It was when I was hearing to CNN Radio - on the Google Desktop that I
learnt there was a serious problem with the way people viewed recession
and how it is triggered.
Recession is a period of economic slump.More about recession* - at the end of this blog.
Where did it start with the US?
Yes the Subprime* crisis in the US - from my previous blog and when we end this blog
When
people started thinking of the Subprime* crisis they began to accept
that their economy was not doing as good as it had been for the past 20
to 30 years - and this perception was strongly backed up by the Fed
rate cuts - it added insult to injury and they insured that the public
did not come out of this when President George Bush - went to the
NewYork Economic Society answered few reporters in his own witty way by
saying "all is not well".
What effect does this have over the thinking of the common man in the US?
Few facts to be considered -
Why does this happen? because companies want to ensure that they remove their non-performers and cut the fat.
Companies
want to cut the fat because they know(feel) the economy is not doing
well and the only way to grow is to cut the cost - and remove employees
through Cost Cutting Measures like DELL wants to remove 8000 employees
in the next 3 years as part of their measures to save around $3 Billion.
The circle drawn evidently -
When
others around them start losing jobs - people tend to think that they
would either lose their jobs or not get the right amount of pay hikes
and as a consequence of this they tend to spend less money because they
want to save for the future (where they might need them in case
anything goes wrong).
When people spend less - there is no
buying that will fuel the market - all goods become abundant and
companies start loosing out on margins because of less volume of sales
and then this will continue to hit the job market and continue to hit
until some drastic "feel good" factor comes into the economy.
- you cannot avoid recession - recession comes and goes, there is not
much the common public can do about it but to wait for strict remedial
measures from the governement.
Human mind and thought does it alll!!!! NOTHING MORE NOTHING LESS.
learnt there was a serious problem with the way people viewed recession
and how it is triggered.
Recession is a period of economic slump.More about recession* - at the end of this blog.
Where did it start with the US?
Yes the Subprime* crisis in the US - from my previous blog and when we end this blog
When
people started thinking of the Subprime* crisis they began to accept
that their economy was not doing as good as it had been for the past 20
to 30 years - and this perception was strongly backed up by the Fed
rate cuts - it added insult to injury and they insured that the public
did not come out of this when President George Bush - went to the
NewYork Economic Society answered few reporters in his own witty way by
saying "all is not well".
What effect does this have over the thinking of the common man in the US?
Few facts to be considered -
- US lost almost 80,000 jobs in March
Why does this happen? because companies want to ensure that they remove their non-performers and cut the fat.
Companies
want to cut the fat because they know(feel) the economy is not doing
well and the only way to grow is to cut the cost - and remove employees
through Cost Cutting Measures like DELL wants to remove 8000 employees
in the next 3 years as part of their measures to save around $3 Billion.
The circle drawn evidently -
When
others around them start losing jobs - people tend to think that they
would either lose their jobs or not get the right amount of pay hikes
and as a consequence of this they tend to spend less money because they
want to save for the future (where they might need them in case
anything goes wrong).
When people spend less - there is no
buying that will fuel the market - all goods become abundant and
companies start loosing out on margins because of less volume of sales
and then this will continue to hit the job market and continue to hit
until some drastic "feel good" factor comes into the economy.
- You cannot avoid recession
- you cannot avoid recession - recession comes and goes, there is not
much the common public can do about it but to wait for strict remedial
measures from the governement.
- Recession can last more than or at least a year
Human mind and thought does it alll!!!! NOTHING MORE NOTHING LESS.
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