Tom Scollon
Tom Scollon
Chief Editor

Will we love again? Will we ever reach a time when we can relax about our job, our mortgage, about our life time savings, go out and have a great time and not worry about tomorrow?

Well yes, for most of us those times will return but it could be some time off.

What we are experiencing in the global economy has a gestation time to work through. And just as it takes roughly nine months from conception for a human to be born it will take a minimum time for this economic malaise to work itself through.

No amount of words from leaders – belated as they are I must say – will hasten the process. Sure interest rate cuts may help a little but only a little as the real cost of borrowing at the moment when measured against risk is high and there is not a lot of margin to lower rates much further in a real sense. So the missing factor here is confidence.

Stimulus and bailout packages will also help but only in the goodness of time as handouts are falling on barren soil in many cases. And it is going to take a whole lot more time before we will see some of these handouts reap any significant harvest.

At the end of the day it all depends on us. At University we were taught the basis to Economics is investment, consumption and government spending. But at the end of the day it is all about consumption – as that also drives investment and government spending – ultimately. At the moment we – mass consumers - don’t want to spend as apart from not having the confidence there is not a whole lot that we need. And if you think about it we could stay this way until there is a combo of a lot more confidence and/or the need to buy. That is our stuff gets run into the ground and/or there is a new beaut iteration that we just have to have.

At Economics school they did not teach us how to calculate the ‘how long’ it will take to work through consumer doubt. You see economics is as much an art as it is a science.

So we have overdosed on consumerism in the last 3-4 decades and maybe materialism – at least in the western world - is on the wane? Maybe love becomes the new paradigm.

Enjoy the ride

Tom Scollon
Chief Analyst