Sk-etchbook

I've had this video flagged to watch for a while but every time I tried to watch it I got that bored I fell off my chair. Today I managed and after the first 5 minuted it is actually interesting. I had a rough idea of how a recession functions as part of the economic cycle but had never really investigated the difference between a recession and the credit crunch as they are two totally separate things.

A recession is usually defined as a general slowdown in economic activity over a sustained period of time, this is normally measured by a decrease in the GDP over two consecutive quarters.

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The credit crunch on the other hand has been caused by short-sightedness, bad management and greed. Banks and financial institutions put profits before risk and now it has come back to bite them on the ass. This means that any reserves that should be in place to brave the recession do not exist. Personally I think all the banks that needed bail outs should be seized by the government and owned by the state. Banks are bastards anyway I've spent 9 months out of the past 2 years having to sort out mistakes and issues with mine. They are very greedy and unethical especially since the reclaiming business began. Banks should not be ran as businesses as people are now totally dependent on them. They should be institutionalised and then when we come out of the recession the profits put towards repaying the government debt.

The government debt is also a big issue. Admittedly it is making matters better at present in terms of job losses, closures and preventing the market stagnating but at what cost? Massive tax rises for a long time coming. You would think trying to correct a debt problem by getting into more debt is a bit of a gamble especially when attempting to maintain what could be a false economy anyway. The housing market is another area where human needs have been over-capitalized on. The basic wage in the UK is (age 22) £5.73 so that's about £12,000 a year. This is the end of the housing market which needs stimulating, house prices just got too high for young people, first time buyers and low earners to buy. Banks then started lending larger mortgages as they could make money on them, fueling the market on via sales raising prices further. Eventually this had to collapse, there is a limit to how much people can and will pay for anything. The problem then is asset prices decrease, loans are no longer covered and securities are worthless the entire market is based upon money which doesn't really exist.

So finally is it better to keep throwing money at the problem or are we better off letting the market crash? Sure companies would fail, jobs would be lost and the better off would be grumbling about the value of their shares or interest on their savings but the new market would boom. People would have less but things would cost less, there would be increased equality and access to goods. Increased tourism, less outsourcing abroad and new companies will always start if the demand exists.

Think I've rambled on enough for now. Here is a comment about the effect the media has had on the situation - Don't even start me on that subject!
The Media Effect