Why things will get worse before they get better

If you haven’t noticed already there is a recession on.
The thing is, in a recession people can still live the way they want.
We are still paid the same amount and things are relatively around the same price.
It is corporations and credit institutions that will be tightening their spending.
I’ve heard people saying lately the light is coming and that we are nearly out of the dark.
That is not the case and this is why:

• The decisions companies make now are going to have flow on effects:
• Redundancies take money out of the pockets of consumers.
• Cost cutting can lead to lack of performance which will cause shares to drop
• The things companies do to cost cut like outsourcing for cheaper labour will change the publics’ view of the company which will deflate brand loyalty.

New Zealand in particular suffers from the Butterworth syndrome.
Remember when Brad Butterworth, the sailor, left to join the Swiss team. He made the right business decision for him. But in the minds of average New Zealand he was a traitor and I think even the sport as a whole has suffered. If Brad Butterworth was a commodity would you still buy it.

New Zealand does not like people who “Sell out”. Our nation is built on the shoulders of go getters and people who don’t give up, no matter what. Change without good reason is a nuisance. Only in NZ could a small town rally to stop a McDonalds being put in.
We conquer mountains physically and metephorically.

The bail out package in America is the worse thing that can happen.
The reason why this crunch started in the first place was the banks and credit companies lent more money then they had and guess what they are going to do with the bail out money? – Lend it out.

I think we won’t hit a depression however I do predict there are more jobs to be lost, more homes to be foreclosed and more companies going under,
I predict it will be late 2010 before we hit the bottom.

Mind you I’m hardly an economic genius so don’t take my word for it, although if you know me you know I predicted this collapse 3 years ago.

Good news though if you’re about purchase a house.