I just read Newsweek issue Feb 23, 2009. It has an interesting section in it entitled, “Myths of the Recession.” The myths they talk about are:
Myth: The Credit Crisis is Over
Myth: All Industries Are Suffering.
Myth: The Dollar Will Collapse.
Myth: Credit Cards Are Killing Us.
Myth: Here Comes Protectionism.
The article talks about how a lot of things have been overblown by the media and makes it look as if the world is worse than it really is. The myths relevant to my previous blog post are:
All Industries Are Suffering.
Credit Cards Are Killing Us
Apparently, a few sectors are really messed up. Banks, financial institutions, brokerages: yeah they really are in big trouble. But the rest of the business world, things are still OK. A ton of companies have built up rainy day funds and are weathering the storm OK.
As for consumer debt, you hear about credit cards being a big suck on consumers, and people are living beyond their means. But the attention is on speculators and lower income people who took on unreasonable amounts of debt relative to what they were taking in. So yeah, a lot of people are going broke or getting kicked out of their homes. But the number is still a lot less than the general populace (90+ percent of the population) didn’t do stupid things with debt, so much that they are in trouble now.
If you believe this article, and I tend to think that the media does over exaggerate statistics and make things seem worse than they really are simply because they are talked about a lot, then the general population doesn’t really feel the brunt of the recession. As long as they still have their jobs and didn’t spend so much over their means to support it, the world still seems rather…normal.
I think this is why people don’t seem to think the recession is really there, because it hasn’t really hit them. Now lose your job or the roof over your head – yeah that’s a pretty big hammer hitting you on the noggin.
Or if you are an angel investor helping out early stage startups – the world’s mess really does affect you in a very direct way.