Many people look forward to the early recovery of the global economy. There was hope that the stimulus packages in USA, China and other countries would be able to spur this recovery. The bad employment report in USA for June was a big disappointment. It caused a big drop in the stockmarkets.
Several economists said that the situation will continue to be bad for a long time. If more people lose their jobs, they will cut their spending. This will cause more jobs to be lost. It is a downward spiral. I share this view.
For the global economy to recover, it is necessary that many jobs be created and that people are sure that they can find a job, even if it is at a minimum wage, as long as they are willing to work. They also need a way to defer the repayment of their debt until they find a better paying job. My suggestion is set out in this article.
I hope that the governments in some countries will adopt this idea, and other governments will follow, if the idea proves to be workable.
Tan Kin Lian
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6 comments:
Create job vs create demand is another chicken and egg problem.
One side says create more job.
I give a simple example. A company sells pots and pans. The boss did not cut more the salesmen's jobs since the government has given help in terms of job credits etc. But nobody is buying the pots and pans because everybody is tightening their belts. So can this company survive for long? How would the boss be able to continue paying the salaries of the salesmen? How long is the government going to offer financial help? Where does this money come from?
On the otherside, jobs are lost, more people become unemployed or retrenched, how do you expect people to have extra money to buy pots and pans ie spend?
If there is no demand, there will be no supply.
So how to create a demand (ie have means to buy pots and pans), so that there will be a supply (ie jobs retained or created)?
Also, is our economy really that bad? Figures said one side of the story. The other side of the story comes from looking around us.
Look at the coffee shops, restaurants, shopping malls, PC shows, car showrooms, launch of condos etc. People queue just to get into the PC show, restaurants. These places packed with people / buyers loaded with cash.
Maybe the REAL situation is not that bad or serious.
starlight
Hmmm. How can it be bad when SM Goh is advising Singaporeans to spend on such things as foot massages.
I hope Singaporeans are not taking his advice literally and are well aware of the consequences, if they cannot afford.
SM Goh is not going to tell them he was just joking.
Lost Citizen
Starlight,
Quite agree with you that the ground level economy is not as bad as the macro figures suggested.
But things are OK only for a segment of the population. This segment is what you described as the crowds and queues to ...
But how big this segment is nobody can tell.
The other segments that are not doing OK also did not protest in the streets, pitch tents to live, become illegal hawkers etc. So you also cannot tell.
But what we can be sure of statistically speaking is about 60 over % will vote PAP at every election. Next election will also be no exception, I think.
This will ensure stability and peace for Singapore for many years, never mind what recession.
Economists base their prediction on numbers.
For people who understand business, it's very clear the unemployment problem will continue for a long time.
A business, be it startup or a new department, takes a lot of time to develop - months and years.
When the crisis strikes, it wipes everything out, essentially pushing people back to the starting stage.
It's going to take a while for everything to grow back.
Starlight,
As to your example, the pot and pans company should have shut down since it's clearly not providing value to its employees and the society with their products. Those people involved should start looking to create value in other ways (through other products and services).
Also just because you see people shopping doesn't mean there are no people affected by the economy. It's like saying Singapore doesn't have an aging population problem because you don't see a lot of elderly people on public transport.
Just last month (June), we were at Beaulieu Restaurant (1st time there bcos of TV Food Program) to celebrate someone's birthday, I noticed for each person having lunch in the restaurant, there were 10 others of lower economics status having simple packet lunch at the beach. So each person at the PC show, etc, there are many others outside walking around their neighbourhood as their past times.
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