health and education spending; and secondly, the proportion of the population who are workers rather than investors/business owners. Given the extraordinary capital expenditure required to enter modern economic sectors like airline transport, the military industry, or chemical production, these sectors are extremely difficult for new businesses to enter and are being concentrated in fewer and fewer hands.

Empirical and econometric research continue especially in the world systems theory and in the debate about Nikolai Kondratiev and the so-called 50-years Kondratiev waves. Major figures of world systems theory, like Andre Gunder Frank and Immanuel Wallerstein, consistently warned about the crash that the world economy is now facing. World systems scholars and Kondratiev cycle researchers always implied that Washington Consensus oriented economists never understood the dangers and perils, which leading industrial nations will be facing and are now facing at the end of the long economic cycle which began after the oil crisis of 1973.

Minsky's theory

Hyman Minsky has proposed a post-Keynesian explanation that is most applicable to a closed economy. He theorized that financial fragility is a typical feature of any capitalist economy. High fragility leads to a higher risk of a financial crisis. To facilitate his analysis, Minsky defines three approaches to financing firms may choose, according to their tolerance of risk. They are hedge finance, speculative finance, and Ponzi finance. Ponzi finance leads to the most fragility.

for hedge finance, income flows are expected to meet financial obligations in every period, including both the principal and the interest on loans.

for speculative finance, a firm must roll over debt because income flows are expected to only cover interest costs. None of the principal is paid off.

for Ponzi finance, expected income flows will not even cover interest cost, so the firm must borrow more or sell off assets simply to service its debt. The hope is that either the market value of assets or income will rise enough to pay off interest and principal.

Financial fragility levels move together with the business cycle. After a recession, firms have lost much financing and choose only hedge, the safest. As the economy grows and expected profits rise, firms tend to believe that they can allow themselves to take on speculative financing. In this case, they know that profits will not cover all the interest all the time. Firms, however, believe that profits will rise and the loans will eventually be repaid without much trouble. More loans lead to more investment, and the economy grows further. Then lenders also start believing that they will get back all the money they lend. Therefore, they are ready to lend to firms without full guarantees of success.

Lenders know that such firms will have problems repaying. Still, they believe these firms will refinance from elsewhere as their expected profits rise. This is Ponzi financing. In this way, the economy has taken on much risky credit. Now it is only a question of time before some big firm actually defaults. Lenders understand the actual risks in the economy and stop giving credit so easily. Refinancing becomes impossible for many, and more firms default. If no new money comes into the economy to allow the refinancing process, a real economic crisis begins. During the recession, firms start to hedge again, and the cycle is closed.

Proutist theories

The salient focus of Proutist theories of financial crisis is inequality and blockages in the rolling of money. These ideas were originally propounded by P.R. Sarkar. The inequality is not just seen in terms of the distribution of income but more importantly in the distribution of wealth. Ravi Batra has written extensively on the evolution in the share of wealth held by the richest one percent of the USA and its link to financial crashes. Earnings inequality in the USA peaked in 1928 and 2007, prior to market tops, which is consistent with this thesis. Another cause of a global financial crisis and depression is blockages in the circulation of money. Indeed, the recovery from the Late-2000s financial crisis has been hampered by unwillingness to lend by banks around the world.

“There are two main causes for economic depressions. First, the concentration of wealth and secondly, blockages in the rolling of money. If the capital is concentrated in the hands of a few individuals or state, the majority of people are exploited by a handful of people. As a result of this process of severe exploitation, a serious explosion takes place. This explosion is known as a depression in the economic world … The second cause: when money that is in the possession of individual or state capitalists stops rolling. Money remains inert or unutilized because those capitalists think that if the money is allowed to roll freely then their profits will decrease, even though it will bring relief to the common masses. The very psychology of the capitalists is to make profit from the rolling of money. When they discover that the investment of money does not bring profit up to their expectations, then they stop rolling the money. This keeps the money immobile or inert in various ways. As the money does not roll, there is no investment, no production, no income and hence no purchasing power, and the situation becomes so dangerous that there are few buyers to buy the commodities.” – P.R. Sarkar, 1987

Coordination games

Mathematical approaches to modeling financial crises have emphasized that there is often positive feedback between market participants' decisions (see strategic complementarity). Positive feedback implies that there may be dramatic changes in asset values in response to small changes in economic fundamentals. For example, some models of currency crises (including that of Paul Krugman) imply that a fixed exchange rate may be stable for a long period of time, but will collapse suddenly in an avalanche of currency sales in response to a sufficient deterioration of government finances or underlying economic conditions.

According to some theories, positive feedback implies that the economy can have more than one equilibrium. There may be an equilibrium in which market participants invest heavily in asset markets because they expect assets to be valuable, but there may be another equilibrium where participants flee asset markets because they expect others to flee too. This is the type of argument underlying Diamond and Dybvig's model of bank runs, in which savers withdraw their assets from the bank because they expect others to withdraw too. Likewise, in Obstfeld's model of currency crises, when economic conditions are neither too bad nor too good, there are two possible outcomes: speculators may or may not decide to attack the currency depending on what they expect other speculators to do.

Herding models and learning models

A variety of models have been developed in which asset values may spiral excessively up or down as investors learn from each other. In these models, asset purchases by a few agents encourage others to buy too, not because the true value of the asset increases when many buy (which is called "strategic complementarity"), but because investors come to believe the true asset value is high when they observe others buying.

In "herding" models, it is assumed that investors are fully rational, but only have partial information about the economy. In these models, when a few investors buy some type of asset, this reveals that they have some positive information about that asset, which increases the rational incentive of others to buy the asset too. Even though this is a fully rational decision, it may sometimes lead to mistakenly high asset values (implying, eventually, a crash) since the first investors may, by chance, have been mistaken.

In "adaptive learning" or "adaptive expectations" models, investors are assumed to be imperfectly rational, basing their reasoning only on recent experience. In such models, if the price of a given asset rises for some period of time, investors may begin to believe that its price always rises, which increases their tendency to buy and thus drives the price up further. Likewise, observing a few price decreases may give rise to a downward price spiral, so in models of this type large fluctuations in asset prices may occur. Agent-based models of financial markets often assume investors act on the basis of adaptive learning or adaptive expectations.

History

A noted survey of financial crises is ''This Time is Different: Eight Centuries of Financial Folly'' , by economists Carmen Reinhart and Kenneth Rogoff, who are regarded as among the foremost historians of financial crises. In this survey, they trace the history of financial crisis back to sovereign defaults – default on ''public'' debt, – which were the form of crisis prior to the 18th century and continue, then and now causing private bank failures; crises since the 18th century feature both public debt default and private debt default. Reinhart and Rogoff also class debasement of currency and hyperinflation as being forms of financial crisis, broadly speaking, because they lead to unilateral reduction (repudiation) of debt.

Prior to 19th century

Reinhart and Rogoff trace inflation (to reduce debt) to Dionysius of Syracuse, of the 4th century BCE, and begin their "eight centuries" in 1258; debasement of currency also occurred under the Roman empire and Byzantine empire.

Among the earliest crises Reinhart and Rogoff study is the 1340 default of England, due to setbacks in its war with France (the Hundred Years' War; see details). Further early sovereign defaults include seven defaults by imperial Spain, four under Philip II, three under his successors.

Other global and national financial mania since the 17th century include:

1637: Bursting of tulip mania^* in the Netherlands – while tulip mania is popularly reported as an example of a financial crisis, and was a speculative bubble, modern scholarship holds that its broader economic impact was limited to negligible, and that it did not precipitate a financial crisis.

1720: Bursting of South Sea Bubble (Great Britain) and Mississippi Bubble (France) – earliest of modern financial crises; in both cases the company assumed the national debt of the country (80–85% in Great Britain, 100% in France), and thereupon the bubble burst.

Crisis of 1772

Panic of 1792

Panic of 1796–1797

19th century

Danish state bankruptcy of 1813

Panic of 1819 – pervasive USA economic recession w/ bank failures; culmination of U.S.'s 1st boom-to-bust economic cycle

Panic of 1825 – pervasive British economic recession in which many British banks failed, & Bank of England nearly failed

Panic of 1837 – pervasive USA economic recession w/ bank failures; a 5 yr ''depression'' ensued

Panic of 1847 – a collapse of British financial markets associated with the end of the 1840s railroad boom.

Panic of 1857 – pervasive USA economic recession w/ bank failures

Panic of 1866 – the Overend Gurney crisis (primarily British)

Panic of 1873 – pervasive USA economic recession w/ bank failures, known then as the 5 yr ''Great Depression'' & now as the Long Depression

Panic of 1884

Panic of 1890 - general economic crisis in Brazil, Argentina and Uruguay due to the economic bubbles burst which recessive effects were felt throughout this decade

Panic of 1893 – a panic in the United States marked by the collapse of railroad overbuilding and shaky railroad financing which set off a series of bank failures

Australian banking crisis of 1893

Panic of 1896 – an acute economic depression in the United States precipitated by a drop in silver reserves and market concerns on the effects it would have on the gold standard

20th century

Panic of 1901 – limited to crashing of the New York Stock Exchange

Panic of 1907 – pervasive USA economic recession w/ bank failures

Panic of 1910–1911

1910 – Shanghai rubber stock market crisis

Wall Street Crash of 1929, followed by the Great Depression – the largest and most important economic depression in the 20th century

1973 – 1973 oil crisis – oil prices soared, causing the 1973–1974 stock market crash

Secondary banking crisis of 1973–1975 – United Kingdom

1980s – Latin American debt crisis – beginning in Mexico in 1982 with the Mexican Weekend

Bank stock crisis (Israel 1983)

1987 – Black Monday (1987) – the largest one-day percentage decline in stock market history

1989–91 – United States Savings & Loan crisis

1990 – Japanese asset price bubble collapsed

early 1990s – Scandinavian banking crisis: Swedish banking crisis, Finnish banking crisis of 1990s

1992–93 – Black Wednesday – speculative attacks on currencies in the European Exchange Rate Mechanism

1994–95 – 1994 economic crisis in Mexico – speculative attack and default on Mexican debt

1997–98 – 1997 Asian Financial Crisis – devaluations and banking crises across Asia

1998 Russian financial crisis

21st century

2000–2001 – Turkish Crises

2001 – Argentine Crises

2001 – Bursting of dot-com bubble – speculations concerning internet companies crashed

2007–10 – Financial crisis of 2007–2010, followed by the late 2000s recession and the 2010 European sovereign debt crisis

See also

Bailout

Flight-to-liquidity

Lender of last resort

Liquidity crisis

Macroprudential policy

Oil crisis

Real estate bubble

Specific:

2000s energy crisis

2007–2008 world food price crisis

''America's Great Depression''

Literature

General perspectives

Walter Bagehot (1873), ''Lombard Street: A Description of the Money Market''.

