It's a start

Hello, I thought I would use this blog (horrid word) as a vehicle to save my thoughts about the current economic climate. I will also try and summarise all the best/worst news from the week gone by (this may be a bit ambitious) but given that I am unemployed it should give me some focus and allow to develop and further think about the issues at hand. So here we go....

As Professor Nouriel "Dr Doom" Roubini (as you will soon understand I love the guy, economically speaking of course) the "recession train has left the station", it probably left about 2 or 3 months ago. So we are in a recession, a big, bad, ugly recession and I would like to call it a depression. As the title suggests I am a bear. For those who are not into their economic lingo (I don't blame you) it means that I am pessimistic about the short term economic future, and why name it after a bear? Simple, when a bear attacks its paw attacks downwards. And when things are going well its a bull market. If you recall the scenes from Pamplona every year where crazy Spaniards are chased through the streets by bulls. They are always tossed up into the air.

I thought of explaining why I am so bearish, but I realised that it would take far too long to explain. So I will do a quick round up of the major economic news to date:

• Largest intervention in the free market, by a supposedly free market country, the TARP in the US.
  
• Lehman Brothers collapsed.
  
• Germany, as of today, is the first major economy to be in recession, the others are just waiting for the formal confirmation.
• Oil has plummeted from $146/barrel to $60
• The Baltic Dry Index which is "an assessment of the price of moving the major raw materials by sea" has nose dived by 93% since its May 2008 peak.
• House prices are falling in the UK, US, Spain, Ireland and pretty much everywhere.

We'll leave it there for now, and I shall come back to some of these facts and explain why they have happened and why they are important.

I will leave you with two facts about the current direction of the economy:

1. In September 2007 Aston Martin sold 150 cars. In September 2008 Aston Martin sold 3 cars.
2. In the 3rd quarter of 2007 Volvo sold 42,000 trucks in Europe. In the 3rd quarter of 2008 Volvo sold 115 trucks in Europe. That is a drop of a staggering 97.3%.
   

So what is my advice? Save some money, however if we all do that we entertain the "paradox of thrift", and then things only get worse, because if we all save more, fewer people will buy goods, so demand will fall, then people lose jobs, so demand falls again, so we save even more.......

So.....use this recession wisely, learn new skills, learn a language, do a masters, and save some money, as this shall be a once in a lifetime (hopefully) investment opportunity, and remember from the flames of a forest fire a new forest shall be born.