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Recession is a Necessity

Updated on April 10, 2009

We must learn to cope with Recessions

Macro-economics clearly anticipates the cycles of Boom and recessions in the world economy. In a way recessions serve the purpose of correction in the economic activity and set new directions for development activity.

In the year 2000 we all have seen how the dot.com boom had reached maddening proportions. Any company in the name of Information Technology could go to stock exchange and walk away with unthinkable valuations, irrespective of its track record or balance sheet. Such bubbles were meant to burst.

Problem with present recession is that it happened because American Economy became fertile ground for bubbles. The productive industrial activity or creative entrepreneurship that were once the backbone of American economy out of Detroit, Chicago & Boston were taken over by scheming and gambling by greedy fresh MBAs on the Wall street.

The biggest problem that still is not being understood in its full scope is, when money on its own begins to produce more money by its financial instruments then focus turns away from actual production and value edition and instead manipulation becomes the byword. For almost over last decade it seemed as though only countries like China had the responsibility of production while USA could simply manipulate debt, bonds and shares by circulating it trough its whirlpool of financial spiral to higher levels. In the process decorating the balance sheets of its banks and offering huge profit share to its key executives and share holders. Even the citizens were hoping more returns from their sky rocketing prices of the real estate than monthly pay checks.

Ask any economist and he will say it must all be stopped. That’s exactly what this recession is doing to economy. If you considers that this is deviation from the earlier ways of lavishness and mind blowing spending extravagance then yes it is & this is how it was to end, any way.

Its going to be painful to many. One can not keep spending without earning it first, for too long.

Reach ou to improve national Productivity during Recessions

Recession is best time to improve upon your Time Management
Recession is best time to improve upon your Time Management

Government and business must reform to reduce impact of recession

There are two kinds of impact this recession will have. First it will affect the poor and not so well of citizen as they may loose their job opportunities or their businesses may fail.

Second while attempting to correct the past excesses the economy may go so downhill that many stakeholders may loose hope and confidence it its rebound. This is where it becomes the joint responsibility of the Governments every where and business leaders to take corrective measures to spur the creative entrepreneurship and invest in the productive capacities of the economy. A sort of big push is need all around in the global economy for it to jump start.

Government also needs to help those who are affected by this depression like situation by engaging them through various training and productivity improvement programs, so that with their own initiative, they should be able to propel the economy and when economy picks up, the country has trained manpower.

Such Personal and organizational productivity can be improved using Effective Time Management.

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    • profile image

      economic times 8 years ago

      only good economists can dare to say that recession was necessary!!!!!

    • G P Tripathi profile image
      Author

      Dr G P Tripathi 8 years ago from India

      Actually this happens all the time. We only feel the recession when its massive.

    • IslandVoice profile image

      Sylvia Van Velzer 8 years ago from Hawaii

      This is exactly what my husband say's must happen. Sometimes you have to break the vessel to come up with a better one. If there's change to be made, let it be reform.

    • G P Tripathi profile image
      Author

      Dr G P Tripathi 8 years ago from India

      Thanks IslandVoice, and thru you thanks to you hubby as well. Actually I am studying economics from a different angle. Problem with every branch of study specially in social sciences is that it gets laced with isms and schools of thought whereby the truth is left languishing some where in between. So is the case with Economics. The experts have made just too much of capitalism and communism. This is the reason that when the “truth of economic depression” knocks on their doors none of them have any clue about the true cause of it, may they be presidents and prime ministers, finance secretaries or ministers, Nobel laureates in economics, professors of economics or experts at World Bank, IMF or other leading financial institutions.

      Best regards-G P Tripathi (www.acnowsystems.com)

    • IslandVoice profile image

      Sylvia Van Velzer 8 years ago from Hawaii

      You can expect us to follow your hubs GP. Keep on enlightening us!

    • sophieqd profile image

      sophieqd 8 years ago

      Recession was a neccessity

      Thanks for sharing all this information.

    • G P Tripathi profile image
      Author

      Dr G P Tripathi 8 years ago from India

      Thanks IslandVoice, we shall keep in touch

    • G P Tripathi profile image
      Author

      Dr G P Tripathi 8 years ago from India

      thanks Sophied

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