Charles P. Kindleberger and Robert Aliber (2005), ''Manias, Panics, and Crashes: A History of Financial Crises''(Palgrave Macmillan, 2005 ISBN 9781403936516).

Gernot Kohler and Emilio José Chaves (Editors) "Globalization: Critical Perspectives" Hauppauge, New York: Nova Science Publishers ISBN 1-59033-346-2. With contributions by Samir Amin, Christopher Chase Dunn, Andre Gunder Frank, Immanuel Wallerstein

Hyman P. Minsky (1986, 2008), ''Stabilizing an Unstable Economy''.

Banking crises

Franklin Allen and Douglas Gale (2000), 'Financial contagion'. ''Journal of Political Economy'' 108 (1), pp. 1–33.

Franklin Allen and Douglas Gale (2007), ''Understanding Financial Crises''.

Jean-Charles Rochet (2008), ''Why Are There So Many Banking Crises? The Politics and Policy of Bank Regulation''.

R. Glenn Hubbard, ed., (1991) ''Financial Markets and Financial Crises''.

Douglas Diamond and Philip Dybvig (1983), 'Bank runs, deposit insurance, and liquidity'. ''Journal of Political Economy'' 91 (3).

Luc Laeven and Fabian Valencia (2008), 'Systemic banking crises: a new database'. International Monetary Fund Working Paper 08/224.

Bubbles and crashes

Didier Sornette (2003), ''Why Stock Markets Crash'', Princeton University Press.

Robert J. Shiller (1999, 2006), ''Irrational Exuberance''.

Markus Brunnermeier (2008), 'Bubbles', ''New Palgrave Dictionary of Economics'', 2nd ed.

Markus K. Brunnermeier (2001), ''Asset Pricing under Asymmetric Information: Bubbles, Crashes, Technical Analysis, and Herding'', Oxford University Press. ISBN 0198296983.

International financial crises

Paul Krugman (1995), ''Currencies and Crises''.

Craig Burnside, Martin Eichenbaum, and Sergio Rebelo (2008), 'Currency crisis models', ''New Palgrave Dictionary of Economics'', 2nd ed.

Maurice Obstfeld (1996), 'Models of currency crises with self-fulfilling features'. ''European Economic Review'' 40.

Stephen Morris and Hyun Song Shin (1998), 'Unique equilibrium in a model of self-fulfilling currency attacks'. ''American Economic Review'' 88 (3).

Barry Eichengreen (2004), ''Capital Flows and Crises''.

Charles Goodhart and P. Delargy (1998), 'Financial crises: plus ça change, plus c'est la même chose'. ''International Finance'' 1 (2), pp. 261–87.

Jean Tirole (2002), ''Financial Crises, Liquidity, and the International Monetary System''.

Guillermo Calvo (2005), ''Emerging Capital Markets in Turmoil: Bad Luck or Bad Policy?''

Barry Eichengreen (2002), ''Financial Crises: And What to Do about Them''.

Charles Calomiris (1998), 'Blueprints for a new global financial architecture'.

The Great Depression and earlier banking crises

Milton Friedman and Anna Schwartz (1971), ''A Monetary History of the United States''.

Ben S. Bernanke (2000), ''Essays on the Great Depression''.

Robert F. Bruner (2007), ''The Panic of 1907. Lessons Learned from the Market's Perfect Storm''.

Recent international financial crises

Barry Eichengreen and Peter Lindert, eds., (1992), ''The International Debt Crisis in Historical Perspective''.

Lessons from the Asian financial crisis / edited by Richard Carney. New York, NY : Routledge, 2009. ISBN 9780415481908 (hardback) ISBN 0415481902 (hardback) ISBN 9780203884775 (ebook) ISBN 0203884779 (ebook)

Robertson, Justin, 1972– US-Asia economic relations : a political economy of crisis and the rise of new business actors / Justin Robertson. Abingdon, Oxon ; New York, NY : Routledge, 2008. ISBN 9780415469517 (hbk.) ISBN 9780203890523 (ebook)

2007–2010 financial crisis

Fengbo Zhang (2008): 1. Perspective on the United States Sub-prime Mortgage Crisis , 2. Accurately Forecasting Trends of the Financial Crisis , 3. Stop Arguing about Socialism versus Capitalism .

Robert J. Shiller (2008), ''The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do About It''. ISBN 0691139296.

JC Coffee, ‘What went wrong? An initial inquiry into the causes of the 2008 financial crisis’ (2009) 9(1) Journal of Corporate Law Studies 1

Fratianni M., Marchionne F. (2009), ''The Role of Banks in the Subprime Financial Crisis'' available on SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1383473

Markus Brunnermeier (2009), 'Deciphering the liquidity and credit crunch 2007–2008'. ''Journal of Economic Perspectives'' 23 (1), pp. 77–100.

Paul Krugman (2008), ''The Return of Depression Economics and the Crisis of 2008''. ISBN 0393071014.

"The myths about the economic crisis, the reformist left and economic democracy" by Takis Fotopoulos, The International Journal of Inclusive Democracy, vol 4, no 4, Oct. 2008.

Pezzuto, Ivo (2008). ''Miraculous Financial Engineering or Toxic Finance? The Genesis of the U.S. Subprime Mortgage Loans Crisis and its Consequences on the Global Financial Markets and Real Economy''. In this working paper dated October 7, 2008 Prof. Pezzuto has predicted the EU peripheral debt crisis. ISSN 1662-761X. available on SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1332784

Nitasha Kaul (2009), "The economics of turning people into things". ''Open Democracy'' 20 April, Available online http://www.opendemocracy.net/article/the-economics-of-turning-people-into-things

Funnell, Warwick N. In government we trust : market failure and the delusions of privatisation / Warwick Funnell, Robert Jupe and Jane Andrew. Sydney : University of New South Wales Press, 2009. ISBN 9780868409665 (pbk.)

Read, Colin, 1959– Global financial meltdown : how we can avoid the next economic crisis / Colin Read. New York : Palgrave Macmillan, c2009. ISBN 9780230222182

The American housing crisis / Susan Hunnicutt, book editor. Farmington Hills, Michigan : Greenhaven Press, c2009. ISBN 9780737743104 (hbk.) ISBN 9780737743098 (pbk.)

United States. Congress. House. Committee on the Judiciary. Subcommittee on Commercial and Administrative Law. Working families in financial crisis : medical debt and bankruptcy : hearing before the Subcommittee on Commercial and Administrative Law of the Committee on the Judiciary, House of Representatives, One Hundred Tenth Congress, first session, July 17, 2007. Washington : U.S. G.P.O. : For sale by the Supt. of Docs., U.S. G.P.O., 2008. 277 p. : ISBN 9780160813764 ISBN 016081376X http://purl.access.gpo.gov/GPO/LPS99198

Davis Polk Financial Crisis Manual

Kolb, Robert (2010). “Lessons from the Financial Crisis: Causes, Consequences, and Our Economic Future” (Robert W. Kolb Series), Publisher: Wiley ISBN 978-0470561775

Dwyer, Gerald P. and Paula Tkac. 2009. "The Financial Crisis of 2008 in Fixed-income Markets" Journal of International Money and Finance 28 (December 2009), 1293–1316, available in working paper version at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1464891.

Paolo Tasca and Stefano Battiston, 2011. "Diversification and Financial Stability" CCSS 11-001 (30 April 2011), available in working paper version at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1878596.

Notes

External links

NYU Stern on Finance – Blog explaining the Financial Crisis (follow link to research blog run by Stern faculty members which deals with financial economics)

Crisis Talk - World Bank blog offering information on the unfolding crisis

Financial Crises: Lessons from History. BBC.

Rescuing our Jobs and Savings: What G7/8 Leaders Can Do – policy proposals from leading economists, sponsored by Centre for Economic Policy Research at VOXEU.org.

Dossier on 2008 financial crisis by Radio France International's English-language service

OECD response to the economic crisis. OECD.

Academic paper about the effect of the financial crisis on the venture capital industry .

The Global Financial Crisis, Developing Countries and Policy Responses Institute of Development Studies (IDS) In Focus Policy Briefing 7.1 March 2009

Davis Polk Financial Crisis Manual

Category:Crisis Category:Economic problems

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Order	108th Mayor of New York City
Term start	January 1, 2002
Predecessor	Rudy Giuliani
Successor	Incumbent
Birth name	Michael Rubens Bloomberg
Birth date	February 14, 1942
Birth place	Boston, Massachusetts, U.S.
Occupation	Businessman, politician, philanthropist
Party	Democratic Party (until 2001)Republican Party (2001–2007)Independent (2007–present)
Partner	Diana Taylor
Residence	Upper East Side, Manhattan, New York City, New York, U.S.
Alma mater
Religion	Reform Judaism
Blank1	Net worth
Data1	US$22 billion (2012)
Signature	Michael Bloomberg Signature.svg
Website	}}

Michael Rubens Bloomberg (born February 14, 1942) is the current Mayor of New York City. With a net worth of $19.5 billion in 2011, he is also the 12th-richest person in the United States. He is the founder and 88% owner of Bloomberg L.P., a financial news and information services media company.

A Democrat before seeking elective office, Bloomberg switched his registration in 2001 and ran for mayor as a Republican, winning the election that year and a second term in 2005. Bloomberg left the Republican Party over policy and philosophical disagreements with national party leadership in 2007 and ran for his third term in 2009 as an independent candidate on the Republican ballot line. He was frequently mentioned as a possible independent candidate for the 2008 presidential election, which fueled further speculation when he left the Republican Party. There was also speculation that he would run as a vice-presidential candidate. Bloomberg did not, however, seek the presidency nor was he selected as a running mate by any of the presidential candidates.

In the fall of 2008, Bloomberg successfully campaigned for an amendment to New York City's term-limits law, in order to allow him to run for a third term in 2009. Bloomberg won the election on November 3, 2009.

Early life

He was born at St. Elizabeth's Hospital in the Brighton neighborhood of Boston on February 14, 1942. His family was Jewish. His father, William Henry Bloomberg (1906–1963), was a real estate agent, and the son of Alexander "Elick" Bloomberg, an immigrant. His mother, Charlotte Rubens Bloomberg, was born on January 2, 1909, in New Jersey, the daughter of a Russian-born immigrant and a New Jersey–born mother. She died, aged 102, on June 19, 2011.

