Blog Prompt 7- Good Crunch, Bad Crunch

As we face global economic downturn industrial production falls, unemployment rises, we spend less, we travel less, we consume less.
However, in terms of sustainable development goals, isn't this a good thing? Shouldn't we take this opportunity to learn to live within our means?
To what extent do you think that there are good things to come from the current economic recession?

Let me apologise now for the longer than usual ranting blog.

One politician had recently stated that this recent recession could do us good in Britain and people would learn from this- something that was not achieved in the 1980s recession. Would people in fact stop taking things for granted that people in other countries do not even have access to? Will people be smarter and save (or even just being more sensible with money) rather than splurging on unnecessary items such as top of the range cars and expensive handbags?

It is a fact- the credit that was available to people in the western world (especially Britain) in the previous few years was excessive and by the banks curving their lending it will eventually help to stabilise the economy and ‘rebalance the markets’. -Ernst & Young

It’s been splashed over many of the big name newspapers that Britain has been living too good for too long and this is time for a change. However, who is benefiting from our losses?
As with the Wall Street Crash of 1929, the rapidly growing economy had been blamed for this sudden drop in the stock market. Is this a similar scenario for the credit crunch and upcoming recessions?
Surely someone had to benefit from the 1929 stock market crash and if not where did all this ‘money’ go?

The main positive topic of discussion regarding the credit crunch in Britain is that a continuing fall in house prices is likely, meaning that first time house buyers, if not all home buyers, will have better opportunities to buy affordable housing for the first time in Britain for several years.
However issues related to this include if this recession continues how are people going to get mortgages (if they still have jobs that is) with the banks still tightening their lending?
Whilst discussing this with someone who works for a home building company, she had said that people were still interested in buying homes however, were unable to get mortgages that they could have gotten a year previously.
It must be argued that house prices were never going to continue increasing and in my opinion; something is only worth as much as what a person is willing to pay for it. With a decrease in spending, and banks tightening their lending this was likely to slow things down quicker.

Within this issue though, are property developers snapping up these bargains? I know in America house repossessions are far more common than in Britain; home auctions are held daily, and driving down the street the word ‘repo’ flashes past at least once on every street. This leaves the market open for people with a bit of money that are willing to take a risk, could very well profit from peoples’ losses. But again- people with a bit of money, who aren’t feeling the strain as much as everyone else are benefiting, not those that are experiencing losses.

Then it comes to what companies and business sectors could possibly benefit from recessions in multiple countries? Well, discount supermarkets for example, such as Aldi and Lidl have seen significant increases in their sales already, and of course Wal-Mart- already a well established supermarket in America. Wal-Mart has already seen sharp increases in its share price from the end of 2007 until mid 2008 which is set to continue rising.
Other sectors that benefit from this is oil companies when they increase their prices, but how much do they really benefit? Their oil is not going to be around for ever and then where will that leave these companies and countries in which they are based? For anyone who didn’t watch ‘Piers Morgan on Dubai’- Dubai has already realised that its oil is running out, and has started establishing its tourist market, and a very unique one at that.

One last point to make- China is of course benefiting from its fast growing economy (growing far more rapidly than any western country ever did). Benefiting from our losses? Needless to say, their economy will slow down eventually one day, hopefully along with their Co2 emissions thats polluting our fresh British air.

Further reading:

http://www.access-accounts.com/news/industry-news/ernst--young-credit-crunch-may-benefit-economy.aspx -Ernst & Young

For those that aren't big Piers Morgan fans:

http://www.guardian.co.uk/culture/2009/jan/30/last-nights-tv

http://british-tv.suite101.com/article.cfm/piers_morgan_on_dubai_itv1

Piers Morgan fans:

Didn't have enough time to search for a nice artical about him.