I'm really interested in what's happening in the world at the moment economically - the contrast between the booming economy in Australia and slowing economies in the UK and USA. Why is there such a difference? Australia is booming mainly because of the very strong minerals boom, and partly because of the oil prices, but how is this affecting the average person - surely only those people actually earning money in this sector are becoming much wealthier - they would spread some wealth through the community by buying bigger houses/cars/shopping more/eating out etc etc, but is this enough to spread the wealth around to everyone else? As far as I can see, why people keep spending doesn't make sense to me - food prices are rising because of the double whammy of higher oil prices and the drought, and everyone's mortgages are going up with the increasing interest rates, yet people keep spending! That's in Australia. Here, where there is also a lot of oil that is pumping lots of money into the community (particularly in Aberdeen!) (and today Shell announced their profit for the year which was some amazing number and makes them the most profitable company in UK history), but I think the UK is more closely ecomonically linked to the US where it seems almost certain that there will be a recession. This means that house prices (that have gone up massively in the last 5 years or so here) are stagnating a bit here in the UK. Also, the banks here have decreased interest rates again, which is the opposite of what's happening in Oz - here there are sales all the time in the shops to try to get people to spend! I think people here are scared of what's going to happen because of the US, but I'm not really sure. Also, recently a large bank collapsed (Northern Rock) and that has got a lot of people scared - the government bailed it out I think, but I don't know details. Also interesting is to see the effect of the stock market downturn the last few weeks - it was pretty severe over here too, and I don't think it's recovered as rapidly as the oz market did last week.
So those are my thoughts Jesse, on what's going on - basically I have no idea, but find it pretty interesting nonetheless! I'd be interested in hearing other peoples' views, so please either comment or join up as an author and blog away ;-)
Cheers,
Selina
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2 comments:
I agree that the current state of the economy is interesting. It is also extremely worrying. As Jesse noted, Sydney certainly is feeling the crunch. Yesterday's news stories contained figures of the estimated number of Australian's who will foreclose on their mortgage this year - 300,000. The estimate is that 750,000 will struggle and feel the pressure. They estimate that Sydney and Melbourne will feel the crunch more than other capital cities. These are alarming statistics. The Reserve Bank meets tomorrow and interest rates are anticipated to rise again.
Yet, in Sydney there is a sense of denial of the state of the economy. Credit continues to increase and people are putting more and more onto their credit cards and don't have the capacity to pay it back. Many have at least 3 months worth of credit to pay back, in addition to their mortgage payments. From discussions I've had with colleagues and friends, there is a real reluctance to cut back spending, instead people are maintaining previous lifestyle expenses when they can't afford it. I find this quite alarming.
Yeah... it's a bit scary.
Maybe advertising has finally reached a threshold where it really really affects people. I know people now seem to go crazy when new products are released, in a way I can't imagine our parents doing when they were our age (look at mobile phones, ipods, etc, and the infantile obsession with constant upgrades). It's also troubling to hear adults getting excited about (what they call) "toys". (I don't claim the moral high-ground here - I'm only human)
I just read an interesting pair of articles about product placement in TV shows, and how it's increasing. They theorise this is being driven by more people downloading TV shows from the internet and/or skipping the adverts. In any case, it is more obvious than ever that TV is nothing more than a means to get us to buy stuff.
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