The family lived in Allston, Massachusetts, until Michael Bloomberg was two years old; they then moved to Brookline, Massachusetts, for the next two years, finally settling in Medford, a Boston suburb, where he lived until after he graduated from college. Bloomberg is also an Eagle Scout..

Bloomberg attended Johns Hopkins University, where he joined Phi Kappa Psi, worked as a parking lot attendant to pay his tuition, and graduated in 1964 with a Bachelor of Science in electrical engineering. Later he received his Master of Business Administration from Harvard Business School.

Business career

In 1973, Bloomberg became a general partner at Salomon Brothers, a bulge-bracket, Wall Street investment bank, where he headed equity trading, and later, systems development. In 1981, Salomon Brothers was bought, and Bloomberg was fired from the investment bank and given a $10 million severance package. Using this money, Bloomberg went on to set up a company named Innovative Market Systems. His business plan was based on the realization that Wall Street (and the financial community generally) was willing to pay for high quality business information delivered as quickly as possible and in as many usable forms as technically possible (such as graphs of highly specific trends).

In 1982, Merrill Lynch became the new company's first customer, installing 22 of the company's Market Master terminals and investing $30 million in the company. The company was renamed Bloomberg L.P. in 1986. By 1987, it had installed 5,000 terminals. Within a few years, ancillary products including Bloomberg Tradebook (a trading platform), the Bloomberg Messaging Service, and the Bloomberg newswire were launched. As of 2009, the company had more than 250,000 terminals worldwide. His company also has a radio network which currently has its flagship station as 1130 WBBR-AM in New York City. He left the position of CEO to pursue a political career as the mayor of New York. Bloomberg was replaced as CEO by Lex Fenwick. The company is now led by president Daniel Doctoroff, a former deputy mayor under Bloomberg.

As the mayor of New York, Bloomberg declines to receive a city salary, accepting remuneration of $1.00 annually for his services. He maintains a public listing in the New York City phone directory, residing not in Gracie Mansion – the official mayor's mansion – but instead at his own home on the Upper East Side of Manhattan, at 17 East 79th Street between Madison and Fifth Avenues. He owns additional homes in London, Bermuda and Vail.

Bloomberg says that he frequently rides the New York City Subway, particularly in the commute from his 79th Street home to his office at City Hall. An August 2007 story in ''The New York Times'' asserted that he was often seen chauffeured by two New York Police Department-owned SUVs to an express train station to avoid having to change from the local to the express trains on the Lexington Avenue line.

Bloomberg wrote an autobiography, with help from a ghost writer, called ''Bloomberg by Bloomberg'' (1997, ISBN 0-471-15545-4).

Wealth

In March 2009, Forbes reported Bloomberg's wealth at $16 billion, a gain of $4.5 billion over the previous year, enjoying the world's biggest increase in wealth in 2009. At that time, there were only four fortunes in the U.S. that were larger (although the Wal-Mart family fortune is split among four people). He moved from 142nd to 17th in the ''Forbes'' list of the world's billionaires in only two years (March 2007 – March 2009). In March 2011, his total wealth had increased to $19.5 billion, ranking 12th in the Forbes 400 and 30th in the world.

Philanthropy

Bloomberg's personal net worth, in addition to aiding his political career, has allowed him to engage in substantial philanthropic endeavors, including the donation of over $300 million to Johns Hopkins University, where he served as the chairman of the board from 1996 to 2002.

According to the ''Chronicle of Philanthropy'', Bloomberg, through his Bloomberg Family Foundation, donated and/or pledged $138 million in 2004, $144 million in 2005, $165 million in 2006, and $205 million in 2007, making him the seventh-largest individual contributor to philanthropy in the U.S. for 2007. 2006 recipients include the Campaign for Tobacco-Free Kids; Centers for Disease Control and Prevention; Johns Hopkins Bloomberg School of Public Health; World Lung Foundation and the World Health Organization. In 2008, Bloomberg's website announced a combined donation of $500 million with Bill Gates to help governments in developing countries with tobacco control.

According to ''The New York Times'', Bloomberg has been an “anonymous donor” to the Carnegie Corporation each year for the last several years, with gifts ranging from $5 to $20 million. The Carnegie Corporation has distributed this contribution to hundreds of New York City organizations ranging from the Dance Theatre of Harlem to Gilda's Club, a non-profit organization that provides support to people and families living with cancer.

In 1996, Bloomberg endowed the William Henry Bloomberg Professorship at Harvard with a $3 million gift in honor of his father, who died in 1963, saying, "throughout his life, he recognized the importance of reaching out to the nonprofit sector to help better the welfare of the entire community." Bloomberg also endowed his hometown synagogue, Temple Shalom, which was renamed for his parents as the William and Charlotte Bloomberg Jewish Community Center of Medford.

Bloomberg reports giving $254 million in 2009 to almost 1,400 nonprofit organizations, saying, "I am a big believer in giving it all away and have always said that the best financial planning ends with bouncing the check to the undertaker."

On July 21, 2011, Bloomberg announced that he would donate $50 million to Sierra Club's “Beyond Coal” campaign, the grassroots organization’s efforts to close older coal plants and prevent new ones from being built. The gift, spread out over four years, will come from Bloomberg Philanthropies.

Awards and honors

At the 2007 commencement exercises for Tufts University, Bloomberg delivered the commencement address. He was awarded an honorary degree in Public Service from the university. Likewise, Bloomberg delivered the 2007 commencement address at Bard College, where he was also awarded an honorary degree of Doctor of Humane Letters. In February 2003, he received the "Award for Distinguished Leadership in Global Capital Markets" from the Yale School of Management. Bloomberg was named the 39th most influential person in the world in the 2007 Time 100. In September 2007, ''Vanity Fair'' ranked him #9 in its "Vanity Fair 100: The 2007 New Establishment."

In May 2008, Bloomberg was awarded an honorary doctorate of laws from the University of Pennsylvania, where he delivered the commencement speech to the class of 2008. Bloomberg also delivered the commencement address to the class of 2008 at Barnard College, located in New York City, after receiving the Barnard Medal of Distinction, the College's highest honor.

It was announced on January 14, 2011, that Bloomberg had been selected as the speaker for Princeton University's 2011 baccalaureate service.

Bloomberg was also awarded a tribute award at the 2007 Gotham Awards, a New York-based celebrator of independent film. On November 19, 2008, Bloomberg received The Hundred Year Association of New York's Gold Medal "in recognition of outstanding contributions to the City of New York." Additionally, he was awarded an honorary doctorate at Fordham University's 2009 commencement ceremonies.

In 2009, Bloomberg received a Healthy Communities Leadership Award from Leadership for Healthy Communities – a Robert Wood Johnson Foundation national program – for his policies and programs that increase access to healthful foods and physical activity options in the city. For instance, to increase access to grocery stores in underserved areas, the Bloomberg administration developed a program called FRESH that offers zoning and financial incentives to developers, grocery store operators and land owners. His administration also created a Healthy Bodega initiative, which provides healthful food samples and promotional support to grocers in lower-income areas to encourage them to carry one-percent milk and fruits and vegetables. Under Bloomberg's leadership, the city also: passed a Green Carts bill, which supports mobile produce vendors in lower-income areas; expanded farmers' markets using the city's Health Bucks program which provides coupons to eligible individuals to buy produce at farmers' markets in lower-income areas; and committed $111 million in capital funding for playground improvements. New York also was one of the first cities in the nation to help patrons make more informed decisions about their food choices by requiring fast-food and chain restaurants to label their menus with calorie information.

Harassment controversies

Bloomberg has previously been accused of sexually harassing women under his employment, which he has denied. In 1997, a former Bloomberg L.P. employee who became pregnant while employed filed a lawsuit accusing Bloomberg of saying, "Kill it!" and "Great, No. 16," which may have been a reference to the number of pregnant women in the company. In December 2008, ''Conde Nast Portfolio'' published a story – "Mayor Bloomberg's Delicate Condition" – which reported that in September 2007 the Equal Employment Opportunity Commission filed a class-action lawsuit against Bloomberg's company on behalf of three women who worked on the business side, plus a group of women who worked at Bloomberg's company between 2002 and the present. The article said the plaintiffs "now total 72, out of about 500 women who took maternity leave during that time, a high percentage, according to the agency".

Elections

2001 election

In 2001, the incumbent mayor of New York, Rudy Giuliani, was ineligible for re-election, as the city limited the mayoralty to two consecutive terms. Several well-known New York City politicians aspired to succeed him. Bloomberg, a lifelong member of the Democratic Party, decided to run for mayor as a member of the Republican Party ticket.

Voting in the primary began on the morning of September 11, 2001. The primary was postponed later that day. In the rescheduled primary, Bloomberg defeated Herman Badillo, a former Congressman, to become the Republican nominee. Meanwhile, the Democratic primary did not produce a first-round winner. After a runoff, the Democratic nomination went to New York City Public Advocate Mark J. Green.

In the general election, Bloomberg received Giuliani's endorsement. He also had a huge spending advantage. Although New York City's campaign finance law restricts the amount of contributions which a candidate can accept, Bloomberg chose not to use public campaign funds and therefore his campaign was not subject to these restrictions. He spent $73 million of his own money on his campaign, outspending Green by five to one. One of the major themes of his campaign was that, with the city's economy suffering from the effects of the World Trade Center attacks, it needed a mayor with business experience.

In addition to serving as the Republican nominee, Bloomberg had the ballot line of the controversial Independence Party, in which "Social Therapy" leaders Fred Newman and Lenora Fulani exert strong influence. Some say that endorsement was important, as Bloomberg's votes on that line exceeded his margin of victory over Green. (Under New York's fusion rules, a candidate can run on more than one party's line and combine all the votes received on all lines. Green, the Democrat, also had the ballot line of the Working Families Party. He also created an independent line called Students First whose votes were combined with those on the Independence line). Another factor was the vote in Staten Island, which has traditionally been far friendlier to Republicans than the rest of the city. Bloomberg handily beat Green in that borough, taking 75 percent of the vote there. Overall, Bloomberg won 50 percent to 48 percent.

Bloomberg's election marked the first time in New York City history that two different Republicans had been elected mayor consecutively. New York City has not been won by a Republican in a presidential election since Calvin Coolidge won in 1924. Bloomberg is considered a social liberal, who is pro-choice, in favor of legalizing same-sex marriage and an advocate for stricter gun control laws.

