Thursday, March 26, 2009

A Story About Recession

This is not original, but the story strikes a chord somewhere.

This story is about a man who once upon a time was selling Burgers by the roadside. He was illiterate, so he never read newspapers. He was hard of hearing, so he never listened to the radio. His eyes were weak, so he never watched television. But enthusiastically, he sold lots of Burgers.

He was smart enough to offer some attractive schemes to increase his sales. His sales and profit went up. He ordered more and more raw material and buns and sold more. He recruited more supporting staff to serve more customers. He started offering home -deliveries. Eventually he got himself a bigger and better stove. As his business was growing, the son, who had recently graduated from college, joined his father.

Then something strange happened.

The son asked, "Dad, aren't you aware of the great recession that is coming our way?" The father replied, "No, but tell me about it." The son said, "The international situation is terrible. The domestic situation is even worse. We should be prepared for the coming bad times."

The man thought that since his son had been to college, read the papers, listened to the radio and watched TV. He ought to know and his advice should not be taken lightly. So the next day onwards, the father cut down the his raw material order and buns, took down the colorful signboard, removed all the special schemes he was offering to the customers and was no longer as enthusiastic. He reduced his staff strength by giving layoffs. Very soon, fewer and fewer people bothered to stop at his Burger stand. And his sales started coming down rapidly and so did the profit. The father said to his son, "Son, you were right". "We are in the middle of a recession and crisis. I am glad you warned me ahead of time."

And this is a question we must pause and ask ... are we talking ourselves into economic recession? Is it, in some way, becoming a self-fulfilling prophecy? I am not an economist, but i feel that maybe ... just maybe ... and this is not to say everything is hunky-dory with the economy ... we are creating the economic scenario by talking ourselves into it? True, sentiment is bearish, but somehow, the bad news makes front-page news, while the good news you must look for, and consider a job well-done if you actually manage to find it. In other words, just as there was a bubble of unrealistic expectations, are we seeing an opposite phenomenon, again made of unrealistic expectations?


Anonymous said...

On a lighter note... we shd not let our business run by the so called "management whiz" who are pushing us further towards recession :-) Sometimes being Gandhiji's 3 monkeys help!

Atul said...

Gandhiji ke 3 bandar? you could say that.

Wiertz sebastien said...

A really nice post. I liked it !
I hope the recession did not impact the Happy holi days ! ;)

Atul said...

some of the beautiful things in life Wiertz. :-)

partha said...

Nice Blog. Hope you are doing great, as usual, Atul...

Anonymous said...

Recession indeed is a self-fulfilling prophecy just like boom. However there are limits on both sides. Once we cross those limits the reality starts biting and that is when you see the correction. Smart money always follows the leading indicators.
This is probably one of those places where second derivatives has some actual value :-)