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Saturday, January 3, 2009

Year 2009 - To Spend Or To Save



It's been about a month since I last update this blog as I was busy with my work, my other blogs as well as planning ahead for Year 2009. Year 2008 ended with stock markets all over the globe almost collapse (I'm using the word almost since we never really know whether we have reached the bottom or there's still downside risk). Then the word RECESSION, STAGFLATION, INFLATION, VSS, etc started to creep out and people have FEAR in them. Why FEAR?

We do not know how long this financial turmoil will last and how long it takes for the business to see the bottom or recover. We can never know. No one in the world will know about it except, well, GOD, of course.

Domino effects will be seen as one business will cost another business to collapse or successful. Once a business is affected, it will affects others as retrenchment and major cost cutting will take place in other business. And this will continue to go in a loop until an equilibrium is achieved, that is when the global economy will recover. However, we do not know when this will happen.

People will start to worry about tomorrow, whether they are still hired, or whether they are not with the company or even worse, the company goes out of business. So, this will triggered people to save.

When people started to save almost all of their money, this is equals to close to zero spending, which is bad bad news for economy. We have to understand this.....economy is made up of money.....and money means spending. So, without spending, more and more company will go out of business.

The question now is whether we are to save or to spend? I'll post more on this in the future, but let us look at the situation and think......Is it best to save or to spend.

1 comment:

  1. Hey, i think we still need to spend but spend wisely stimulate the market. but that said where to get the extra income to spend. everything is so expensive now.

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