The present contains nothing more than the past, and what is found in the effect was already in the cause.

Effects of Recession :

Bankruptcy: is a situation in which a business' debt exceeds the fair market value of its assets. It is also a court action under which a debtor may be discharged for unpaid debts, in whole or in part, and in which creditors receive distributions of assets from the debtor's property under the supervision of the court. Chapter 11 of the Bankruptcy Law (US) provides for reorganization in which the debtor remains in possession of the business and in control of its operation, while the debtor and creditors are allowed to work together It is a state of legally declared inability or impairment of ability of an individual or organization to pay their creditors. When they fail to pay off their debt and meet their liabilities, they become the defaulters causing snow-ball disruption and damage down the line.

A credit crunch is a sudden reduction in the general availability of loans or other forms of finance, or a sudden increase in the cost of obtaining loans from banks. There are a number of reasons why banks may suddenly increase the costs of borrowing or make borrowing more difficult. It may be due to an anticipated decline in value of colleteral used by the banks when issuing loans, or even an increased perception of risk regarding solvencyof other banks within the banking system. It may be due to a change in monetary conditions or credit controls. A credit crunch is often caused by a sustained period of careless and inappropriate lending which results in losses for lending institutions and investors in debt when the loans turn sour and the full extent of bad debt becomes known. These institutions may then reduce the availability of credits , and increase the cost of accessing credit by raising interest rates.

Deflation, economics, is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below zero percent, resulting in an increase in the real value of money — a negative inflation rate.

As per classical economists, deflation is a persistent decrease in the general price level of goods and services or in other words, decreases in the money supply and credits. The two meanings are closely related, since a decrease in the money supply is likely to cause a decrease in the price level. The crunch is generally caused by a reduction in the market prices of previously "over inflated" assets and refers to the financial crisis that results from the price collapse. This can result in widespread foreclosure or bankruptcy for those investors and entepreneur who came in late to the market, as the prices of previously inflated assets generally drop sharply. In contrast, a liquidity crisis is triggered when an otherwise sound business finds itself temporarily incapable of accessing the bridge finance it needs to expand its business or smooth its cash flow payments. In this case, accessing additional credit lines and "trading through" the crisis can allow the business to navigate its way through the problem and ensure its continued solvency and viability. It is often difficult to know, in the midst of a crisis, whether distressed businesses are experiencing a crisis of solvency or a temporary liquidity crisis.

Foreclosure is the legal and professional proceeding in which a lender obtains a court ordered termination of a mortgager equitable right of redemption. Commonly, the violation of the mortgage is a default in payment of a promisory note , secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien".

Stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. Crashes are driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles. Stock market crashes are in fact social phenomena where external economic events combine crowd behaviour and psychology where selling by some market participants drives more market participants to sell.

Unemployment means a person is available for doing work does not find a work. Unemployment rises sharply during recession time due to decline in production caused by decline in sales for the want of effective demand attributable to the real purchasing power measured by the disposable money in the hands of consumers. Unemployment is the greatest dread of any man. Steep rise in unemployment during recession further slows down the economy with a multiplier effect. Some economists believe that due to sticky nature, due to minimum wage regulations or union pressures, wages do not proportionately decline with the fall in demand, resulting in unemployment. Few others believe that unemployment results from insufficient effective demand for goods and services in the economy. Alternatively, some blame unemployment on Globalisation. It is rightly said that the workers are the last to benefit from an economic boom but the first to be sacrificed in recession. It is a great paradox of capitalist economy that government, through bail-outs and stimulus packages, puts money in the hands of those who engineer crisis and not a penny is spared for those who really shape-up the economy. What a great interpretation of Darwinian Doctrine!!! Workers contribute hand-in-hand in their employers’ growth and there is hardly any vice versa Patronage System. However, it should be clearly understood that if a free society cannot help the many who are poor, it cannot save the few who are rich.

Business Closure : Recessions have the tendency to touch painful spots of businesses. Those which are no longer viable in a given condition are shut off. Market promotion agencies are more prone to negative consequences as the companies are forced to cut down their costs for advertisement, PR and other modes of promotion. Staff in the office faces retention as now the work load is divided between only the most necessary employees. Those left can also forget about the raise in salaries and also work hard. Sales of luxuries are the hardest hit category in such hard times. In the time of fast globalization, most of the developing countries are also the helpless victims of recession grown in the developed nations whom their economies largely depend upon.

Gross outcome:
As a measure to combat recession, central banks of countries force the banks to cut down their interest rates. As a result, borrowers with standard variable mortgages, people with large debts get benefits in terms of lower interest payment. Also, due to weakening currency, exporters get benefited by rising profits. Some other people who may benefit from economic slow down are companies dealing with bankruptcies and debt settlements, people making cash payments for goods at bargained prices, traders selling inferior quality goods at low price and last but not the least, economists and analysts who get to talk about recession and how to get out it. On the other hand, people loosing their employment are at the greatest disadvantage in terms of their subsistence and so also the people having large amount of Cash on hand as well as savings and retired persons in terms of their interest earnings.

For retirees, and those who plan to leave the workforce soon, fears of a prolonged economic downturn are intense, because they have less time to recover and replace those losses they are suffering now in recession. For the people who have a long career ahead, it is easier to heed advices like ‘Stay calm, think long-term’, but hard for older people

Cash is the King during recession and those having it sufficiently can plough it back to reap stupendous profits in post-recession period.

Realty sector suffer badly in terms of plummeting housing prices and the Government itself, in the form of falling tax revenues as well as burden of forced bailouts.