Recession and scaremongering

[Alistair]

Im going to make this short and sweet.

Im getting pissed off with these apocolyptic assholes on tv hyping up the recession and inducing negativity amongst consumers.

First of all lets get things straight. The economy is cyclical. Thus a sine wave:



From 0 to 1 we see a build up to a boom, in other words aggregate demand (consumption, investment and government spending) is increasing. At 1.0 where the peak/crest is that is the boom. Then as the wave returns to its mean position (1.0 to 0) we see the cool down. We then go into the negative zone (recession) and when we hit the trough at -1.0 thats the depression. This wave profile repeats itself. Thats the mechanics of the economy.

Simplification but I hope to get my message across this way. This recession is nothing new, it happened in the 1970s when Japanese and French banks gave out crazy mortgages and had stupidly illiliquid investments. The economy is a cyclical system composed of boom and boosts. The economy is slowing down and ready to enter the depression phase. This is where Keynesian policies favoured by the US and UK government strike me as suspicious. Yeah through monetary policy and fiscal policy we can try to stimulate investment and create aggregate demand. But if we did create such stimulus it's only going to be short term and superficial. Shit, the US and UK government really think they can recover all the loses made in their countries and drive themselves out of recession? Bullshit, even if interest rates were zero investment would hardly be increased. Government spending will shift aggregate demand but the effect is going to be short term and negligable relative to the total demand lost. Why? Cause its a cycle. It's a system, we have no control over it. Just like gravity acts on our mass, we have no control over this, its a law of nature.

I say accept the economy as a cyclical system, don't be fooled by talk and speculation. Ignore miracle-makers who tell you that government policy will get us out of the recession.

[Tantalus]

I agree COMPLETELY!

So much sensationalism!

It's a bloody recession! It happens every 20 years!

Sure, this one is a bit worse because of overseas debt but the boom will come back in 20 years.

[Dae]

Ignore miracle-makers who tell you that government policy will get us out of the recession.

So what you're basically saying is, the economy lives its own life independently to the government and people of a country?

[Alex]

The entire economy is based on psychology.

Prices are based on demand, demand are based on thoughts/psychology.

Shares of a company can become real high, but also lower a lot. Why? Because of what people think.
If people think it will a company will do bad, they will sell shares. But what if the company actually isn't doing bad, but people just think it does, or competition made a rumour that it is doing bad? People sell shares. The shares are worth less. Other people start believing the rumours, and so on.
Result? Goodbye company.


It's all based on psychology.

The government WILL help, you know why? They make us think they know what to do, and they make us think it actually helps. Due to that, we will stop saving up our cash and spending it like we used to. Increasing demand in products, and so on, pricing will become 'normal' again.

[Mr. Tastix]

Meh, this "recession" hasn't affected too much, some things cost me more (though it's going back to a more normal rate now) but overall, I'm not fucking dead, am I?

The things we need to survive were already too goddamn pricy, even before this so called "recession". Food and heating aren't exactly cheap where I live, and oil (if you consider it "important" for living) had prices so jacked up everyone was getting pissed (I'm still pissed, goddamn oil barons).

This recession means nothing to me, all it tells me is that the US is just as greedy today as it was 20 years ago. So yes, I actually do believe we'll keep going into "recessions" every few decades, because some bastard in the world wants more than he can get/have.

The media over-dramatize everything, btw. Not just this.

[Alistair]

Yeah we all have our own personal inflation rate. Yeah im saying the economy lives it's own independant life, even if it is part of our collective unconsciousness. I guess the government can help to a certain degree, I was feeling cynical . The media isn't helping the psychology of the average consumer at this time which is pretty bad.

[Tantalus]

How many banks have collapsed in New Zealand?

Currently the record holder is Iceland.
Next in with the UK (I believe): with two nationalised and two merged.

[Mr. Tastix]

How many banks have collapsed in New Zealand?

Currently the record holder is Iceland.
Next in with the UK (I believe): with two nationalised and two merged.

None, as far as I know. Not mine anyway, which doesn't really surprise me.

New Zealand isn't as big as other countries, we're one of the smallest countries in the world (not the smallest). I have no idea how much this "recession" affects us (besides the usual importing and exporting prices).

As for the common individual, it may affect them more than the next person. It affects me more than some people because a lot of the goods and services I pay for, I pay in United States currency ("services" being games, "goods" being shit I resale here in NZ).

That and I've got to nearly double my shipping costs - a CD of Windows XP Pro was going to cost me relatively cheap, cheaper than what it costs here ($350 NZD), but with $30 US shipping.

It was going to cost one of my cousins $900 US for a friggin electric guitar (wasn't going to buy it, but he wanted to know how much the shipping would've been).

Now to some, you can just say "Why not buy in NZ then?" and for shit like Windows XP and a guitar (or most musical instruments) it is cheaper. But some of the crap I've bought isn't found in NZ (some computer games aren't found in-store here, as well as computer parts I was looking at).

For most people, it's not a problem. For people who import and export crap off, it's a pain in the ass (not that I export stuff overseas yet). For people who pay for online subscriptions or for other services online such as game subscriptions, donations to get stuff, and contract work (I'm paying $200 for a ratings system/members area for one of my sites, paid $100 for a contact form, nearly $600 for IPB + templates) it's also annoying as well.

I could be worse off though. I'm not really complaining, I have the money, it's my choice to buy the crap I've bought. I'm not overly worried because I have/had the money for the shit I've bought (most notably, IPB, contract development work and a TF2 game server).

Like I said, I could be worse off. I'm not dead, I don't live in the slums and I'm not using dial-up on a library connection to post this (couldn't though, my library blocks this site for profanity and apparently porn lol).