After years of listening to financial reports, market projections, and economic forecasts Ive reached the conclusion that the global economy is based more on psychology and emotions than figures and statistics. When people collectively feel the economy is good, they buy and the economy is good. When people have their doubts, they horde, and the economy shrivels up. When people are convinced that theyre going to lose everything in a 1930s style depression, they sell and sell until the financial world crumbles and they do, in fact, have nothing left.
Now that some American economic analysts are predicting a slowdown or even a recession in the near future, you know that its going to happen because economic predictions are, at the root, a self-fulfilling prophecy.
Companies will use the levelling of the economy and the threat of a recession as an excuse trim thousands of jobs in preparation for the "lean" years ahead. Consumers, afraid for their jobs, will become incredibly stingy and will inevitably prove those companies right.
When finance Minister Paul Martin recently told Canadian businesses that a slowdown in the U.S. will only make Canadas more diversified economy attractive to foreign investors, thats called damage control. If American companies and consumers panic, youd better believe that the Canadian economy is going to feel the effects just as badly, if not worse than our cousins to the South.
Whistler, which exists primarily for tourism, is particularly vulnerable to the effects of a recession if things start to get tight for American and Canadian families, the first expense to go will be the ski vacation.
All because of speculation and the inner workings of a faulty economic system that is built solely on growth (new houses, new cars, new clothes). Like the shark that dies when it stops moving forward, the economy tends to crumble when the growth slows or tapers off. And the only reason it slows in the first place is because of our justified lack of confidence in the economy and the systems that prop it up. There is no middle ground in our cyclical "boom" and "bust" economy.
Skeptical? Then consider this: in the same speech where he forecast that Canada would prosper in an economic slowdown, Martin said that the only reason the value of our dollar is so low is because of the global misconception that our economy is primarily resource-driven when in fact it is far more diversified.
Its tough to know where to place the blame. On the financial analysts who sensationalize financial reports? On the financial system that makes such sensationalism possible? On the company who thinks that a shake up every now and then is a good thing? Or on consumers, the pawns who make the financial analysts sensational predictions come true?
My family lost a lot in the last recession due to corporate downsizing, and its hard not to take the threat of another recession personally.
Yeah, its probably going to take all day to type this URL in correctly, but its not a bad idea if you own a business and are susceptible to economic downturns (Hint: any business that is somehow connected to tourism falls in this category). While most big companies generally have large cash hordes and a list of creditors that could stretch around the equator to fall back on it, small companies are a little harder put to it when a recession is underway. Heres a list of eight tips to help your small or medium-sized business muddle through.
Even Steve Forbes, the owner and publisher of Forbes Magazine, believes that the American economy is slowing down, possibly stopping, possibly even going in reverse. While Alan Greenspan (or "God" to everyone who has money in the market) will do everything in his power to alleviate the situation, Forbes warns against trying to do too much if Greenspan cuts interest rates and the economy doesnt improve as a result, then we could be in for the long haul if the prolonged Asian Economic Crisis is any indication. Scary wisdom from a brilliant man.
Finance Minister Paul Martin should have been Prime Minister. Follow this URL to find a recent speech on the promises and pitfalls of the global economic system, which will be discussed at the upcoming G20 meeting in Switzerland 19 counties that account for 88 per cent of the economy, 66 per cent of the worlds population, and 60 per cent of the worlds poor. Although he doesnt use the word "recession" he does use the Asian Economic Crisis as a prime example of the faults of the global economy and discusses the possible ramifications of an economic slowdown in the U.S. This is a simply brilliant speech that captures all the hopes, fears, positives and negatives of the global economy.
For virtually every business on the face of the planet, wages are the biggest expense. Thats why employees are the first thing that get jettisoned before the crash. Nobody is safe, with the possible exception of the president and CEO, the vice president, his son, and the few low level employees that actually understand the product or service thats offered. Middle and upper-middle managers, with high salaries and benefits are usually let go or forced into early retirement, only to be replaced with promising lower level employees who will be expected to do twice the work for a lot less pay than their predecessors or so my experience has shown me. A man by the name of Theo Larch put together a list of common early warning signs to help you recognize the first stages of downsizing, and protect your job.