What is the deep down, root, basic, cause of recession?
Discussion
There must be a reason for it, why should some years be recession and others not?
It's not as if there has been any change in the weather, or other natural causes. Perhaps it the expanding Asian economies using up all the raw materials, including oil?
Or did some stockbroker f
k up somewhere?
It's not as if there has been any change in the weather, or other natural causes. Perhaps it the expanding Asian economies using up all the raw materials, including oil?
Or did some stockbroker f
k up somewhere?It's basically because we, as a nation, have spent the last 5 years filling in spreadsheets and going to meetings, rather than actually doing anything productive.
This gap between what we individually contribute and what we consume has been filled by the great unwashed feeling rich due to overinflated house prices and cheap credit. So they've been merrily spending money they don't have and keeping things over.
Credit Crunch = no lending = no remortgaging = no purchasing for a chunk of the populace.
All of a sudden "nobody has any money" and we have a recession.
Plus the Govt are making everyone panic by taxing the living fk out of everyone and meddling with road tax etc.
This gap between what we individually contribute and what we consume has been filled by the great unwashed feeling rich due to overinflated house prices and cheap credit. So they've been merrily spending money they don't have and keeping things over.
Credit Crunch = no lending = no remortgaging = no purchasing for a chunk of the populace.
All of a sudden "nobody has any money" and we have a recession.
Plus the Govt are making everyone panic by taxing the living fk out of everyone and meddling with road tax etc.
When the economy reached its natural peak it was far too easy to borrow money. So the economy just kept growing [and my God did Gordon Brown shout about it].
Now nobody has any more money to lend the economy is on its way down. Everybody was in it for the short-term and your going to see alot of people loose their HP cars and other items which they borrowed to buy.
Consumer borrowing, to the tune of over £1 Trillion is the reason
An easy question to answer in one word.....................Greed
You can dress it up with all the graphs and high brow economic analysis you want, you can explain about productivity, interest rates, cycles, global economies, the growth of China and India or the over stretching of the US. But nothing else sums it all up as easilly as, Greed.
You can dress it up with all the graphs and high brow economic analysis you want, you can explain about productivity, interest rates, cycles, global economies, the growth of China and India or the over stretching of the US. But nothing else sums it all up as easilly as, Greed.
Not an expert by any means but as far as I can tell you had the mortgage crisis in America, which lead to a lot of banks over there not being willing to loan any money to any other banks across the globe, this left all banks across the world in a state of fear that their paths to easy finance are closed and to an extent they are. This in turn lead to banks tightening up on their own loan criteria, suddenly they aren't interested in taking risks any more and will only loan money to those that don't really need it.
Secondly you had the oil 'crisis' where the price of oil spiked severely mainly due to greedy traders, leading to an increase in the cost of all goods, this combined with the lack of 'easy money' from the banks has lead people to panic and hold onto whatever cash they have because of the fear of where all these price increases were going to end. So now people have stopped spending money and the banks have all but stopped lending it. So economies across the world have become stagnant due to a overwhelming sense of fear about the world economic future.
It doesn't help that every night on the news there's talk of further economic turmoil (which the TV stations latch onto because now its big news) and never any positive talk about recovery and growth. If people stop spending then economies stall, what we need is to stimulate spending. If leaders wanted to, they could simply reduce vat takings on oil (already much higher than would have been forecasted) and offer incentives to banks to start doing a bit more business, and after a short period of time peoples confidence would start to grow again and they would begin to spend, this would boost business, banks, etc and get the whole thing flowing again. Instead we seem to be stuck with a bunch of halfwits (across the globe) who are sticking their heads in the sand rather than taking any affirmative action.
Secondly you had the oil 'crisis' where the price of oil spiked severely mainly due to greedy traders, leading to an increase in the cost of all goods, this combined with the lack of 'easy money' from the banks has lead people to panic and hold onto whatever cash they have because of the fear of where all these price increases were going to end. So now people have stopped spending money and the banks have all but stopped lending it. So economies across the world have become stagnant due to a overwhelming sense of fear about the world economic future.
It doesn't help that every night on the news there's talk of further economic turmoil (which the TV stations latch onto because now its big news) and never any positive talk about recovery and growth. If people stop spending then economies stall, what we need is to stimulate spending. If leaders wanted to, they could simply reduce vat takings on oil (already much higher than would have been forecasted) and offer incentives to banks to start doing a bit more business, and after a short period of time peoples confidence would start to grow again and they would begin to spend, this would boost business, banks, etc and get the whole thing flowing again. Instead we seem to be stuck with a bunch of halfwits (across the globe) who are sticking their heads in the sand rather than taking any affirmative action.
trimbo said:
Fear and greed.
Or, more accurately, greed and fear.
We've had a bit too much of the former now we have the latter.
Agreed, basic human emotions are what drive booms and recessions. People tend to make emotional decisions rather than logical ones, that is just the nature of the beast.Or, more accurately, greed and fear.
We've had a bit too much of the former now we have the latter.
2something said:
trimbo said:
Fear and greed.
Or, more accurately, greed and fear.
We've had a bit too much of the former now we have the latter.
Agreed, basic human emotions are what drive booms and recessions. People tend to make emotional decisions rather than logical ones, that is just the nature of the beast.Or, more accurately, greed and fear.
We've had a bit too much of the former now we have the latter.
________________________________
..the people who are moaning higher up - which are you 'computer programmers' or 'engineers'?
CrashTD said:
When the economy reached its natural peak it was far too easy to borrow money. So the economy just kept growing [and my God did Gordon Brown shout about it].
Now nobody has any more money to lend the economy is on its way down. Everybody was in it for the short-term and your going to see alot of people loose their HP cars and other items which they borrowed to buy.
Consumer borrowing, to the tune of over £1 Trillion is the reason
If no one has any money how can the Economy expand again?
Greed is only one half of the problem, the other being corruption.
Greedy corrupt individuals lining their pockets at the expence of everyone else - and the problem is not only at the top of the tree within the parliament but filters down through every level of our national and local government, through the armed forces and local services, through private companies from the tax dodging directors through to the dodgy guy in the warehouse selling off stolen goods.
Greedy corrupt individuals lining their pockets at the expence of everyone else - and the problem is not only at the top of the tree within the parliament but filters down through every level of our national and local government, through the armed forces and local services, through private companies from the tax dodging directors through to the dodgy guy in the warehouse selling off stolen goods.
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