Despite the fact that 68 percent of New York City's registered voters are Democrats, Bloomberg decided the city should host the 2004 Republican National Convention. The Convention drew thousands of protesters, many of them local residents angry over the Iraq war and other issues. The Police Department arrested approximately 1,800 protesters, but according to ''The New York Times'', more than 90 percent of the cases were later dismissed or dropped for lack of evidence.

2005 election

Bloomberg was re-elected mayor in November 2005 by a margin of 20 percent, the widest margin ever for a Republican mayor of New York.

Bloomberg spent over $1 million on his campaign by late October 2005 and was projected to exceed the record of $74 million he spent on the previous election. In late 2004 or early 2005, Bloomberg gave the Independence Party of New York $250,000 to fund a phone bank seeking to recruit volunteers for his re-election campaign.

Former Bronx Borough President Fernando Ferrer won the Democratic nomination to oppose Bloomberg in the general election. Thomas Ognibene sought to run against Bloomberg in the Republican Party's primary election. Bloomberg's campaign successfully challenged enough of the signatures Ognibene had submitted to the Board of Elections to prevent Ognibene from appearing on ballots for the Republican primary. Instead, Ognibene ran only on the Conservative Party ticket. Ognibene accused Bloomberg of betraying Republican Party ideals, a feeling echoed by others.

Bloomberg opposed the confirmation of John Roberts as Chief Justice of the United States. Though a Republican at the time, Bloomberg is a staunch supporter of abortion rights and did not believe that Roberts was committed to maintaining Roe v. Wade.

In addition to receiving Republican support, Bloomberg obtained the endorsements of several prominent Democrats: former Democratic Mayor Ed Koch; former Democratic governor Hugh Carey; former Democratic City Council Speaker Peter Vallone, and his son, Councilman Peter Vallone, Jr.; former Democratic Congressman Floyd Flake (who had previously endorsed Bloomberg in 2001), and Brooklyn Borough President Marty Markowitz.

2009 election

On October 2, 2008, Bloomberg announced that he would seek to extend the city's term limits law and run for a third mayoral term in 2009, arguing that a leader of his field is needed during the Wall Street financial crisis. "Handling this financial crisis while strengthening essential services ... is a challenge I want to take on," Bloomberg told at a news conference. "So should the City Council vote to amend term limits, I plan to ask New Yorkers to look at my record of independent leadership and then decide if I have earned another term". On October 23, 2008, the City Council voted 29–22 in favor of extending the term limit to three consecutive four-year terms, thus allowing Bloomberg to run for office again. After two days of public hearings, Bloomberg signed the bill into law on November 3.

Bloomberg's opponent was Democratic and Working Families Party nominee Bill Thompson, who had been New York City Comptroller for the past eight years and before that President of the New York City Board of Education. Bloomberg defeated Thompson by a vote of 50.6 percent to 46.0 percent.

After the release of Independence Party campaign filings in January 2010, it was reported that Bloomberg had made two $600,000 contributions from his personal account to the Independence Party on October 30 and November 2, 2009. The Independence Party then paid $750,000 of that money to Republican Party political operative John Haggerty Jr.

This prompted to an investigation beginning in February 2010 by the office of New York County District Attorney Cyrus Vance, Jr. into possible improprieties. The Independence Party later questioned how Haggerty spent the money, which was to go to poll-watchers. Former New York State Senator Martin Connor contended that because the Bloomberg donations were made to an Independence Party housekeeping account rather than to an account meant for current campaigns, this was a violation of campaign finance laws. Haggerty also spent money from a separate $200,000 donation from Bloomberg on office space.

Mayoralty

thumb|Bloomberg attending the opening night of the 2011 Tribeca Film FestivalBloomberg assumed office as the 108th Mayor of New York City on January 1, 2002. He won re-election in 2005. As mayor, Bloomberg initially struggled to gain high approval levels from the public; however, he subsequently developed and maintained high approval ratings.

Bloomberg's re-election means the Republicans have won the previous four mayoral elections (although Bloomberg's decision to leave the Republican Party and be declared an independent on June 19, 2007, resulted in the Republican Party's losing the mayor's seat prior to the expiration of his second term). Bloomberg joins Rudy Giuliani and Fiorello La Guardia as re-elected Republican mayors in this mostly Democratic city. (John Lindsay was also elected mayor of New York twice while a registered Republican; however, Lindsay did not receive the Republican Party nomination during his 1969 campaign for re-election but ran successfully on the Liberal ticket and joined the Democratic Party during his second term.)

Bloomberg has said that he wants public education reform to be the legacy of his first term and addressing poverty to be the legacy of his second. Some have alleged that he made certain decisions regarding the closure of seventeen day-care centers across the city for political reasons. According to the National Assessment of Educational Performance, fourth-grade reading scores from 2002 through 2009 rose nationally by 11 points. However, on May 10, 2010, ''The New York Times'' reported:

"According to the test [NAEP], New York City eighth graders have shown no significant improvement [in math or reading] since they began taking it in 2003, mirroring the largely flat performance of American eighth graders as a whole during that period. In the city, the lack of improvement held true across ethnic groups and also among lower-income students."

The annual New York City Department of Education Budget noted that spending for education was $12.5 billion in 2002 and $21 billion in 2009.

Bloomberg has chosen to apply a statistical, results-based approach to city management, appointing city commissioners based on their expertise and granting them wide autonomy in their decision-making. Breaking with 190 years of tradition, he implemented what ''New York Times'' political reporter Adam Nagourney called a "bullpen" open office plan, similar to a Wall Street trading floor, in which dozens of aides and managerial staff are seated together in a large chamber. The design is intended to promote accountability and accessibility. Some have seen this approach to the New York education system as largely unsuccessful because of skewed numbers. Under the reformed approach, a school must do better than the previous year to receive funding. Because of this requirement, many successful schools were closed for being "unsuccessful" because of their inability to raise test scores, even though they were the top performing schools, while many unsuccessful schools received the bulk of funding for simply raising their scores slightly.

Political stands

Some of the policies Bloomberg advocates parallel those of either the Democratic or the Republican party platform. He is socially liberal, supporting abortion rights, gay marriage, gun control, and amnesty for illegal immigrants, for example. On economics, foreign, and domestic issues, Bloomberg tends to be conservative. He opposed a timeline for withdrawal from the Iraq War, and criticized those who favored one. Economically, he supports government involvement in issues such as public welfare and climate change, while being strongly in favor of free trade, pro-business, and describing himself as a fiscal conservative because he balanced the city's budget. Bloomberg has been cited for not allowing many emergency officials at the 10th anniversary of the September 11, 2001 attacks to attend the tenth anniversary observation of this day. He also is at odds with many around the United States for not allowing prayer at the ceremony marking the anniversary of the 9/11 attacks.

Social issues

Bloomberg supports abortion rights, stating: "Reproductive choice is a fundamental human right and we can never take it for granted. On this issue, you're either with us or against us." He has criticized pro-choice politicians who support pro-life candidates.

Bloomberg supports governmental funding for embryonic stem cell research, calling the Republican position on the issue "insanity". He also supports same-sex marriage with the rationale that "Government shouldn't tell you whom to marry."

Bloomberg supports the strict drug laws of New York City. He has stated that he smoked marijuana in the past, and was quoted in a 2001 interview as saying "You bet I did. I enjoyed it." This led to a reported $500,000 advertising campaign by NORML, featuring his image and the quote. Bloomberg stated in a 2002 interview that he regrets the remark and does not believe that marijuana should be decriminalized.

On November 15, 2011, some Occupy Wall Street protesters in Zucotti Park were arrested after Bloomberg ordered sanitation crews to go in and clean up the park. Protesters were told they could return after the park was clean, but without sleeping bags, tents, or tarps.

Domestic issues

On crime, Bloomberg opposes the death penalty, stating, "I'd rather lock somebody up and throw away the key and put them in hard labor, the ultimate penalty that the law will allow, but I'm opposed to the death penalty." As mayor he increased the mandatory minimum sentence for illegal possession of a loaded handgun. In regard to the change, Bloomberg commented, "Illegal guns don't belong on our streets and we're sending that message loud and clear. We're determined to see that gun dealers who break the law are held accountable, and that criminals who carry illegal loaded guns serve serious time behind bars."

Bloomberg replaced the school board set up by the state with direct mayoral control over public education. He raised the salaries of teachers by fifteen percent while the test scores of students in the city and the graduation rate rose as well. He is opposed to social promotion, i.e. the promotion of students to the next grade level for strictly social reasons, stating that students should be promoted only when they are adequately prepared for the next grade level. He favors after-school programs to help students who are behind. As mayor, Bloomberg strengthened the cell-phone ban in schools.

In dealing with global warming and New York's role in it, he has enacted a plan called ''PlaNYC: A Greener, Greater New York'' to fight global warming, protect the environment and prepare New York for the projected 1 million more people expected to be living in the city by the year 2030. Bloomberg has been involved in motivating other cities to make changes, delivering the keynote address at the C40 Large Cities Climate Summit and stating, "[W]e now know beyond a doubt that global warming is a reality. And the question we must all answer is, what are we going to do about it?" Bloomberg also talked about how he would go about fighting climate change by reducing carbon dioxide emissions, using cleaner and more efficient fuels, and encouraging public transportation. His ideas have occasionally suffered setbacks, such as the New York State Assembly's rejection of his idea for applying congestion pricing below 60th Street in Manhattan.

On issues of domestic and homeland security, Bloomberg has attacked social conservatives on immigration, calling their stance unrealistic, "We're not going to deport 12 million people, so let's stop this fiction. Let's give them permanent status." He supports a federal ID database that uses DNA and fingerprint technology to keep track of all citizens and to verify their legal status. Bloomberg has held that illegal immigrants should be offered legalization and supported the congressional efforts of John McCain and the late Ted Kennedy in their attempt at immigration reform in 2007. Regarding border security, he compared it to the tide, stating, "It's as if we expect border control agents to do what a century of communism could not: defeat the natural market forces of supply and demand... and defeat the natural human desire for freedom and opportunity. You might as well as sit in your beach chair and tell the tide not to come in. As long as America remains a nation dedicated to the proposition that 'all men are created equal, endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness', people from near and far will continue to seek entry into our country." In 2006, Bloomberg stated on his weekly WABC radio show that illegal immigration does not strain the financial resources of New York City, since many immigrants are hard working and "do not avail themselves of services until their situation is dire".

