Recession: Prevention and Way Out

I am not a financial expert, but used to view the world with my limited knowledge and unlimited passion. I believe, it is high time for us to think about some preventive measures to avoid frequent financial meltdowns, or we need to develop some mechanisms to automatic restructuring of markets (without war/armed conflicts) to avoid job cuts and related miseries. It may be a natural end of a capital based system, but it will be good, if we can do some thing to reduce its impact on us(whole world). I feel it is worth sharing my thoughts regarding prevention of recession in future as well as on a way out from 2008 recession, which is gripping the world at the time of writing this.
Basically, if we see the bottom line, avoiding all the financial terms, recession is the result of financial credibility loss. The financial world is driven by the fight for the survival and the fittest emerges as winners. As a result of this the wealth gets accumulated in limited points, even though regulatory authorities and taxation are in place. When the economy take measures like job cuts to save individual players or units to survive, it indirectly pumps more distrust and reduces the purchasing power of more people; in-turn adding more to the credibility loss.
It seems once the economy is recovered we can be more preventive. Governing bodies and/or regulators should be more vigil on the purchase power of common public. They should be more supportive, both for helping more people to attain purchasing power and for retaining the purchasing power once it is reached. This can be either by social security measures, or by automatic acquisition of a fixed percentage of shares of profit making institutions, if it controls a considerable meaningful amount of assets to the financial system, specifically for generating more jobs and supporting individuals with income below some bench marks.
It will be better to have little slowdown in profit making at good times to create a society with more purchasing power around than getting in to trouble in cycles (naming it as a cyclic unavoidable phenomenon to escape from the responsibility of tackling it!). Rather than terming such initiatives as protectionist/socialist and discarding such options, such inclusiveness will bring more continuality to the system.
Prevention is better than cure. A stitch in time saves nine. Planting a tree at good times will return its fruits at bad times (a Malayalam proverb; sampathu kalathu ka pathu nattal, aapathu kalathu ka pathu thinnam, means, If in good times 10 seeds are planted , at bad times 10 fruits can be eaten). Our world have a lot of proverbs/lessons to guide us, let us be optimistic.
While the world is going through an economic slowdown, the governing bodies should invest in the customers than investing in the producers/suppliers. It is being understood that suppliers are not able to create their respective customers, or failed to create a purchasing community for their products/services. So the immediate action of the states/authorities is to enable more people with financial security and thus providing them a mind set to involve in more purchases than financially aiding big corporate houses, which have accepted their failure in anticipating and/or preventing a meltdown. Right action can give right signals, right signals can bring joyful results.

Throw away money, We can have a better life!

February 12, 2008

I was thinking a lot about why people are so particular about money. I learned in my schools, only because the barter system of exchange was bulky money was introduced for convenience.
But later, it has proved that invention of money distroyed the necessity of it! Now the world is behind money, only for the sake of making money.

I was observing employed young people around me, including me. We bargains and gets more salary from our employers; except buying a home or some thing like that what useful activity we are doing with it? We lock it some where, you call it insurance, mutual fund, share market, etc; replicate it and again repeat the same.

Instead of this, why can’t the state (which is a collection of us) provide some open ended schemes? If I am having money and do not able to do anything with it; I will give it to the state. If I am ill or not in a position to exist my self, let the state help me.

Instead of spoiling our heads with the permutation combinations of the money multipications, let us think what and all can be done in our surronudings to make it a better place — plant some useful vegitables in road side, make some pickle or some house hold items, organize poor people around us, spend ourself (includinng money) on them and help them to build a better life. This may be a better insurance for our family, since the investment in people will return more than the investment in an insurance company, believe me!

So I think, time has ripened enough to re-look at relevance of money in civic society; the needs should drive us than the profitability.

Thanks for spending time with me. Some times it may be an empty talk; but it worth more than money, is n’t it?

Peace to all (Om Shanthi OR Assalamum Alaikkum)!