14 April 2008

Recession is coming

For economists every period of 10 years, the threat of a recession comes around. An economy will not keep expanding indefinitely, eventually it will contract for a while. History taught us that this comes around every 10 years or so. This year we have seen stocks tumbling in the US markets, the US dollar is weak, unemployment is on the rise, people are buying less stuff and there is a decrease in factory production. A downturn in the US economy will have a domino effect in other countries. Malaysia is not spared as the US is one of the biggest importers of our product. When there is less demand in the US, we will export less, invariably this will stunt our earnings and effect our growth. The snowballing effect will cause the Malaysian economy to slow down. There will be a spiraling effect on all other economic activities in this country. In short, a recession is forthcoming.

If you notice, in every turn of shopping malls you'll be hassle by agents coaxing you in signing for new credit cards. I will always shirk them by telling that i am blacklisted by Banks and loan sharks are coming after me. (He He, this trick i learned from a friend, and it never fails!). Banks are coming up with many innovative packages for customers to take up personal loans. Telemarketing is a pain in the neck, as telephone agents sweet talk us to take up unnecessary loans. What does this tell us?. The government is trying to make people spend more. They realise that people are tightening their belt and they say this is not good for the economy.

For those in the 40's and 50's age bracket, we still remember the recessions in the 70's, 80's and 90's. For government servants, they were not hard hit but for the rest of the rakyat marhaen, it was really bad times. Houses were put under lelong, cars confiscated, businesses go bankrupt and people out of jobs.

Did you notice, prices of foodstuff and other goods escalating like nobody business nowadays?. I pity Shahril Samad as he has a gigantic task ahead of him.

To my younger friends, i would advice them to spend wisely and always be prudent. Maintain your old car rather than buying new ones. Spend less on foodstuff and eat less. Curb your eating forays and try to eat cooked home food. Eat less nasi lemak and be more healthy.

Off course, for those bright Economists, to avert a recession, they advice you to spend, spend, spend ........

This is one advice that i will forgo.

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