Wednesday, December 24, 2008

Economic recession

This evening, my eldest son ask me "what caused economic recession?" Well.... errrr... emmmm...If I was a contestant in a beauty paegant, I will surely lost the contest for not being able to give smart answer in the blink of an eye. Well , after some research, I now will list down what probably caused economic recession so that I will not forget if someone happen to ask me the same question again.
1. Global warming caused the earth climate to change, floods, draught, happen all over the world caused the agricultural sector to face difficulties to produce enough food. As a result, the price of food increase.
2.Oil price, earlier this year the price of petroleum in USD100.00. And continue to hike to USD144.00. When petrol price increase, like a domino, everything will goes up to. This is worsened, when some companies used food such as palm oil, soybean and others to substitute petrol as organic fuel. This contribute to increase the food price even more.
3. Mortgage. Some banks allow loaners to loan money to buy houses, cars without strict rules. Some loaners cannot pay back their debts, and the bank will face the loss too. Some banks in US have to be bail out by the government to solve their financial problems.
4. When the economic recession hecomes global and becoming the talk of everyone, people become more money concious. They will cut all the expenses they able to cut. For instance, to cut petrol expenses, they reduce the use of petrol by planning their journey, car pooling, use public transport and ects. This help to bring down the price of petrol like we are experiencing now.
5. When people being thrifty in their spending, business will becomes slow, supermarkets, night markets, eating outlets, are becoming less busy now. Income for business people will drop and to prevent more damage, they have to reduce their production and let go their employees. Unemployment will rise and add more and more problems to the already problematic situation.

Well, there are a lot more contributing to this situation. How are we going to face and solve it? Because our way of handling the situation might worsened the scenario.
In my next post, I will write some suggestions on what we should do. I'll stop now because the man next to me looks like need someone to talk to.

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