Economic Damage & Spoiled Markets

Markets are spoiled when policymakers place greater worth on the value of a penny saved than on a pound spent on doing something. Consumers prefer to save instead of spend, as each fears to spoil the chance of getting a better price later. With a declining demand at a time of positive technology expectations, economic damage embeds itself into the spoiled markets, as the experience of buying and selling in bad times influence future behaviour and the damage will occur and recur in a pattern of lifecycle debt and deflation. G20 policymakers could endorse global policies that borrow more of the future and spend in the present. The economic damage today is in government cutbacks, indebtedness, redundancies, job losses and credit restrictions. Although technology and innovation cycles are visible across many products and services, although we are in an information business cycle, any expectant boost to world growth has been muted by the debt of economic damage. Banks had had converted a simple banking exchange of deposits and lending into a complex debt instrument exchange system – complex betting on the probability that a no income, no job or assets (NINJA) loan recipient would repay. They have spoiled banking, they have lost credibility as their profits continue to be privatised, and their debts socialised. The recent initiatives from ECB and the Fed represent a pan-QE3 frontal attack on a stubborn world economy that is stumbling into an era of deflation and economic damage. The QE3 is a positive signal, it has a chance of success, but more has to be done now.

Tags: , ,

Comments are closed.