Friday, June 19, 2009

The Forgotten Economic Participants

In the Macro Economics sense, many people are looking into how we got into a financial crisis and deep recession. Marco Economic analysis of the financial crisis complete with Toxic Assets, Credit Default Swaps, etc., etc..

In the Macro Economic sense, many people are looking into how Government Response of simultaneously deploying Quantitative Easing and Keynesian Deficit Spending, in an environment of current high Government debt levels, will effect the economy going forward.

Here is an interesting Macro Economic item that gets no attention: What about the consumer and business of all economic sizes and shapes, from all Political Quarters, that entered the current crisis/recession with low debt, cash on hand, balanced budget, and secure credit lines?

Little attention is paid to this section of consumers and businesses. Believe it or not, they do exist in large numbers.

This particular group of prudent consumers and businesses: How do they react during the recession? Did they spend more or less? Did they cherry pick bargains since they were in a position to do so? How does this group react to the end of the Bush Tax Cuts expiring 01/01/2010? How does this group of prudent households and prudent businesses react to spiralling Government Debt? What about the bail outs of financials and car companies?

This particular group of prudent consumers and business do not need to de-leverage. The falling values of residential property and commercial property are concerns but are not a crisis to this particular group. This particular group were in a position to capitalize on falling prices in many sectors and conversely could weather $147 a barrel oil.

Studying this particular group is valuable. What this particular group did correctly is as important as what went wrong for other groups.

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