Bloomberg believes that the September 11, 2001 attacks were not intended to be solitary events. When he assumed office, he set up a Counterterrorism Bureau which works along with the NYPD intelligence division to gather information about terrorism affecting New York worldwide. He believes that funding for Homeland Security by the federal government should be distributed by risk, where cities that are considered to have the highest threat for a terrorist attack would get the most money. Bloomberg is also a supporter of the USA PATRIOT Act.

Economic issues

Bloomberg characterizes himself as a fiscal conservative for turning the city's $6 billion deficit into a $3 billion surplus; however, conservative PAC Club for Growth has criticized him because he increased property taxes and spending while doing so.

Bloomberg has expressed a distaste of taxes, stating, "Taxes are not good things, but if you want services, somebody's got to pay for them, so they're a necessary evil." As mayor, he did raise property taxes to fund budget projects; however, in January 2007 he proposed cuts in property taxes by five percent and cuts in sales taxes, including the elimination of taxes on clothing and footwear. Bloomberg pointed to the Wall Street profits and the real estate market as evidence that the city's economy is booming and could handle a tax break.

Bloomberg's self-described fiscal conservatism also led him to eliminate the existing $6-billion deficit when he assumed office. Bloomberg balanced the budget of New York City by raising property taxes and making cuts to city agencies, excluding the police and fire departments.

Bloomberg is in favor of providing tax breaks to big corporations for the good of the whole community. As mayor, Bloomberg lobbied the CEO of Goldman Sachs to establish its headquarters across from Ground Zero by promising $1.65 billion in tax breaks. Regarding this deal, Bloomberg stated, "This [New York City] is where the best want to live and work. So I told him [CEO of Goldman Sachs], 'We can help with minimizing taxes. Minimizing your rent. Improving security. But in the end, this is about people.'"

Bloomberg has had a less cordial relationship with unions as mayor. In 2002, when New York City's transit workers threatened to strike, Bloomberg responded by riding a mountain bike through the city to show how the city could deal with the transit strike by finding alternate means of transportation and not pandering to the unions. Three years later, a clash between Bloomberg and the New York City Transit Authority over wages and union benefits led to a full blown strike that lasted three days. Negotiations led to the end of the strike in December 2005, but controversy exists over Bloomberg's handling of the situation.

Bloomberg is a staunch advocate of free trade and is strongly opposed to protectionism, stating, "The things that we have to worry about is this protectionist movement that has reared its head again in this country...." He worries about the growth of China and fears the lessening gap between the United States and other countries: "The rest of the world is catching up, and, there are people that say, surpassing us. I hope they are wrong. I hope those who think we are still in good shape are right. But nevertheless, the time to address these issues is right now."

Bloomberg has placed a strong emphasis on public health and welfare, adopting many liberal policies. As the mayor he made HIV, diabetes, and hypertension all top priorities. He extended the city's smoking ban to all commercial establishments and implemented a trans fat ban in restaurants. Bloomberg has been a strong supporter of the New York City Health and Hospitals Corporation – the largest urban healthcare agency in the United States – serving over 1.3 million New Yorkers, and has touted its use of information technology and Electronic Health Records to increase efficiency and enhance patient care. He launched a program called Opportunity NYC which is the nation's first-ever conditional cash transfer pilot program designed to help New Yorkers break the cycle of poverty in the city. He instituted a $7.5 billion municipal affordable housing plan, the largest in the nation, that is supposed to provide 500,000 New Yorkers with housing.

Bloomberg has expressed concern about poverty and growing class divisions stating, "This society cannot go forward, the way we have been going forward, where the gap between the rich and the poor keeps growing."

Foreign policy

As mayor, Bloomberg made trips to Mexico, the United Kingdom, Ireland, and Israel in the first four months of 2007. In late 2007 he conducted an Asia trip that brought him to China, where he called for greater freedom of information to promote innovation. He attended the United Nations Climate Conference in Bali.

Initially, Bloomberg strongly supported the war in Iraq and the rationale for going in. He stated, "Don't forget that the war started not very many blocks from here" alluding to Ground Zero. In regard to the global War on Terrorism including Iraq he said, "It's not only to protect Americans. It's America's responsibility to protect people around the world who want to be free." During the 2004 presidential election campaign, New York City hosted the Republican National Convention at which Bloomberg endorsed President George W. Bush for President of the United States.

His enthusiasm seemed to have lessened somewhat over the course of the war. In August 2005 he said, "I think everybody has very mixed emotions about the war that was started to find weapons of mass destruction and then they were not found." Bloomberg expressed criticism of Democrats in Congress who wanted to set a timetable for withdrawal from Iraq calling them, "irresponsible".

Preservation and development issues

Bloomberg is a proponent of large-scale development. He has repeatedly come down in favor of projects such as the Atlantic Yards mega-development, the Hudson Yards redevelopment, and the Harlem rezoning proposal. This support has led to a negative response from the preservationist community. On smaller-scale issues, Bloomberg usually takes the side of development as well. He favors the demolition of Admiral's Row in order to build a supermarket parking lot. However, Bloomberg has occasionally come down on the side of preservation, most notably in vetoing landmark revocation for the Austin Nichols warehouse. This move was widely applauded by architectural historians. The City Council overruled the veto shortly thereafter, however.

2008 presidential campaign speculation

On February 27, 2008, Bloomberg announced that he would not run for president in 2008, and that he would endorse a candidate who takes an independent and non-partisan approach. He had also stated unequivocally, live on the ''Dick Clark's New Year's Rockin' Eve'' TV show, December 31, 2007, that he was not going to run for president in 2008. Despite prior public statements by Bloomberg denying plans for a presidential run, many pundits believed Bloomberg would announce a campaign at a later date. On January 7, 2008, he met at the University of Oklahoma with a bipartisan group, including (now former) Nebraska Senator Chuck Hagel and former Georgia Senator Sam Nunn, both of whom had been frequently mentioned as possible running mates – to pressure the major party candidates to promote national unity and reduce partisan gridlock. Speculation that Bloomberg would choose this forum to announce his candidacy proved to be unfounded. Other purported signs that he planned to run included:

In summer 2006, he met with Al From of the Democratic Leadership Council, a centrist group, to talk about the logistics of a possible run. After a conversation with Bloomberg, Republican Senator Chuck Hagel of Nebraska suggested that he and Bloomberg could run on a shared independent ticket for the presidency.

On ''This Week'' on June 10, 2007, anchor George Stephanopoulos included panelist Jay Carney, who mentioned a conversation between Bloomberg and top staffers where he heard Bloomberg ask approximately how much a presidential campaign would cost. Carney said that one staffer replied, "Around $500 million." According to a ''Washington Post'' article, a $500 million budget would allow Bloomberg to circumvent many of the common obstacles faced by third party candidates seeking the White House. On June 19, 2007, Bloomberg left the Republican Party, filing as an independent after a speech criticizing the current political climate in Washington. On August 9, 2007, in an interview with former CBS News anchor Dan Rather that aired on August 21, Bloomberg categorically stated that he was not running for President, that he would not be running, and that there were no circumstances in which he would, saying, "If somebody asks me where I stand, I tell them. And that's not a way to get elected, generally. Nobody's going to elect me president of the United States. What I'd like to do is to be able to influence the dialogue. I'm a citizen."

Despite continued denials, a possible Bloomberg candidacy continues to be the subject of media attention, including a November ''Newsweek'' cover story. During a private reception in December 2007, Bloomberg conducted a version of bingo in which guests were to guess the meaning of the numbers on a printed card. When Bloomberg asked the significance of 271, one guest answered correctly: the number of electoral votes received by George W. Bush in 2000. In January 2008, CNN reported that a source close to Bloomberg said that the mayor had launched a research effort to assess his chances of winning a potential presidential bid. According to the report, the unidentified source also stated that Bloomberg had set early March as a timetable for making a decision as to whether or not to run. On January 16, 2008, it was reported that Bloomberg's business interests were placed in "a sort of blind trust" because of his possible run for the presidency. His interests were put under the management of Quadrangle Group, co-founded by reported Bloomberg friend Steven Rattner, though Bloomberg would ''"continue to have control of and access to certain investment decisions"''.

On January 18, 2008, the Associated Press reported that Bloomberg had a meeting in Austin, Texas, with Clay Mulford, a ballot-access expert and campaign manager for Ross Perot's third party presidential campaigns. Bloomberg denied that the meeting concerned a possible presidential campaign by him, stating "I'm not a candidate — it couldn't be clearer. Which of the words do you not understand?" On February 28, 2008, Bloomberg stated "I am not – and will not be – a candidate for president." He added that he is "hopeful that the current campaigns can rise to the challenge by offering truly independent leadership. The most productive role that I can serve is to push them forward, by using the means at my disposal to promote a real and honest debate.

At the same time that the presidential run was being considered, there was also some speculation that Bloomberg could be a candidate for the vice presidency in 2008. In a blog posting of June 21, 2007, The Politico's Ben Smith asked the question of whether a vice-presidential candidate can self-finance an entire presidential ticket. Many believed that Bloomberg would in fact be legally permitted to self-finance a campaign as the vice-presidential candidate.

Adding more fuel to the speculation that Bloomberg might consider a VP slot were a series of meetings he had in mid-August 2007 with former Georgia Senator Sam Nunn and later with Barack Obama on November 30, 2007. A May 17, 2008, breakfast meeting with John McCain led to speculation that Bloomberg might be on McCain's short list of possible VP candidates.

Rumored gubernatorial campaign

On November 6, 2007, the ''New York Post'' detailed efforts by New York Republicans to recruit Bloomberg to oppose then-incumbent Governor Eliot Spitzer in the 2010 election. Early polls indicated Bloomberg would defeat Spitzer in a landslide. (The potential 2010 match-up became moot when Spitzer resigned on March 17, 2008.) A March 20, 2008, poll of New York State voters had the Mayor topping newly ascended Governor David Paterson and former New York City Mayor Rudy Giuliani for the 2010 gubernatorial election. Bloomberg denied plans to run for the governorship in 2010, and did not seek the nomination.

2012 presidential campaign speculation

In March 2010, Bloomberg's top political strategist Kevin Sheekey resigned from his mayoral advisory position and returned to Bloomberg LP, Bloomberg's company. It is speculated that the move will allow Sheekey to begin preliminary efforts for a Bloomberg presidential campaign in the 2012 election. An individual close to Bloomberg said, "the idea of continuing onward is not far from his [Bloomberg's] mind".

