topicalhuman.com

Many people I talk to, regular people like myself, seem to be very dismissive of any imminent threat of a severe economic recession.

Now, I am not an economist by any stretch of the imagination, but to ignore the possibility to me seems foolish. I think one just needs to consider that here in Australia we are at the start of a major downturn in the mining sector. Alcoa is laying off staff in the midst of a declining market, and Macarthur Coal and Xstrata recently announced they are cutting coking coal production by 50%. Rio Tinto has announced it is cutting 14,000 jobs, many of which are expected to be in Australia. BHP Billiton is also cutting jobs. Additionally, any new developments and projects are being heavily scrutinised by the mining companies, with many new projects likely to be delayed until the markter recovers, and the credit-crunch eases.

Despite some experts predictions that this downturn may be short-lived, this is still going to impact heavily on ordinary Australians, either directly or indirectly. The stockmarket is certainly being affected.

Even seeing retailers are feeling the effects of the global economic situation, and laying off staff. Shoobiz looks like cutting about 200 jobs.

I don’t know what is going to happen, and I certainly don’t know how to fix it. I guess it just surprises me that so many people appear to have not considered the possibility that things could get tough soon for ordinary people in this country. Some I have spoken to have even argued that things are gettting better because the interest rates on their home loans has gone down. But this is a head in the sand response - interest rates have largely fallen because the Reserve Bank is trying to stave off recession by stimulating the economy through interest rate cuts. And the job cuts spoken about above have either only just happened or are yet to happen. It hasn’t hit the fan just yet.

I truly hope I am wrong on this one, but I can see things getting tough very soon.