F0ul Thoughts

Mild mannered on the outside, Free thinker on the inside

Recession Behaviour – what happened LAST time

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Everyone always goes on about recessions and how the sky is falling. Yeah, yeah, yeah – that is what they always said!

However, what is very interesting is how business developments in one recession is carried on in the next recession.

Take the idea of nationalizing the banks, It was done in France during the last recession, and joked about in the UK while the UK car industry was being nationalized.

Another one is retail. During the 90’s the food giants, Tesco, Asda, etc were doing food quite well. They had a market share, but they wanted more. Slowly, they started selling more stuff which wasn’t food. It was slowly at first, but by the end of the last recession, it was well known that you could now buy a TV in Tesco’s.

Roll forward 20 years, and the supermarkets are now doing the same thing to the entire retail industry, that it did to the grocery market during the last recession. Now you can do your entire weekly shop in Tesco – no need to visit any other shop!

The point is, recessions are just booms in reverse. Just like a boom means that everyone stops saving and starts spending, a bust means nobody spends unless there is a way to push your debt out of sight!

Once the last recession ended, the most popular way of buying big ticket items was through 12 months interest free deals. These died off as the boom carried on, and credit cards took over.

I wonder what will appear in this market over the next 18 months? Credit cards with 12 month interest free deals on purchases, maybe?


Written by f0ul

February 25, 2010 at 3:57 pm

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