KentXie
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- May 25, 2006
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When you pick up the newspaper, one of the first things you see on the front pages is the economy. While the economy is certainly big enough of a news to be on the front page, the way it portrayed is not. Now before you label me as a Communist or anything like that, hear me through first. Everywhere you read in the newspaper is the current economic crisis talking about job unemployment, bail-out, same corporations failing, the dow dropping, and comparison to the Great Depression. Now that is all fine and dandy but having the same thing printed out on the newspaper everyday is overkill. This includes the news on tv. The media is probably doing the worst thing it could do to help stop the economic crisis.
Do you know what consumer confidence is? It is probably one of the most important pieces in the US economy. Without consumer confidence, there will be no spending and no investment. Now go pick up a local newspaper or watch the evening news. Chances are, there will be a lot of reports containing words such as "recession, depression, unemployment, lay offs, foreclosure, etc." Other reports will include how the future of the US economy will look bleak, and will continue to slide. Now think about how these reports will impact consumer confidence. Nobody wants to take a chance during an economic downturn. Nobody will be willing to spend their cash when the economy is so unstable. If the media continues to emphasize on the doom and gloom, surely they are correct, right?
Of course they are, but not because they predicted it correctly. It is because of the consumer confidence. Having repeatedly knock down with constant negative reports of the same news, consumers have no confidence in helping to cure the economy. Sure there are many other reasons, like debt, the credit crunch, mortgage payments and foreclosure. But consumer confidence can be found in the mix of all these problems. Remember the housing bubble? Why do you think people continue to buy property even when the price of one was so high? It's because their confidence was also high (whether it was smart or not is a whole another discussion). They believe that the prices would continue to rise so they could sell their house for more than they bought. What we see today is the complete opposite. With confidence low, people are unlikely to spend, which means less money will be flowing from the hands of one person to another. People are afraid to put money in the bank and banks, with smaller amount of money in the safe, will lend out less money. The reverse has to happen.
Now hammer me all you want about how confidence is the reason why there is a bubble. That is true for the most part. Banks started lending our randomly without taking account of the risk. That is a lesson the US needs to learn from, but doing so now is the worst time. With the stimulus package coming our way, the best usage of this is to create jobs that target those in danger of foreclosure. Instead of simply bailing them out with free money, make them work for it. Help them pay off their debt by giving them jobs and money. When the banks feel more confident that the debtors can pay off their loan, start lending more money but do so more safely. This will help get the economy back up and running by increasing the spending and flow of money.
None of the things I mentioned above, however, will start without, again, confidence. To help increase confidence, the media needs to start emphasizing the positive, not the negatives. Sure, there are probably not much that can be reported that is positive, but it is better to report about the positive possibilities of the coming future. Instead of focusing so much on which sectors are losing jobs, report more on those that are gaining, for example, the medical sector. Instead of focusing on how a project can be built during a downtime, focus on how, if properly financed, it can create thousands of temporary jobs that will bring money flowing into people's hands. Talk about the successes of small business who are taking advantage of the current crisis. List ideas and information on how to get more for your money without necessarily cutting spending. Focus on a possible bright future. Avoid depressing words such as "depression, recession, default, debt, etc." While this won't be enough to fix the economy entirely (other pieces have to fall into place), it will be the first step in curing the economy.
Do you know what consumer confidence is? It is probably one of the most important pieces in the US economy. Without consumer confidence, there will be no spending and no investment. Now go pick up a local newspaper or watch the evening news. Chances are, there will be a lot of reports containing words such as "recession, depression, unemployment, lay offs, foreclosure, etc." Other reports will include how the future of the US economy will look bleak, and will continue to slide. Now think about how these reports will impact consumer confidence. Nobody wants to take a chance during an economic downturn. Nobody will be willing to spend their cash when the economy is so unstable. If the media continues to emphasize on the doom and gloom, surely they are correct, right?
Of course they are, but not because they predicted it correctly. It is because of the consumer confidence. Having repeatedly knock down with constant negative reports of the same news, consumers have no confidence in helping to cure the economy. Sure there are many other reasons, like debt, the credit crunch, mortgage payments and foreclosure. But consumer confidence can be found in the mix of all these problems. Remember the housing bubble? Why do you think people continue to buy property even when the price of one was so high? It's because their confidence was also high (whether it was smart or not is a whole another discussion). They believe that the prices would continue to rise so they could sell their house for more than they bought. What we see today is the complete opposite. With confidence low, people are unlikely to spend, which means less money will be flowing from the hands of one person to another. People are afraid to put money in the bank and banks, with smaller amount of money in the safe, will lend out less money. The reverse has to happen.
Now hammer me all you want about how confidence is the reason why there is a bubble. That is true for the most part. Banks started lending our randomly without taking account of the risk. That is a lesson the US needs to learn from, but doing so now is the worst time. With the stimulus package coming our way, the best usage of this is to create jobs that target those in danger of foreclosure. Instead of simply bailing them out with free money, make them work for it. Help them pay off their debt by giving them jobs and money. When the banks feel more confident that the debtors can pay off their loan, start lending more money but do so more safely. This will help get the economy back up and running by increasing the spending and flow of money.
None of the things I mentioned above, however, will start without, again, confidence. To help increase confidence, the media needs to start emphasizing the positive, not the negatives. Sure, there are probably not much that can be reported that is positive, but it is better to report about the positive possibilities of the coming future. Instead of focusing so much on which sectors are losing jobs, report more on those that are gaining, for example, the medical sector. Instead of focusing on how a project can be built during a downtime, focus on how, if properly financed, it can create thousands of temporary jobs that will bring money flowing into people's hands. Talk about the successes of small business who are taking advantage of the current crisis. List ideas and information on how to get more for your money without necessarily cutting spending. Focus on a possible bright future. Avoid depressing words such as "depression, recession, default, debt, etc." While this won't be enough to fix the economy entirely (other pieces have to fall into place), it will be the first step in curing the economy.