In October 2010, The Committee to Draft Michael Bloomberg – which had attempted to recruit Bloomberg to run for the presidency in 2008 – announced it was relaunching its effort to persuade Bloomberg to wage a presidential campaign in 2012. The committee members insisted that they would persist in the effort in spite of Bloomberg's repeated denials of interest in seeking the presidency.

While on the December 12, 2010, episode of ''Meet the Press'', Bloomberg ruled out a run for the Presidency in 2012, stating: "I'm not going to run for president," further adding "I'm not looking at the possibility of running, (...) no way, no how."

On July 24, 2011, in the midst of Democrats' and Republicans' inability to agree on a budget plan and thus an increase in the federal debt limit, the ''Washington Post'' published a blog posting about groups organizing third party approaches. It focused on Bloomberg as the best hope for a serious third party Presidential Candidate in 2012.

Personal life

Bloomberg married Yorkshire-born Susan Brown in 1975. Together, they had two daughters: Emma (b. ca. 1979) and Georgina (b. 1983), who were featured on ''Born Rich'', a documentary film about the children of the extremely wealthy. Bloomberg divorced Brown in 1993 and is currently living with former New York state banking superintendent Diana Taylor.

Bloomberg pilots an AW109 helicopter, and is near the top of the waiting list for an AW609 tiltrotor aircraft.

His younger sister, Marjorie Tiven, has been Commissioner of the New York City Commission for the United Nations, Consular Corps and Protocol, since February 2002.

See also

List of people from Boston

List of Harvard University people

List of Johns Hopkins University people

List of mayors of New York City

List of richest American politicians

List of philanthropists

References

;Notes

Further reading

Brash, Julian. ''Bloomberg's New York: Class and Governance in the Luxury City'' (University of Georgia Press; 2010) 344 pages. Uses anthropology and geography to examine the mayor's corporate-style governance, with particular attention to the Hudson Yards plan, which aims to transform the far West Side into a high-end district.

External links

mikebloomberg.com, Bloomberg's official website

nyc.gov/mayor, official mayoral website

Profile at ''Bloomberg Businessweek''

#23 Michael Bloomberg at ''Forbes'' list of 2010 world's billionaires

Issue positions and quotes at On The Issues

Michael Bloomberg collected news and commentary] at the New York ''Daily News''

Michael Bloomberg collected news and commentary] at ''Newsday''

Biography at the Encyclopaedia Britannica

Category:1942 births Category:Living people Category:20th-century American people Category:21st-century American people Category:American aviators Category:American billionaires Category:American company founders Category:American financial businesspeople Category:American mass media owners Category:American memoirists Category:American people of Polish-Jewish descent Category:American people of Russian-Jewish descent Category:American philanthropists Category:American Reform Jews Category:Eagle Scouts Category:Gun control advocates Category:Harvard Business School alumni Category:Independent politicians in the United States Category:Jewish American mayors Category:Johns Hopkins University alumni Category:Massachusetts Democrats Category:Mayors of New York City Category:New York Democrats Category:New York Republicans Category:News agency founders Category:Writers from Boston, Massachusetts Category:Writers from New York City

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Birthname	Henry Ross Perot
Width	220px
Birth date
Birth place	Texarkana, Texas
Party	IndependentReform
Spouse	Margot Birmingham
Children	H. Ross, Jr., Nancy, Suzanne, Carolyn, and Katherine
Occupation	Businessman
Education	Texarkana Junior CollegeUnited States Naval Academy
Networth	US$3.4 billion(2011)
Website	perotcharts.com }}

Henry Ross Perot (; born June 27, 1930) is a U.S. businessman best known for running for President of the United States in 1992 and 1996. Perot founded Electronic Data Systems (EDS) in 1962, sold the company to General Motors in 1984, and founded Perot Systems in 1988. Perot Systems was bought by Dell for $3.9 billion in 2009.

With an estimated net worth of about US$3.4 billion in 2011, he is ranked by ''Forbes'' as the 99th-richest person in the United States.

Early life

Perot was born in Texarkana, Texas, to Luly Maye Perot (née Ray) and Gabriel Ross Perot. His father was a cotton broker. He attended a private school called Patty Hill. He graduated from Texas High School in Texarkana in 1947. One of Perot's boyhood friends was Hayes McClerkin, later Speaker of the Arkansas House of Representatives and a prominent Texarkana, Arkansas, lawyer.

Perot joined the Boy Scouts of America and made Eagle Scout in 1942, after only thirteen months in the program. He is a recipient of the Distinguished Eagle Scout Award.

Perot entered the United States Naval Academy in 1949 and helped establish its honor system. By the time he graduated in 1953 he was president of his class and battalion commander. By late 1954, Perot was made a lieutenant, junior grade. In 1955, however, Perot expressed some discontent with his life in the United States Navy in a letter to his father. He quietly served the remainder of his four-year commitment and resigned his commission.. Perot married Margot Birmingham of Greensburg, Pennsylvania, in 1956.

Business

After he left the Navy in 1957, Perot became a salesman for International Business Machines. He quickly became a top employee, filling his year's sales quota in two weeks, and tried to pitch his ideas to supervisors who largely ignored him. He left IBM in 1962 to found Electronic Data Systems (EDS) in Dallas, Texas, and courted large corporations for his data processing services. Perot was refused seventy-seven times before he was given his first contract. EDS received lucrative contracts from the U.S. government in the 1960s, computerizing Medicare records. EDS went public in 1968 and the stock price rose from $16 a share to $160 within days. ''Fortune'' called Perot the "fastest, richest Texan" in a 1968 cover story. In 1984 General Motors bought controlling interest in EDS for $2.4 billion.

In 1974 Perot gained some press attention for being "the biggest individual loser ever on the New York Stock Exchange" when his EDS shares dropped $450 million in value in a single day in April 1970.

Just prior to the 1979 Iranian Revolution, the government of Iran imprisoned two EDS employees in a contract dispute. Perot organized and sponsored their rescue. The rescue team was led by retired U.S. Army Special Forces Colonel Arthur D. "Bull" Simons. When the team was unable to find a way to extract their two prisoners, they decided to wait for a mob of pro-Ayatollah revolutionaries to storm the jail and free all 10,000 inmates, many of whom were political prisoners. The two prisoners then connected with the rescue team, and the team spirited them out of Iran via a risky border crossing into Turkey. The exploit was recounted in a book, ''On Wings of Eagles'' by Ken Follett, which became a best-seller. In the 1986 miniseries, Perot was portrayed by Richard Crenna.

In 1984 Perot bought a very early copy of the Magna Carta, one of only a few to leave the United Kingdom. It was lent to the National Archives in Washington, D.C., where it was displayed alongside the Declaration of Independence and the United States Constitution. In 2007, it was sold by the Perot Foundation, in order to provide "for medical research, for improving public education and for assisting wounded soldiers and their families." The document sold for US$21.3 million on December 18, 2007 to David Rubenstein, managing director of the Carlyle Group and kept on display at the National Archives.

In 1988 he founded Perot Systems Corporation, Inc. in Plano, Texas. His son, Ross Perot, Jr., eventually succeeded him as CEO. In September 2009, Perot Systems was acquired by Dell for $3.9 billion.

Early political activities

In the same year that Perot organized the rescue mission in Iran, Texas governor Bill Clements requested his assistance developing policy to reduce illegal drug use. Perot led the Texas War on Drugs Committee that proposed five laws, all of which were passed by the legislature.

In 1983 he was called upon by Democratic Governor Mark White to help improve the quality of the state's public education, and ended up leading the effort ("Select Committee on Public Education") to reform the school system, which resulted in major legislative changes. The best known of Perot's proposals that were passed into law was the "No Pass, No Play" rule, under which it was required that students have passing grades in order to participate in any school-sponsored extracurricular activities. The intent was to prevent high school sports from being the focus of the school's funding, and to emphasize the importance of education for the students who participated in sports. Another key reform measure was a call for teacher competency testing, which was strongly opposed by the teachers unions in Texas.

Perot became heavily involved in the Vietnam War POW/MIA issue. He believed that hundreds of American servicemen were left behind in Southeast Asia at the end of the U.S. involvement in the war, and that government officials were covering up POW/MIA investigations in order to avoid revealing a drug smuggling operation used to finance a secret war in Laos. Perot engaged in unauthorized back-channel discussions with Vietnamese officials in the late 1980s, which led to fractured relations between Perot and the Reagan and George H.W. Bush administrations. In 1990, Perot reached agreement with Vietnam's Foreign Ministry to become its business agent in the event that diplomatic relations were normalized. Perot also launched private investigations of, and attacks upon, U.S. Department of Defense official Richard Armitage.

Perot stands next to a portrait of George Washington at his office in 1986.|thumb|right|200px Beginning in the late 1980s and continuing in the early 1990s, Ross Perot began speaking out about what he described as the failings of the United States government. Perot asserted that the United States "had grown arrogant and complacent after the War" [referring to World War II] and was no longer the world's greatest nation. Instead of looking into what was to come, he argued, America was "daydreaming of [its] past while the rest of the world was building its future." He said: In Florida in 1990, retired financial planner Jack Gargan funded a series of "I'm mad as hell and I'm not going to take it anymore" (a reference to a famous quotation from the 1976 political and mass media satire movie, ''Network'') newspaper advertisements denouncing the U.S. Congress for voting for legislative pay raises at a time when average wages nationwide were not increasing. Gargan later founded "Throw the Hypocritical Rascals Out" (THRO), which Ross Perot supported.

Maya Lin, architect of the Vietnam Veterans Memorial received harassment from Perot after her race was revealed: he was known to have called her an "egg roll" after it was revealed that she was Asian.

Perot did not support President George H. W. Bush and vigorously opposed the United States involvement in the 1990-1991 Persian Gulf War. He unsuccessfully urged Senators to vote against the war resolution, and began to consider his own presidential run.

1992 presidential candidacy

On February 20, 1992, he appeared on CNN's ''Larry King Live'' and announced his intention to run as an independent if his supporters could get his name on the ballot in all fifty states. With such declared policies as balancing the federal budget, a firm pro-choice stance on abortion, expansion of the war on drugs, ending outsourcing of jobs, support for gun control, belief in protectionism on trade, advocating the Environmental Protection Agency and enacting electronic direct democracy via "electronic town halls," he became a potential candidate and soon polled roughly even with the two major party candidates.

