Tag Archives: economy

Why you shouldn’t care at all about the Eurozone crisis

If you’re an individual or a small business, you don’t need to worry about the Eurozone crisis. You don’t need to think about the ongoing recession. It should be the last thing on your mind.

Why? Is this not the worst recession since the Great Depression? Could this not be The End of the Eurozone?

Yeah, maybe. But ask yourself this:

Can you do anything to change it?

You can’t set fiscal and monetary policy. You can’t force Greece or Portugal (or the US) to cut spending. You can’t force companies to invest more.

So stop worrying about it. It’s out of your control.

What should you worry about? I’m glad you asked.

People: get your finances in order. Stop overspending. Look at earning more money through a second job or freelancing if you need to. Start eating healthily and exercising regularly. Take time every day to be grateful for the good things in your life. Think how you can do your job better: make a list of ideas and pick the best two, and start doing that.

Businesses: stay focused on your customer. Always think what they would want you to do. Even in this economy there are opportunities – Groupon is the fastest-growing company in history by revenues, and was formed in November 2008. There is money to be made, and people will fall over themselves to give you their money, if you can give them what they want or need.

In other words, focus on things you can control. Forget about things you can’t.

The best paragraph (and a half) I’ve read today

From Alex Mann‘s interview with Philalawyer:

I’m referring to solving actual, human problems using available communication tools, regardless if it’s called “social media” or not. The tools will never replace humans, but they can help.

Look at the reaction to the Iranian election online. A lightweight Internet application, Twitter, has created a sense of healthy transparency in a geographic arena that has been traditionally stubborn by design in the past. The conversation has always existed, but now it’s being funneled and aggregated online. The tools haven’t created the conversation; they just created an outlet. That’s more democracy than Iran has ever felt.

The whole article is great. Read it here.

A layman’s guide to the credit crunch, part 5: Confidence is everything

So, when a lot of mortgage-backed securities were found to be close to worthless, companies that were holding a lot of them at the time, such as Northern Rock, found themselves struggling.

The problem is, large swathes of the economy rely on confidence. Banks are happy to lend to you if they are confident that you’ll be able to pay it back in the future; people invest in the stock market if they’re confident that their investments will increase in value; people spend money today because they’re confident they’ll have more money to spend tomorrow.

But when something scary happens, like a lot of people defaulting on mortgages and a burst in a housing bubble, people’s confidence takes a huge dent.

Suddenly, banks don’t want to lend money to you or your company, because they’re unsure about the future and don’t know if you’ll be able to pay it back. Companies, pension funds and individuals don’t invest in the stock market, as they’ve heard lots of scary words on the radio like “recession”, “volatility”, “Ponzi scheme”, and “bailout”. And individuals don’t spend money because they’re unsure about their job stability, and whether tomorrow will finally be the rainy day that they’ve neglected to save for, because who cares, it’s summertime.

And if businesses can’t borrow money, they struggle to operate properly. They can’t buy new machinery, factories or equipment, they might not be able to get short-term finance to pay their employees, and their customers are running scared. They make cuts, lay people off and don’t invest.

People are scared of the stock market. There’s a fall in demand for shares of companies. Share prices fall.

And people decide to save their money instead of spend it. They downgrade their brands at the supermarket. They hold off on that new HD TV. They stick with their old car instead of buying a new one.

All of this leads to economic contraction. And brings about a recession.

Welcome to 2009.