Overview
An Economic disaster is the widespread disruption or collapse of a national or regional economy, causing financial panic, hoarding, famine, hyperinflation, political upheaval or revolution. Such occurrances are the product of economic forces such as the stock market or monetary policy in combination with political/natural forces, such as hurricanes or droughts.
Categories
Crisis
Crisis is a term in business cycle theory defining the steep descent from economic equilibrium into recession. Financial crises consist of both currency and banking turmoil.
Crisis of capitalism refers to a period in which the normal reproduction of an economic process over time suffers from a temporary breakdown. This crisis period encourages intensified class conflict or societal change — or the revival of a more normal accumulation process.
Collapse
An economic collapse is a breakdown of a national, regional, or territorial economy. A full or near-full economic collapse is often quickly followed by months, years, or even decades of economic depression, social chaos, and civil unrest. Usually this is eventually corrected at least in part by recovery measures implemented by the government, although some economists believe that often government intervention and over-regulation of the economy can lead to the conditions for collapse.
Deflation
Deflation (opposite of inflation) is a decrease in the general price level over a period of time. For economists especially, the term has been and is sometimes used to refer to a decrease in the size of the money supply (as a proximate cause of the decrease in the general price level). The latter is now more often referred to as a 'contraction' of the money supply. During deflation the demand for liquidity goes up, in preference to goods or interest. During deflation the purchasing power of money increases.
Deflation is considered a problem in a modern economy because of the potential of a deflationary spiral and its association with the Great Depression, although not all episodes of deflation correspond to periods of poor economic growth historically.
Hyperinflation
Hyperinflation is an extreme inflationary cycle without any tendency toward equilibrium. A vicious circle is created in which more and more inflation is produced with each iteration of the cycle. Although there is a great deal of debate about the root causes of hyperinflation, it becomes visible when there is an unchecked increase in the money supply or drastic debasement of coinage, and is often associated with wars, economic depressions, and political/social upheavals.
Market Failure
Market failure is a term used by economists to describe the condition where the allocation of goods and services by a market is inefficient. The belief that markets can fail is a common mainstream justification for government intervention in free markets – however, not all economists believe that market failures occur, or that they are compelling arguments for government intervention, due to government failure.
Notable Business Failures
2007
- Metronet
- Kwik Save
- Fopp
- Benjys
- Music Zone
2006
- Tower Records
- Farepak (European Home Retail)
- Humbrol
- Air Wales
- Golden Wonder
- Tiger Telematics
- Independence Air
2005
- MVC
- All:sports
- Granville Technology Group
- EUjet
- Red Letter Days
- MG Rover
- Jetsgo Corporation
- Allders
See Also
SmallBusiness.com Glossary