Perot's candidacy received increasing media attention when the competitive phase of the primary season ended for the two major parties. With the insurgent candidacies of Republican Pat Buchanan and Democrat Jerry Brown winding down, Perot was the natural beneficiary of populist resentment toward establishment politicians. On May 25, 1992 he was featured on the cover of ''Time Magazine'' with the title "Waiting for Perot," an allusion to Samuel Beckett's play ''Waiting for Godot''.

Several months before the Democratic and Republican conventions, Perot filled the vacuum of election news, as his supporters began petition drives to get him on the ballot in all fifty states. This sense of momentum was reinforced when Perot employed two savvy campaign managers in Democrat Hamilton Jordan and Republican Ed Rollins. In July, while Perot was pondering whether to run for office, his supporters established a campaign organization United We Stand America. Perot was late in making formal policy proposals, but most of what he did call for were intended to reduce the deficit. He wanted a gasoline tax increase and some cutbacks of Social Security.

By the summer Perot commanded a lead in the presidential race with thirty-nine percent of the vote. By mid-July, the ''Washington Post'' reported that Perot's campaign managers were becoming increasingly disillusioned by his unwillingness to follow their advice to be more specific on issues, and his need to be in full control of operations with such tactics as forcing volunteers to sign loyalty oaths. Perot's poll numbers began to slip to 25%, and his advisers warned that if he continued to ignore them, he would fall into single digits. Co-manager Hamilton Jordan threatened to quit, and on July 15, Ed Rollins resigned after Perot fired advertisement specialist Hal Riney, who worked with Rollins on the Reagan campaign. Rollins would later claim that a member of the campaign accused him of being a Bush plant with ties to the CIA. Amidst the chaos, Perot's support fell to 20%. The next day, Perot announced on ''Larry King Live'' that he would not seek the presidency. He explained that he did not want the House of Representatives to decide the election if the result caused the electoral college to be split. Perot eventually stated the reason was that he received threats that digitally altered photographs would be released by the Bush campaign to sabotage his daughter's wedding. Regardless of the reasons for withdrawing, his reputation was badly damaged. Many of his supporters felt betrayed and public opinion polls would subsequently show a large negative view of Perot that was absent prior to his decision to end the campaign.

In September he qualified for all fifty state ballots. On October 1, he announced his intention to reenter the presidential race. He said that Republican operatives had wanted to reveal compromising photographs of his daughter, which would disrupt her wedding, and he wanted to spare her from embarrassment. Scott Barnes, a private investigator and security consultant who had testified to that effect, later recanted his story. He revealed in 1997 that he had deceived Perot about the existence of the photographs, and that he had created the hoax with others who were not involved with any political campaign. Barnes was a Bush supporter, and believed that if it were revealed that Republicans were involved in dirty tricks, it would harm Bush's candidacy.

He campaigned in 16 states and spent an estimated $65.4 million of his own money. Perot employed the innovative strategy of purchasing half-hour blocks of time on major networks for infomercial-type campaign advertisements; this advertising garnered more viewership than many sitcoms, with one Friday night program in October attracting 10.5 million viewers.

Perot's running mate was retired Vice Admiral James Stockdale, a highly-decorated former Vietnam prisoner of war (POW). In December 1969 he organized and flew to North Vietnam in an attempt to deliver thirty tons of supplies to beleaguered American POWs in North Vietnam. Although North Vietnam blocked the flights, the effort was instrumental in bringing the plight of those POWs to the world's attention and their captors soon began treating them better.

At one point in June, Perot led the polls with 39% (versus 31% for Bush and 25% for Clinton). Just prior to the debates, Perot received 7-9% support in nationwide polls. It is likely that the debates played a significant role in his ultimate receipt of 19% of the popular vote. Although his answers during the debates were often general, many Democrats and Republicans conceded that Perot won at least the first debate. In the debate he remarked: "Keep in mind our Constitution predates the Industrial Revolution. Our founders did not know about electricity, the train, telephones, radio, television, automobiles, airplanes, rockets, nuclear weapons, satellites, or space exploration. There's a lot they didn't know about. It would be interesting to see what kind of document they'd draft today. Just keeping it frozen in time won't hack it."

Perot denounced Congress for its inaction in his speech at the National Press Club in Washington, D.C., on March 18, 1992. Perot said:

In the 1992 election, he received 18.9% of the popular vote, approximately 19,741,065 votes (but no electoral college votes), making him the most successful third-party presidential candidate in terms of the popular vote since Theodore Roosevelt in the 1912 election. Unlike Perot, however, some other third party candidates since Roosevelt have won electoral college votes. (Strom Thurmond had 39 in 1948, George Wallace had 46 in 1968 and John Hospers won one in 1972). Compared with Thurmond and Wallace, who polled very strongly in a small number of states, Perot's vote was more evenly spread across the country. Perot managed to finish second in two states: In Maine, Perot received 30.44% of the vote to Bush's 30.39% (Clinton won Maine with 38.77%); in Utah, Perot received 27.34% of the vote to Clinton's 24.65% (Bush won Utah with 43.36%). Although Perot won no state, he received the most votes in some counties, including Trinity County, California.

A detailed analysis of voting demographics revealed that Perot's support drew heavily from across the political spectrum, with 20% of his votes coming from self-described liberals, 27% from self-described conservatives, and 53% coming from self-described moderates. Economically, however, the majority of Perot voters (57%) were middle class, earning between $15,000 and $49,000 annually, with the bulk of the remainder drawing from the upper middle class (29% earning more than $50,000 annually). Exit polls also showed that Ross Perot drew 38% of his vote from Bush, and 38% of his vote from Clinton, while the rest of his voters would have stayed home had he not been on the ballot.

Based on his performance in the popular vote in 1992, Perot was entitled to receive federal election funding for 1996. Perot remained in the public eye after the election and championed opposition to the North American Free Trade Agreement (NAFTA), urging voters to listen for the "giant sucking sound" of American jobs heading south to Mexico should NAFTA be ratified.

Reform Party and 1996 presidential run

Perot tried to keep his movement alive through the mid-1990s, continuing to speak about the increasing national debt. He was a prominent campaigner against the North American Free Trade Agreement, and even debated Al Gore on the issue on ''Larry King Live''. Perot's behavior during the debate was a source of mirth thereafter, including his repeated pleas to "let me finish" in his southern drawl. The debate was seen by many as effectively ending Perot’s political career. Support for NAFTA went from 34% to 57%.

In 1995, he founded the Reform Party and won their nomination for the 1996 election. His running mate was Pat Choate. Because of the ballot access laws, he had to run as an Independent on many state ballots. Perot received eight percent of the popular vote in 1996, much less than in the 1992 race but still an unusually successful third-party showing by U.S. standards. He spent much less of his own money in this race than he had four years before, and also allowed other people to contribute to his campaign, unlike his prior race. One common explanation for the decline was Perot's exclusion from the presidential debates, based on the preferences of the Democratic and Republican party candidates (as described by George Farah in ''Open Debates'').

Later activities

Later in the 1990s, Perot's detractors accused him of not allowing the Reform Party to develop into a genuine national political party, but rather using it as a vehicle to promote himself. They cited as evidence the control of party offices by operatives from his presidential campaigns. Perot did not give an endorsement during Jesse Ventura's run for governor of Minnesota in the 1998 election, and this became suspicious to detractors when he made fun of Ventura at a conference after Ventura had a falling out with the press. The party leadership grew in tighter opposition to groups supporting Ventura and Jack Gargan. Evidence of this was demonstrated when Gargan was officially removed as Reform Party Chairman by the Reform Party National Committee.

In the 2000 presidential election, Perot refused to become openly involved with the internal Reform Party dispute between supporters of Pat Buchanan and of John Hagelin. Perot was reportedly unhappy with what he saw as the disintegration of the party, as well as his own portrayal in the press; thus he chose to remain quiet. He appeared on ''Larry King Live'' four days before the election and endorsed George W. Bush for president. Despite his earlier opposition to NAFTA, Perot remained largely silent about expanded use of guest worker visas in the United States, with Buchanan supporters attributing this silence to his corporate reliance on foreign workers. Some state parties have affiliated with the new (Buchananite) America First Party; others gave Ralph Nader their ballot lines in the 2004 presidential election.

Since then, Perot has been largely silent on political issues, refusing to answer most questions from the press. When interviewed, he usually remains on the subject of his business career and refuses to answer specific questions on politics, candidates, or his past activities.

The one exception to this came in 2005, when he was asked to testify before the Texas Legislature in support of proposals to extend technology to students, including making laptops available to them; additionally, changing the process of buying textbooks, by making electronic books (ebooks) available and by allowing schools to buy books at the local level instead of going through the state. In an April 2005 interview, Perot expressed concern about the state of progress on issues that he had raised in his presidential runs.

In January 2008, Perot publicly came out against Republican candidate John McCain and endorsed Mitt Romney for President. He also announced that he would soon be launching a new website with updated economic graphs and charts. In June 2008, the blog launched, focusing on entitlements (Medicare, Medicaid, Social Security), the U.S. national debt and related issues.

Family

Perot is married to Margot Birmingham; they have five children (Ross Jr., Nancy, Suzanne, Carolyn, and Katherine). As of 2007, the Perots have 15 grandchildren.

Honors

On April 22, 2009, Ross Perot was made a Honorary Green Beret at the John F. Kennedy Special Warfare Center in Fayetteville, North Carolina, that also honored the OSS, Alamo Scouts and the First Special Service Force, elite World War Two units that were inducted into the "1st Special Forces" Regiment.

Mr. Perot was inducted into the Junior Achievement U.S. Business Hall of Fame in 1988.

On September 18, 2009, the Texarkana Independent School District named him (1947 graduate of Texas High School) as a 2009 Distinguished Alumnus.

In May 2009, he was appointed an honorary chairman of The OSS Society.

On October 15, 2009, the United States Military Academy at West Point awarded him with the distinguished Sylvanus Thayer Award. In honor of his 80th birthday, the bridge connecting Walton and University drives in Texarkana, Texas, was named the H. Ross Perot Bridge. On Oct. 2, 2010, Perot was given the William J. Donovan Award from the OSS Society at the Mandarin Oriental Hotel in Washington, D.C. He is the 26th receipent of the award.

