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The Credit Cruncher was conceived to help you to keep up to date with credit crunch and recession developments, it provides some helpful credit crunch advice and it addresses personal debt. The Credit Cruncher also seeks to explain how the credit crunch started and shed some light on the worldwide recession. Recently, we have begun to look at how BREXIT will affect the UK economy. Please feel free to leave comments where relevant.

8 Nov 2008

Trying to talk the crisis down

Anyone who knows about economics knows that it is common to try to 'talk' markets up and down as demand can respond to confidence with or without substance. I have seen countless comments on the web implying that the media is 'talking up' the coming crisis and making it worse, but I have to say that the truth as I see it is that industry and Government have been combined in talking the crisis down in an attempt to keep things on a even keel.
I refer you to the following articles which have already been reported:

CBI predicts 'shallow' recession - in which the CBI try to convince us that this recession will only be a blip.
Paulson predicts recovery by the end of the year - in which the US treasury try to pour some very expensive oil on troubled water...

Whether recovery is from the credit crunch or the recession, recovery by the end of this year was NEVER on the cards as far as I can see... On balance, the media have had their part in creating a monster, but if a monster recession is indeed on the way, then they are fully justified. On the other hand if industry and Government have encouraged an "it'll be alright" kind of complacency, then maybe some fingers should be pointing back at them.
One thing is for sure, the media did not make the current financial crisis - we can put the banking sector and possibly even Government firmly in the dock for that particular inquiry.

If we want to know the truth about what is happening take a look at the growing employment figures, the drop in the GDP and the corresponding giant cut in interest rates, the falling markets, the drop in retail sales, the drop in the housing market - if I go on I might be accused of talking the crisis up, so I will balance it with this: There is no huge panic as long as you make budgets for your expenditure, stick to them and amend them according to any change in your income. There is no mystery, if you don't overspend you will come through the crisis unscathed, however that alone does not mean that there is no crisis.

Related posts:
Gordon Brown rescue plan
The Bush plan is approved
The Bush plan falters
The Bush rescue plan begins
Government Intervention

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