Marc Allinson: What is a recession anyway?

Related tags Global warming

In short it is confidence.There is nothing tangible, it is not a big fire-breathing monster that can be slain and everything be put right. Simply...

In short it is confidence.

There is nothing tangible, it is not a big fire-breathing monster that can be slain and everything be put right. Simply put, it is that people believe they have less money to spend and so hold back on the purchases, this in turn reduces the income of companies who then reduce their costs, often including staff, the redundant staff have less money to spend, and so we enter a downward spiral.

In order to address this problem we have to find out why people feel that they have less money to spend.

In my belief it is that the newspapers are creating hard-hitting sensational headlines in order to sell papers, telling everybody how bad it will get, and how millions of people will be out of work by Christmas, while at the same time, confidence in the country's government has fallen to an all time low. Just look at the mess they made with the stamp duty statements a couple of weeks ago. Someone asked if they would put a freeze on them, they dithered but said nothing, and so loads of people who were about to buy a house pulled out of the deals so that they would not loose out if it happened. This could have been prevented with a simple yes or no to the question by the chancellor.

What we need is a confidence boost for the economy. This could be done by a concerted effort by the newspapers and other media, where they make a point of showing where things are going well, or by a change of leadership to people whom engender confidence, and seem to have a plan to get us out of the mess, and tell us the truth.

If the press stopped calling it a "Credit Crunch" and took on a more positive attitude it would help matters immeasurably. If you looked at the facts in a different light, it makes all the difference.

Example.

Banks have stopped lending to people who cannot afford to pay them back.

House prices have fallen 10% already and will fall for a while longer until they get to an affordable level.

People are having to look at ways to reduce their energy consumption and cut down on the amount of waste that they produce.

As far as I'm concerned, they are just common sense. Banks should not help people get into crippling debt. Houses are to be bought for homes not investments, and whether or not you subscribe to the global warming debate, you cannot deny that reducing waste and recycling is a good thing in general.

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