Hey guys, as I was reviewing the news, I noticed the recent research conducted by the Harvard professor which was alleged: "The decade of the Great Depression, cosmetic sales increased 25 percent." After the downturn following Sept. 11, lipstick sales doubled”. As the interpretation we may simply find the complementary relation-ship between psychology and economy[1].
On the other note I found the interesting subject which was arguing about the psychological strategies which may improve the market trust among the societies to stimulate the economy. Coming up with the idea of the luxurious exhibitions for the reach segments of the societies by selling the market skimmed products or offering the high end tour packages which again targets the reach levels of societies are the recent strategies of entrepreneurs to get back the market trust and try to tackle the psychology of economy.
What sort of strategies you suggest to give back the trust through the markets? Are the financial stimulations and bailouts sufficient enough to see the surge through market shares?
Reference
[1] "Yahoo buzz", "The Lipstick Economy" followed by URL:
http://buzz.yahoo.com/buzzlog/92031/
Friday = Time to wash toilet
13 years ago
6 comments:
The first thing to restore trust in the economy is to locate the real culprits. And they are not business leaders, 'greedy' CEO's or the 'captains of industry', but the government itself!
Any elementary student of business cycles will know that booms and busts are monetary phenomena. And who creates money? Only the government! Try doing it yourself and you will charged with counterfeiting. But let the government print money and its called 'legal tender'!
Governments, over the lastest boom times have been printing money far in excess of productivity. hence, prices have been rising, along with the stock market and housing prices. There has been so much liquidity in the economy that banks have been lending the cheap money to house buyers who really haven't got the financial security or income to afford them.
The simple lessons of Economics 101 is that an excess of supply over demand will bring the price of the supply down. This has happened with money-interest rates have been artifically low. Low interest will mean that projects and production that is not really economically viable will be undertaken - misinvestment e.g. the US housing market.
But money supplied in excess of production will also mean 'too much money chasing too few goods' which will result in prices rising (inflation).
To summarize, to avoid what the world economy is now experiencing, and what all economies periodically go through, is to at least limited the growth of the money supply to the growth in productivity. Then the world will not have to go through the agonies of boom and bust! And who only can do this - the government!
Bardia, there's one thing you got to understand clearly, this is a financial market meltdown, resulting to economic consequences, and NOT just an economic meltdown.
What's low now is the investor confidence.The promotion of a multilateral trade system, investment and market liberalization(especially in equity), corporate social responsibility would be needed to lift confidence,and yes, a financial package is needed to help the liquidity problems faced by banks.
The most important thing would be to restore the currency-gold pecking system. Many countries rejected the system, saying its too american, and as a result started printing money indiscriminately, not backed up by real market values. This created alot of articficial scenarios in financial markets, and would continue if the situation is not addressed.
Michael Bloomberg, the mayor of New York, says the US bail-out plan is not sufficient to lift the American economy out of the current crisis.
He told the BBC's HARDtalk that it was "one necessary step" but it would not solve the credit crunch on its own.
He added that there was "real fear" among governments in all countries today over the economic crisis.
The $700bn (£394bn) bail-out package is aimed at buying up the bad debts of failing institutions on Wall Street.
The move is aimed at getting credit markets moving again.
"I don't think there's anybody that really believes that this is sufficient to deal with the current crisis. It is one step. It is probably a necessary step," Mr Bloomberg said.
"It was critical that it gets going now partially because it will make a difference and partially because if you didn't do it, it would send a message that the government's not going to do something."
Mr Bloomberg also said it was a "terrible mistake" that the US did not rescue investment bank Lehman Brothers.
"I don't know that I knew any more than anybody else did but in retrospect we probably should have bailed out Lehman Brothers," he said.
"It spreads the fear far and wide and all of these institutions have contracts with each other so that if one side of the contract disappears the guy on the other side has a very serious problem."
Democratic House Speaker Nancy Pelosi said "great progress" had been made - but details remain to be agreed.
The Bush administration wants $700bn (£380bn) to be able to buy bad debt that is freezing up financial markets.
A vote could be held in the House of Representatives as early as Sunday, with negotiators keen to reassure the markets before they reopen on Monday.
The deal proposes that the government would spend the $700bn to buy up bad mortgage-related debts from US banks, borrowing the cash from the money markets by issuing more government debt.
A White House spokesman welcomed the announcement and praised the efforts of the negotiators.
"We're pleased with the progress tonight and appreciate the bipartisan effort to stabilise our financial markets and protect our economy," said Tony Fratto.
The outline deal gives the treasury secretary powers to oversee the two-year plan, but critics have insisted on the inclusion of greater oversight and reporting. The BBC's Justin Webb in Washington says the tentative agreement that appears to have been reached is thought to include a measure to limit the pay for executives of companies which seek financial assistance, which was a key demand of the Democrats. At the request of Republicans, who have strongly criticised some elements of the administration's proposal, the accord is believed to include the setting up an insurance program for mortgage-backed securities.
http://news.bbc.co.uk/2/hi/business/7640223.stm
Losses are never wished but it is occurred. The economic turmoil in US is doing something similar to it and has galloped billions of dollars of common people. Crash of couple of leading financial institutions simply refers to the severity of the situation and it entails for serious steps from private and government entities both. The bailout proposal from the US president can be seen as one of such steps but it’s the consensus of congress there which will decide its success.
It is to be noted that this bailout plan keeps a huge amount of nearly $700 billion that seeks a serious debate in the congress for its feasibility in the current time. There may be apprehensions too there as only investing a huge amount right now is not enough to ease out the current crisis. But it takes a strategic planning for the implementation of the some effective programs.
Since in such moment a general consensus is essentially needed, the US president has appealed the whole congress and general public to consent their views on bailout plan. The US president seems more serious for this cause and forecasting his views on the crisis he added that if the proper action is not taken timely it all we have to cost more in the future. No doubt he has reined the country for two consecutive sessions successfully and he better understands the pulse of US economy.
Meanwhile the country is also undergoing the pressure of presidential election. US citizen have been caught in doldrums to whether think for the right candidate or fighting with economic turmoil. No doubt this crisis has more affected the common people’s lives and many of them have lost majority of their hard earned savings. But perhaps US have a pool of intelligent citizens. Responses from them are always co-operative and they all are ready to fight this mess together. The Two leading presidential candidates have also understood the pulse of their citizen that is signified through acceptance for leaving their election campaign and share their time in bailout plan.
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