Thursday, July 10, 2008

What is a recession?

It's in all the paper, it's smell bad and it sounds like we should avoiding it by what is it?

It's actually not that bad, it's mainly going back to earth, following a misallocation of investment and work, we need to reallocate the labour to what actually people needs and pay for all the money thought they had but end up not having.

It is manifested by bug lay off, but don't be scared. these lay off are part of the redistribution of the production system. They are mainly located on the company that were only working because of temporally local circumstances like the bubble.

It's in the end a good thing, realigning the production to what people really need, not to what the producer thought they need.

3 comments:

Vonric said...

Yes, not that bad in theory.... except that everybody THINKS it is bad, is depressed, stop planning for future...etc... that's what is scary in reality

French Fry said...

@Vonric

I did not say bad, I said not that bad :) It could turn very wrong though.

But it's normal for people to stop spending their money, specially because they've been spending money they did not have.

What do you mean by planning for the future?

Vonric said...

debts... but I agree that in the case of Britain. it might be good to restrain a bit... problem is that it affects also people who shouldn't have any worry because they've been cautious, but are still limited for future plans by the credit crunch.