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Credit or Media, the recession root

I am looking forward to the UK government disposing of its bank holdings at the right time and paying off the national debt. However the root of recession lies not in the poor credit practices that have led to a needed bank correction, but in the obsessive media coverage that has curtailed consumer spending.

Interestingly even in Brazil where GDP growth will be over 6% again this year, media fear has caused a slow down on the high street. Thankfully this appears to have only been temporary in such a strong economy.

Whilst we all look forward to seeing an up-tick in EU and US consumer spending in the next few months, for the moment dramatic moves in cutting interest rates and increasing public spending are being coordinated across the globe. This is real money, along with the loss of tax revenues, the immediate cost will be high. Perhaps higher still for emerging economies if interest rate reductions lead to higher inflation. Remember these countries have capital needs but are not in recession. The recent G20 meeting looked at measures to support the EU and the US, however they will not necessarily benefit Emerging nations.

It does beg the question whether better media management might have been a cheaper solution to the problem of recession, educating people that a reset in banking needs to take place but the REAL economy can remain stable.

..... or was the long term goal mentioned at the outset of my blog... actually planned ?


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