It has struck me this week that changes in the financial sector will always (can I say ‘always’, or should I say ‘often’?) be good news for some, and bad news for others. Some people will benefit, others will suffer. Here are some examples of how the current financial crisis has benefited some people:
- As interest rates go down, those with variable interest rates will be paying less per week/fortnight/month against their mortgage.
- Petrol prices have fallen significantly (20-30 cents per litre by my count) in just the last couple of months.
- Stock prices have fallen also – the perfect opportunity to get into the stock market at rock-bottom prices.
- The price of food has gone down (has anyone else seen signs for the ‘credit crunch lunch’?!)
- What other examples can you think of?
Think back just 12 months ago (or even less). When the economy was going well, we weren’t all doing well. Petrol prices continued to rise, and interest rates were rising by 0.25% almost every time the board of the Reserve Bank met. What was the media telling us then? It’s time to get scared – can you afford to pay off your mortgage?
My point here is that when the economy is doing well, the media can find reasons to try to scare us. If the economy is doing badly, they can find different reasons to make us feel scared. There’s never really a point where we can settle and say – “it’s all good, nothing could be better, there’s now nothing to worry about”.
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Actually, one of the big threats with the current crisis is that it will trigger a deflationary spiral (i.e. when decreases in price lead to lower production, which in turn lead to lower wages and demand, which lead to further decreases in price — thanks Wikipedia).
And of course, to someone with a mortgage, there’s not much difference between lower wages and higher interest rates.
You are right though, there is always being a reason to be scared about money. Unless you are a sparrow, or a lily, or trust Jesus.
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