Posts Tagged ‘recession’

1. It may be the 500,001st word, but it will certainly not be the last

   Published on Monday, March 15th, 2010

   The power of the English language to invent new words and seamlessly adopt them into everyday use is one of its magical strengths, and as a result English is universally recognised as having the richest vocabulary of any of the world’s 2700 languages.

   Why raise it? Well the thought came to me last Friday following a Newstalk ZB chat about the economy between host Mike Hosking and the Governor of the Reserve Bank, Dr Alan Bollard.

   (Not verbatim): Hosking says: What will be the ‘new normal’ then?  The Governor: Well the ‘new normal’ is yet to be determined Mike.

   The ‘new normal’! The two used it as though it’s an economic term that has been around forever and the mass audience that Hosking’s show attracts would know exactly what they are talking about.

   As an economic term, ‘new normal’ has only really built up a head of steam since early 2009 following the financial meltdown.

   Its strongest use to date is around spending patterns. In the United States, for example, the normal spending pattern between 1950 and 1980 was 62% of GDP. In the 80s it increased to 65%, the 90s to 67% and between 2001 and 2008 70%.

   Most economists are confident that spending power is returning, but just where it will settle is a matter of conjecture – hence what will be the ‘new normal’.

   It will be interesting to see if ‘new normal’ remains selective in definition, or whether it gathers momentum as a buzz word, and morphs into a general word describing change, and from there … where?

   As an aside, it’s estimated that there are 500,000 English words (excluding the 500,000 technical and scientific words), or is that now 500,001! German has about 185,000 and French 100,000.

   

2. Media serves up hard economic information … but are we interested?

   Published on Wednesday, September 30th, 2009

   The economist Edgar Fielder, who served under Presidents Nixon and Ford, is quoted as saying ‘ask five economists, and you’ll get five different answers – six if one went to Harvard’.

   This self deprecating comment would draw mirth from his peers because they understood the complexities and intricacies of taking historical economic data, and trying to forecast what it means for the future.

   For those of us who are not economists, and who try to make sense out of what will happen on the basis of the media coverage of economists’ comments, the result can be bewildering.

   We are no sooner buoyed by headlines proclaiming New Zealand’s recession is ‘over’ than we are brought down to earth by headlines elsewhere forecasting the economy is going ‘nowhere fast’ over the next 18 months or that unemployment will ‘continue to rise’.

   How can this be? Well, the answer certainly isn’t the economists are playing mind games with us, or the media is misquoting or misunderstanding what the economists are saying.

   In part it is the price we pay for trying to understand an issue as complex as the economy on the basis of sound bytes, or a 250 word précis of a 60 page report.

   It is also a reminder that we should view potted media coverage of most topics as the start point – and that there is far more to the full story than the media will ever give us.

   If we want that full story, then we are required to go out of our way to learn more.

   Which bring us round to the issue of whether it is the media’s role to inform us, or to report what others are saying?

   It can be argued that economics is one area where the print and online media in particular do try to inform and give a balanced view, through comment by in-house and external columnists, and by in-depth coverage of personal finance, business and agricultural items.

   Whether we choose to read the in-depth economic stuff with the same desire for knowledge as when we are looking at the All Blacks’ performance or nutritional and health issues, is another matter.

   

3. Bored senseless by recession

   Published on Wednesday, July 1st, 2009

   The recession is the elephant in every room and a tired and grey elephant it is at that.

   Here in New Zealand we started our slide, to feel the effects of economic decline well before the likes of Lehmann Brothers and the spectacular collapse of the subprime mortgage sector in the US became front page news.

   Our recession began with a whimper some 18 months ago. Quietly many businesses re-organised, changed structure and readied themselves for the economic winter ahead before the Northern hemisphere noticed.

   New Zealand had come off a long period of sustained growth.  We all enjoyed record high employment where a shortage of skilled workers was one of the biggest hurdles to business development.

   While the world went credit-crazy the deep conservatism shown by much of the banking sector here (on a comparative basis with the US and Britain) has saved many a Kiwis’ bacon.

   We are often criticised for our love affair with bricks, mortar and land but the housing market has showed surprisingly resilience, not plummeted anywhere near to the levels in the UK and US.

   Now we are into the dull-phase of the recession, the hard yards where gloomy global messages are being recycled over and over again. Tried dodging the talk of the downturn at a dinner party? Businesses going to the wall-stories pile up like a body count.

   But where is the perspective? World news is not our news. Many key elements of our economy are in robust health and unemployment rates are still relatively low. Today’s business confidence survey points to sparks of optimism returning as a net 5.5% of firms expect business conditions to improve in the next year.

   As a nation we struggle with self-belief, and this applies here. What we really need to do is ‘knock the bastard off’ and we can do that with confidence, grit and self belief.

   Spread the word.