The recession is over… or is it?
To be honest I very rarely write about this things in my blog, simply couldn’t be bothered. But in fact decided to put this post simply because a good friend of mine today was like: “Yay, it’s over now, the economy is growing again…”. We all have heard things like this on the radio and TV as well.
Now, let me reassure you, it’s NOT over, it even hasn’t STARTED properly yet. Am I an economist? No, I am an analyst and this type of analysis is not amongst the difficult ones.
Just briefly what happened so far. To make it simple – Banks oversold the “money” (which they haven’t had) tenfold by artificially inflating the market. At the payback time only small percentage of money was there and therefore banks went belly-up taking the remaining money with them. Of course they’ve started to scream – the vital part of the economy is disappearing, we need money (who doesn’t, huh?). The governmental machine started to work full-speed, pumping money into banks and rubbish into our ears. Like Banks are the vital organs of the economy and if they gone – the economy is gone. Banks? Vital? Don’t get me wrong, people, but WHY they are vital? In very simple terms Banks are parasites that sell your and my money to others or to us and make profit. Do you think if you have 100 pounds in the bank then it is safely stored somewhere in the vault? Nope, your 100 pounds were sold long time ago to someone else for likes of 200 pounds. Therefore if all of us come and say – give me my money that I’ve trusted you then the Bank is finished. (Northern Rock, does it ring the bell?) I am intentionally oversimplifying the overall situation, if required, I can do mathematical analysis but it would look much more complicated and, hmmm, will have worse results, trust me.
So where was I? Oh, yes, so government started to pump money in (your and my money, honest, government only has what we give to it!) and at the same time the main players and vital organs of the economy (remember – banks = parasites) – manufacturing industry – started to suffocate. Why it happened? Simple, unlike many-many years ago manufacturers are now “addicted” to the delayed finance. And this addiction is a direct result of the banking industry getting their paws on the juicy slice of the real goods sector. At the beginning how the manufacturing worked: some wealthy individual would buy a plant, machinery, raw materials, pay his employees, make goods, sell them, get profit and return his investment + (or go down, it all depends). Where is the Bank? Not in this picture, huh? That wasn’t right for banks, so they said hey, why risk only your own money, we give you some (including that 100 quid me and you put!) but then you give me back just a tiny bit more, deal?
…. To be Continued.
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