Language Shift in Recession
Within the last two days, I have seen two stories on signs to watch for the end of the recession. We all knew the mortgage bankers had made those bad loans. The situation was never as dire as it was made out to be. What happened was a cascading roll of consequences for bad loans, and a crisis of confidence amount consumers, coupled with a huge tightening up of credit.
Most of this is based on perception. It seems to me we are seeing the beginning of the next perceptual shift, just in time for spring, always a time of new beginnings and new hope.
You can read it for yourself: it is one of the featured stories today on AOL News “Companies that will Pull Us out of Recession
Will things go back to the way they were before? Not exactly. These financial events shake things up, people lose jobs, people find new jobs – sometimes – it can even be for the better. It’s always interesting watching for the the signals that change is about to take place. Smarter people than me know how to take advantage of the signals and take advantage of them. I’m happy just to ride the wave and watch for signals. I have an idea that language shifts forecast shifts in perception. Am I making any sense at all here?
These British comedians are hilarious, and all the more so because it if pretty much true!
4 Comments »
Leave a reply to Ken Cancel reply
Recent Comments
Catherine on Donna Leon Crossing Cultu… intlxpatr on Ignoring the Law thani on Ignoring the Law Anon. on British Soldier Kidnapped, Esc… Reeva Mills on Cahors to Bordeaux, Preparing… Wikipedia Donate Button
Amazina
Early Voting in Florida
Here There and Everywhere 
I have learned about the concept of “business cycles” recently and from an historical stand point, there’s always a fluctuation between economic prosperity and economic contraction. Some economists have even measured that the cycle takes about 8 or 9 years to complete. 2008 was, presumably, a stagnation-phase in the latest business cycle.
I agree, language does shift post-crises. The first few weeks of the credit crunch everyone was talking about defaults and interest rates and recessions …etc. Now it sounds a bit more hopeful.
What i don’t get, Kinan, is how much of the cycle is based on perception, rather than on any concrete facts. I have always loved the phrase “irrational exuberance” and thought the market has a tendency to bubble on optimism, but the crashes are equally full of irrational panic and despondency!
One of the most no-nonsense tell-it-like it is commentators I have found is at at this link :
http://www.ritholtz.com/blog/
Some of his stuff gets quiet technical and detailed but he explains things in detail. I frequently have to Google some of the acronyms he uses so don’t feel alone if you don’t know the lingo.
The problem goes much beyond the bank bad loans. All of those loans nationwide were “packaged” and resold as investments to all types of stock investors. The investors relied on ratings assigned by “independent” groups. Only problem is they weren’t independent – they were basically selling the rates for a price. So an investment group buys a “package” that is rated “A+ and secure” when in fact it was based on high-risk loans to financialy unstable borrowers. When the loans started collapsing, all of that investment “paper” was now worthless. Because of IRS accounting policies, many large investment firms and banks are bankrupt. Which means millions of investors stock mutual funds are worthless. When an individuals stock portfolio goes from $100K to $100 their entire retirment strategy and plans are destroyed. They must now hoard every penny they earn for their upcoming retirement which pulls the money out of the economy cash flow. So the banks, which are already in dire straights, have no new incoming cash with which to make new loans – to include to businesses for new infrastructure and expansion. People quit buying so manufacturing firms now have excess inventory and $0 sales – no sales, no money to pay employees. Etc. And, back to the individual, even if they wanted to invest what are they going to invest in? The market, including every major market worldwide, is in the crapper. They can’t really invest in government bonds because the gov’t is offering 0.01% to encourage banks and business to borrow…it’s ugly.
http://www.ritholtz.com/blog/
I checked the blog – I like it. Clear language on a complex subject. Thank you, Ken.