can market effect your life??
December 22, 2008 12:56am CST
the economy of every country will be effect due global down in thee market.how much it will effect to the life of simple human being like you and me friend.tell me what are the effect happens in your life due to global down in the share market and IT industry,and all other sectors. how much this will effect to a common man??
1 person likes this
22 Dec 08
The economy works on a simple cycle and takes on an upward or downward spiral in different situation. The market is based on the fundamentals of Demand vs Supply. Lets skip the part on how these 2 variables determine prices in a free market economy and look at how it affects the spending power of people with a local market. We must cast out the effects of imports and foreign labours which will also affect the outcome. If an economy is self-sufficient, consumers of the local market will affect the economy. First, there must be an injection of capital investment into the economy. Lets use the example of a government project of building a Mass Transit System throughout a city or country. With the project, jobs are created to facilitate the construction. So when people are employed, they have the power to consume (spend) on other products and services. building materials required for the structural development also boost sales for companies and increase in production to meet the demand. This will also generate either higher earnings or more jobs. In this senario, you have seen how a simple government expenditure (injection) can spur the economic activity. In the most ideal situation, a expenditure should have a multiplier effect of at least 1:1 ratio. This is assume that people don't spend (Marginal propensity to save = 1). Other factors like foreign workers may be a "leakage" or reduce the multiplier effect if they send their money back to their home countries to support their family. Consumption on imports may also serve as a leakage as it will spur the production of the exporting country so the local production of competitive products may be affected. That is the reason why government representatives tries to sign Trading agreements to ensure that they either balance their import and exports or slightly more exports vs imports to create trade surplus. Trade surplus is good but it is soon offset by the appreciation of local dollar (demand of currency of the exporting country) making the exports more expensive and thus loses competitiveness to other countries exporting similar commodities at lower prices. Technically, if everyone continues to consume even with problems in the housing problems. The problem would not have been in the current situation. As people gets more negative towards the economy, they tend to save more than before causing leakage. This will create a downward spiral of cutting production and jobs due to a decrease in demand. It doesn't matter where it hits, it is just a matter of time before it affects other sectors (industries) that forms the overall economy. The act of bush administration is to try and introduce stimulus packages to stimulate the economy. However, it relies on the support of people not limited to US citizens but the global population to return to their positive sentiments for the package to work. Else the billions of dollars will only go into the savings of people or large organization thus not helping the economic growth. I have tried to explain the situation and what powers the economy in the simplest form hope that you can understand it and think about where you stand. Cheers and Happy MyLotting...
22 Dec 08
By the way, economics offers insight based on an ideal situation where many variables (factors) are under controlled. What works in real life is the fundamentals and how individual factors come into play and how much it influence another will result in a change of the outcome. There are too many uncertainties in this world that undermines the effectiveness of economic theories and policies derived from these basis. The economy will recover as it is always going in a cycle. How long do we take to recover depends on ourselves. It takes 2 hands to clap and in this case billions pairs of hands are needed to get the economy back on track.
• United States
23 Dec 08
it greatly affects man! jobs are leaving or not available and people are losing their homes and not being able to eat!! my bro has been laid off of 5 jobs in the last 2 years and may go over seas to find some thing now.. i know a lot of people that lost their jobs and have been looking for months.. my hubby took a pay cut in his new job and businesses are closing everywhere.. food prices are up.. people are not able to buy xmas presents etc.. its really awful
22 Dec 08
as a graduates, the current economic market affected us a lot. the direct result is harder and harder to find a job.due to millions of jobs are cut down. at the same time..the salary is much lower than usual. to my family and my relative's company ,it's much harder for them to get lots oversea order. though Chinese government adopt lots policy to lead citizens out for this cold winter,but it takes time..and the CPI is still high..and the pressure of buying a house, a car and support the family is extreamly tough..