Production Crisis

One kind of crisis in a market economy that is characterized by a breakdown of demand and supply balance (proposal begins to predominate over demand), credit problems, unemployment, a decline in company investment, a decline in GNP and GDP, a decline in the standard of living of the population and so on.

The nature of the overproduction crisis

In the process economic crisis It is possible to reduce market balance. For example, production becomes much higher than demand, which inevitably leads to reproduction. At such times, the country ' s economy is experiencing a decline in growth and, further, a sharp decline in output.

Inaction may lead to massive destruction of companies and enterprises that are unable to sell the accumulated output. As a result of the interruption of production, there is a new problem: unemployment, lower wages, increased social tensions, worsening living standards.

It's all the more complicated than that. It's ruined by borrowed credit, the work of the securities market is disrupted, and the stock rate collapses. Entrepreneurs have a severe financial crisis, they are unable to cope with the accumulated debts. As a result, the percentage of non-return and complexity are already experienced by banks themselves.

Reproduction crisis mechanism

The economic downturn phase has its mechanism and is taking place in several stages:

1. Wholesale trade crisis. Optical buyers and product manufacturers are starting to have problems. Optovics are unable to pay the entire amount to the manufacturer, and banks are not on loan. The outcome is the emergence of a short-term credit crisis, the collapse of wholesale buyers and the complete collapse of short-term credit systems.

2. Credit crisis. Loan issues are getting worse. Banks stop making funds available to unreliable borrowers, interest rates are increasing. Stock exchanges are starting to fail, securities holders are fused and panicked, shares fall in the price, companies are being destroyed.

3. Lower output. People ' s consumption products are initially scarce and the production of essential goods is declining. There are huge amounts of unrealized balances that are stored in retail and wholesale stores.

caused by the following reasons:

- There is no point in increasing production since existing products have not yet been sold;
- There are no opportunities for expansion, because banks do not lend and revenues have declined to a minimum.

5. Production problems♪ Manufacturing has already declined. This should be followed by a reduction in the means of production. At this juncture, the crisis is becoming new and becoming universal.