The Dow Jones Industrial Index crash in late 2007
With the start of the global credit crisis back in late 2007/early 2008 we the general public have been bombarded with new reports, newspaper/magazine articles and blog posts on how the economy is doing. We have pundits and professors constantly giving us status reports and if you switch to a channel like Bloomberg or CNBC you get hourly updates on the sate of the economy.
I noticed from the very first days that most people, such as my parents don’t actually understand all this economic talk. They get the basic gist of it, that the economy is in bad shape but besides that they’re pretty lost. Many don’t even know what the term ‘recession’ means. New reporters and columnists throw around phrases such as ‘demand side shock’ or ‘balance sheet recession’ like everyone should already know what they mean.
So, being an economist and a writer I decided to have a go at explaining the basics of economics in a way that everyone can understand. I’m not going to write this in the style of a text book, there wont be any waffling or useless information. My plan is to do a series of posts on a variety of economic topics that will help people understand what’s going on. So that after reading these articles anyone can pick up a copy of the Financial Times or The Economist and understand what they’re talking about.
With that in mind, I’ve decided to write the first series of this venture on the subject of recession. Over the coming weeks I’ll take you through the economic principles of a recession. These will be broken up into 4 sections:
- Part 1: Causes and basic principles
- Part 2: Effects of a recession
- Part 3: Getting through it
- Part 4: Avoiding a recession
Each section will go up weekly and within a month you should know more than just the bare bones of the economic principles of a recession.