Credit Crunch and Recession – the Economic Bandwagon

The credit crunch as well as now theglobal recession continue to produce gloomier and gloomier news. Partly this is the media having an easy feast day; not too much hardwork finding the story, more just picking it off the news wires. However, the underlying facts are real enough. It is now severalmonths since our government or rather Gordon Brown decided to savethe world and it is time to ask if his reaction to each newshock-wave has had a real effect as opposed to a media headline. Hecannot say and neither can anyone else predict if the governmentresponse to each new crisis is going to help in the long run, becausethe future is not ours to predict especially in a banking catastropheof such unprecedented magnitude. However, the first reaction bothhere and in the USA of pouring trillions into the banking systemseems to have saved the banks, allowed them to rebuild their ownpositions but not done much for the rest of the economy. So perhapsthose trillions might have been wasted in terms of reducing therecession, if not actually lost to the taxpayer. Here the mediawould serve us all a lot better by finding out what other countriesare doing, not just reporting about London and Washington. The nextsector to get bailed out seems to be motor manufacturing, perhapsanother few billion. We should note that up until a few months agowe were quite in awe of mention of a few million whereas now we canonly react to talk of billions. What sector will be next? Or willthe US and British governments realise that the recession cannot bebought off?

On a more general note, the media havereminded us that these recessions happen every few years withgreater or lesser consequences. It is called the Economic Cycle,which suggests that this is a natural phenomenon a bit like therotation of the earth, something outside our control. It is ofcourse nothing of the sort. It is actually a recurring EconomicBandwagon, entirely man-made. It features nobody wanting to be leftbehind, everyone wanting to be part of the gravy train and outrightgreed. Presumably lemmings have exactly the same motives of wantinga part of the action. Each cycle has it share of soothsayerspredicting gloom and doom all of whom are ignored and vilified. Likeany runaway vehicle the more people who jump aboard the moreunstoppable it becomes until it finally comes to an abrupt, violentand totally disruptive end. Only 2008 saw the biggest ever economicvehicle crash in an unprecedentedly spectacular fashion.

In spite of all the mayhem every fewyears, the accepted mantra is still that capitalism is best for theworld. Surely capitalism as practised in the last few decadesrequires at least some modification. If economists can take onboard the fact that the economic cycle is entirely man-made, itshould be possible to devise methods of counterbalancing its runawayeffect. Engineers many years ago perfected the mechanical governorwhich reacts against the acceleration of a rotating machine byincreasing the load. Governments need to give themselves similarpowers. It may, however, be wishful thinking to suppose that theythemselves will stand aside from the economic bandwagon and apply thebrakes.


This entry was posted in Uncategorized by robthill. Bookmark the permalink.

About robthill

I am semi-retired ICT Staff Tutor in Dundee, Scotland and an online facilitator. The views here expressed are my own somewhat quirky feelings about the world as I see it, no doubt just as prejudiced as most other bloggers.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s