Electoral history

United States presidential election, 1992

Bill Clinton/Al Gore (D) - 44,909,806 (43.0%) and 370 electoral votes (32 states and D.C. carried)

George H. W. Bush/Dan Quayle (R) (Inc.) - 39,104,550 (37.4%) and 168 electoral votes (18 states carried)

Ross Perot/James Stockdale (I) - 19,743,821 (18.9%) and 0 electoral votes

Andre Marrou/Nancy Lord (L) - 290,087 (0.3%) and 0 electoral votes

United States presidential election, 1996

Bill Clinton/Al Gore (D) (Inc.) - 47,400,125 (49.2%) and 379 electoral votes (31 states and D.C. carried)

Bob Dole/Jack Kemp (R) - 39,198,755 (40.7%) and 159 electoral votes (19 states carried)

Ross Perot/Pat Choate (Ref.) - 8,085,402 (8.4%) and 0 electoral votes

References

Further reading

Thomas M. Defrank et al. ''Quest for the Presidency, 1992'' Texas A&M; University Press. 1994.

Mason, Todd (1990). ''Perot''. Business One Irwin. ISBN 1-55623-236-5 An unauthorized biography by a longtime Perot watcher.

Doron P. Levin, ''Irreconcilable Differences: Ross Perot Versus General Motors'' (New York: Plume, 1990)

Thomas Moore, ''The GM System is Like a Blanket of Fog'', ''Fortune'', February 15, 1988

Posner, Gerald ''Citizen Perot: His Life and Times'' Random House. New York 1996

Clinton, Bill (2005). ''My Life''. Vintage. ISBN 1-4000-3003-X.

Forbes 400

Rapoport, Ronald and Walter Stone. ''Three's a Crowd: The Dynamic of Third Parties, Ross Perot, and Republican Resurgence'' Ann Arbor: University of Michigan Press, 2005.

External links

Perot Charts; a blog launched June 2008 by Perot to examine different national issues with charts and graphs. Link is dead 11 Aug 2011.

''United We Stand'', H. Ross Perot; text of the book published by Perot in 1992 to mark the launch of his Presidential campaign, complete with charts. The text is hosted by the site of the organization he created that year ''United We Stand America'', as saved by ''The Internet Archive''.

Category:1930 births Category:Living people Category:People from Texarkana, Texas Category:American billionaires Category:American businesspeople Category:Distinguished Eagle Scouts Category:IBM employees Category:Recipients of the Order of Saint Maurice Category:People from Dallas, Texas Category:United States Naval Academy alumni Category:United States Navy officers Category:United States presidential candidates, 1992 Category:United States presidential candidates, 1996 Category:Vietnam War POW/MIA issues Category:Reform Party of the United States of America politicians

da:Ross Perot de:Ross Perot es:Ross Perot fa:راس پرو fr:Ross Perot id:Ross Perot it:Ross Perot he:רוס פרו hu:Ross Perot nl:Ross Perot ja:ロス・ペロー no:Henry Ross Perot pl:Ross Perot pt:Ross Perot ru:Перо, Росс fi:Ross Perot sv:Ross Perot th:รอสส์ เพโรต์ tr:Ross Perot

name	James Beeland Rogers, Jr.
birth date	October 19, 1942
birth place	Baltimore, Maryland, USA
occupation	investor, financial commentator, and author
alma mater	Balliol College, OxfordYale University
website	www.jimrogers.com
footnotes	}}

James Beeland Rogers, Jr. (born October 19, 1942) is an American investor, financial commentator, and author based in Singapore. He is chairman of Rogers Holdings and Beeland Interests, Inc. He was the co-founder of the Quantum Fund with George Soros and creator of the Rogers International Commodities Index (RICI).

Rogers is an outspoken proponent of the free market, but he does not consider himself a member of any school of thought. Rogers acknowledged, however, that his views best fit the label of Austrian School of economics.

Biography

Rogers was born in Baltimore, Maryland and raised in Demopolis, Alabama. He started in business at the age of five by selling peanuts and by picking up empty bottles that fans left behind at baseball games. He got his first job on Wall Street, at Dominick & Dominick, after graduating with a bachelor's degree from Yale University in 1964. Rogers then acquired a second BA degree in Philosophy, Politics and Economics from Balliol College, Oxford University in 1966.

In 1970, Rogers joined Arnhold and S. Bleichroder. In 1973, Rogers co-founded the Quantum Fund with George Soros. During the following 10 years, the portfolio gained 4200% while the S&P; advanced about 47%. The Quantum Fund was one of the first truly international funds.

In 1980, Rogers decided to "retire", and spent some of his time traveling on a motorcycle around the world. Since then, he has been a guest professor of finance at the Columbia University Graduate School of Business.

In 1989 and 1990, Rogers was the moderator of WCBS' ''The Dreyfus Roundtable'' and FNN's ''The Profit Motive with Jim Rogers''. From 1990 to 1992, he traveled through China again, as well as around the world, on motorcycle, over 100,000 miles (160,000 km) across six continents, which was picked up in the ''Guinness Book of World Records''. He tells of his adventures and worldwide investments in ''Investment Biker'', a bestselling investment book.

In 1998, Rogers founded the Rogers International Commodity Index. In 2007, the index and its three sub-indices were linked to exchange-traded notes under the banner ELEMENTS. The notes track the total return of the indices as an accessible way to invest in the index. Rogers is an outspoken advocate of agriculture investments and, in addition to the Rogers Commodity Index, is involved with two direct, farmland investment funds - Agrifirma, based in Brazil, and Agcapita Farmland Investment Partnership, based in Canada.

Between January 1, 1999 and January 5, 2002, Rogers did another Guinness World Record journey through 116 countries, covering 245,000 kilometers with his wife, Paige Parker, in a custom-made Mercedes. The trip began in Iceland, which was about to celebrate the 1000th anniversary of Leif Eriksson's first trip to America. On January 5, 2002, they were back in New York City and their home on Riverside Drive. His route around the world can be viewed on his website, jimrogers.com. He wrote ''Adventure Capitalist'' following this around-the-world adventure. It is currently his bestselling book.

On his return in 2002, Rogers became a regular guest on Fox News' ''Cavuto on Business'' which airs every Saturday. In 2005, Rogers wrote ''Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market''. In this book, Rogers quotes a ''Financial Analysts Journal'' academic paper co-authored by Yale School of Management professor, Geert Rouwenhorst, entitled ''Facts and Fantasies about Commodity Futures''. Rogers contends this paper shows that commodities investment is one of the best investments over time, which is a concept somewhat at odds with conventional investment thinking.

In December 2007, Rogers sold his mansion in New York City for about 16 million USD and moved to Singapore. Rogers claimed that he moved because now is a ground-breaking time for investment potential in Asian markets. Rogers's first daughter is now being tutored in Mandarin to prepare her for the future. He is quoted as saying: "If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia." In a CNBC interview with Maria Bartiromo broadcast on May 5, 2008, Rogers said that people in China are extremely motivated and driven, and he wants to be in that type of environment, so his daughters are motivated and driven. He also stated that this is how America and Europe used to be. He chose not to move to Chinese cities like Hong Kong or Shanghai due to the high levels of pollution causing potential health problems for his family; hence, he chose Singapore. He has also advocated investing in certain smaller Asian frontier markets such as Sri Lanka and Cambodia, and currently serves as an Advisor to Leopard Capital’s Leopard Sri Lanka Fund. However, he is not fully bullish on all Asian nations, as he remains skeptical of India's future - "India as we know it will not survive another 30 or 40 years". In 2008 Rogers endorsed Ron Paul for President of the United States.

Rogers has two daughters with Paige Parker. Hilton Augusta(nicknamed Happy) was born in 2003, and their second daughter Beeland Anderson in 2008. His latest book, ''A Gift To My Children'', contains lessons in life for his daughters as well as investment advice and was published in 2009.

On November 4, 2010, at Oxford University’s Balliol College, he urged students to scrap career plans for Wall Street or the City, London’s financial district, and to study agriculture and mining instead. “The power is shifting again from the financial centers to the producers of real goods. The place to be is in commodities, raw materials, natural resources."

In February 2011 Rogers announced that he has started a new index fund which focuses on "the top companies in agriculture, mining, metals and energy sectors as well as those in the alternative energy space including solar, wind and hydro." The index is called The Rogers Global Resources Equity Index and the best and most liquid companies, according to Rogers, go into the index.

Books

1995: ''Investment Biker: Around the World with Jim Rogers''. - ISBN 1-55850-529-6

2003: ''Adventure Capitalist: The Ultimate Road Trip''. - ISBN 0375509127

2004: ''Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market''. - ISBN 140006337X

2007: ''A Bull in China: Investing Profitably in the World's Greatest Market''. - ISBN 1400066166

2009: ''A Gift to My Children: A Father's Lessons For Life And Investing''. - ISBN 1400067545

Further reading

External links

The Millennium Adventure, Official Jim Rogers website

The Rogers International Commodity Index A site for information on the RICI

The Jim Rogers Blog

;Articles

"An Early Christmas for Jim Rogers". - ''BusinessWeek'' - December 8, 2004.

"Invest In Commodities – and Keep Your Shirt". - November 23, 2006.

"We Want Our Kids To Learn Chinese". - MySinchew. - July 19, 2008. - (article about Rogers' life in Singapore)

"Adventure Capitalist". - ''PODER Magazine''. - April 2010.

;Interviews

Curated Interview With Jim Rogers From Market Wizards

Jim Rogers on the British Pound, US Dollar, And China

Jim Rogers, The Adventure Capitalist

Jim Rogers and George Soros Started the Quantum Fund

rediff.com: The Money Interview/Jim Rogers, investor, globetrotter

Financial Sense Newshour's Ask The Expert: Jim Rogers:

*2003.

*May 6, 2004.

Riverside Conversations: a 3 Part TV Series with Marc Faber

SCMP video interview, September 8, 2008.

Investors Chronicle interview. - (on the decline of the US/Europe, emerging markets, commodities). - November 2008.

Bloomberg Night Talk interview. - November 24, 2008.

Jim Rogers on The Lew Rockwell Show:

*"The Crash of '08". - December 12, 2008. - (*.MP3 audio)

*"Economic Advice to My Children (and You)". - May 17, 2009. - (*.MP3 audio)

Bloomberg TV Jim Rogers Special. - December 24, 2008.

''TIME'' Q&A;: Jim Rogers:

*April 28, 2009.

*October 31, 2008.

Interview from March 2009 on Channel 4

Jim Rogers Sat 3 Interview German TV Sat 3

References

Category:Austrian School economists Category:1942 births Category:American investors Category:American money managers Category:Living people Category:Hedge fund managers Category:Financial analysts Category:Stock traders Category:Stock and commodity market managers Category:Columbia Business School faculty Category:Yale University alumni Category:Alumni of Balliol College, Oxford Category:People from Demopolis, Alabama

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