Sunday, 13 April 2008

A recession is not on the cards!

Trevor Manual is the South African Minister of Finance. Last week he told the country that recession is not on the cards.

Prominent financial experts around the globe have been telling us that the world's financial condition is at its worst since the Great Depression. Most of this caused by the $800 billion plus losses experienced in the aftermath of the sub-prime crisis.

Can a world-wide recession be averted?

Recession is caused by market sentiment. People make decisions based on their perception of the economic climate. Consumers cut back on consumption. Investors cut back on investment. Producers cut production. All because of expectations of an economic downturn. Having burned their fingers through poor judgement, investors shy away from any investment that involves a perceived risk.

There are some very negative pressures on our economy and on the global economy as a whole. Increasing oil prices from an already highly inflated base. A world food production crisis fueled by a wide-scale agricultural shift to the production of bio energy.

Can these negative pressures be counteracted by a positive attitude? An up-beat minister of finance is certainly of great value, but will his positive view of the future be taken-up by business?

If more people are willing to come to the party, then economic disaster can be averted! All it takes is a positive outlook.

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