Wednesday, March 25, 2009

Global Economic Crisis

Hell – it has been a bloody long time since I have penned anything of note.. so here goes, my two cents on the current headache that all the governments in the world are trying to fix..

Well – first and foremost – I do not understand it at all..

Yes – I get the fact that this was precipitated by greedy and over-enthusiastic banks and the housing crisis…. but what is the fix for this mess that we all are into – most of us have been spectators who have become involved unintentionally?

Governments all over the world are trying to put more money into people’s pockets by reducing key lending rates so that consumers who have started penny pinching to get back to the market and spend some money. Now this money is what most corporations need for R&D and for any new products that hit the market. However, if you read any business news papers or websites, it will probably scream that some corporation or another has frozen salaries or stopped hiring!

Isn’t this counter-intuitive? Governments are trying to get more money/credit into the system and corporations are doing exactly the opposite? No matter how much money the government puts into the system, if corporations decide not to give salary increments to their employees – how will consumers hit the shops?

Call me naive – but I don’t get this at all – shouldn’t it be in the corporations’ benefit that people have money with them – it will help necessitate the want to buy their products and therefore will boost their share value – which goes on to satisfy the shareholders because the stock value will go up – no matter what because the customers are spending money buying up products which means they will consistently exceed market expectations!

Yes – I agree this recession will go a long way to get people to save.. but should this not be corporate responsibility to ensure that any nation’s economy does not reach recessionary levels!

Does this make sense?

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