- Sep 26, 2009
Spoiled: The Economic Downturn, Luxury as Necessity, and "Struggling" in the Modern Economy
My original comment was not meant to imply I don't believe that there are tangible effects on people (most notably unemployment, which is certainly up compared to a few years ago).
All I said was that media and politicians largely made it up. I think it is a self-fulfilling prophesy to an extent, where in people hear constant messages that times are tight, therefore they cut back on consumption, therefore retail markets fall, therefore manufacturers cut back, and employers start laying people off. Which fuels the beginning of the cycle even more. This is why business analysts track "consumer confidence". In fact, to a large extent it is what the stock market is all about. Its less a question of how well a company is doing and more one of how popular are they. If people think its doing well, they buy, which itself drives the stock price up. It works both ways, so if everyone is convinced the market is doing bad, they sell so they don't lose too much by waiting, and then companies don't have the capital to invest.
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All I said was that media and politicians largely made it up. I think it is a self-fulfilling prophesy to an extent, where in people hear constant messages that times are tight, therefore they cut back on consumption, therefore retail markets fall, therefore manufacturers cut back, and employers start laying people off. Which fuels the beginning of the cycle even more. This is why business analysts track "consumer confidence". In fact, to a large extent it is what the stock market is all about. Its less a question of how well a company is doing and more one of how popular are they. If people think its doing well, they buy, which itself drives the stock price up. It works both ways, so if everyone is convinced the market is doing bad, they sell so they don't lose too much by waiting, and then companies don't have the capital to invest.
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