A situation in which asset prices are seriously inflated can lead to a market crash. Notable examples are the South Sea Bubble, the dot-com bubble, and the mid-2000s housing bubble.
A capital intensive business involves significant investment in fixed assets such as plant and machinery. These companies are regarded as high-risk investments, particularly in times of economic downturns, due to the high proportion of fixed costs.
A period during which lenders are unwilling to extend credit to borrowers. The term is particularly associated with the period beginning in late 2007, when the previous era of 'easy credit' came to a sudden end in the wake of the subprime lending fiasco.
The Great Depression was a severe worldwide economic depression that took place during the 1930s, starting in the United States. The timing of the Great Depression varied across nations; in most countries, it started in 1929 and lasted until the late 1930s or early 1940s.
**Hunkering Down** is a slang term used in the context of business and economics to describe taking a defensive stance and adopting a conservative strategy, usually in anticipation of tough conditions or to weather through a downturn. Companies often hunker down by reducing expenditures, postponing expansion plans, and preserving resources to maintain stability until the business environment improves.
A downturn in economic activity, defined by many economists as at least two consecutive quarters of decline in a country's Gross Domestic Product (GDP).
A shakeout is a market phenomenon where weaker or marginally financed participants are eliminated due to changing market conditions. In financial markets, it often results in speculators being forced to sell their positions, typically at a loss.
A slump denotes a noticeable drop in economic or productive activity. While it indicates a downturn, it is generally less severe than a recession or a depression.
A comprehensive evaluation imposed by the Obama administration in 2009 on certain large banks to assess their ability to withstand a major economic downturn without needing additional capital infusions.
A mutual effort by a property owner and lender to avoid foreclosure or bankruptcy following a default. It generally involves a substantial reduction in the debt service burden during an economic downturn.
