Economic Financial Crisis: What to Expect

In secondary and tertiary education, we were taught that economics, one of the social sciences, studies how people and institutions behave and function when producing, exchanging, and using goods and services. We are also aware that our main motivation is looking for mechanisms which encourage efficiency in the production and use of material goods and resources and producing a pattern of income of distribution which society finds acceptable. Our newspaper headlines bombard us with economic problems most of the time (if not every day). Because economics is a social science, it reflects the way economists analyze problems. Collecting and analyzing observations about economic phenomena – prices, employment, costs, Gross Domestic Product – is the core of the work of an economist. Recently, we are faced with an economic financial crisis. What must we expect then?Aside from the aforementioned question, knowing that we are facing economic financial crisis, we have the following questions: What is recession? What happens during a recession? What are the causes of economic recession? What is inflation? How to survive the great depression? All these and more are what we ask to ourselves and to others. Wikipedia.org reveals that the economic financial crisis of 2007-2009 has been the most serious financial crisis since the Great Depression. There are many identified causes and effects. Are we facing a bleak future? Thomas Sowell stated “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” People these days are more concerned in making a living than living life or enjoying the bounties of life. The bottom line is our endless wants and desires. Since we are faced with economic financial crisis, this is the ripe time to go back to the basics. First let us differentiate wants and needs. Second, let us learn the virtue of simplicity. Finally, let us learn how to save. These three words are like clanging cymbals to our ears yet we have never inculcated them in our hearts and minds. Let us examine what we will get if we apply the three principles as part of a crisis management plan.•    Differentiating wants and needs. Oftentimes, we buy something because we just want it. We are impulsive buyers. Ours needs are only simple but our wants are complex. We confuse the two words so we end up walking on the street without a penny in our wallet or we end up arguing with our spouses because we failed to buy all that we need. •    Learning the virtue of simplicity. We work in order to live and not vice versa. Henry David Thoreau once said “As you simplify your life, the laws of the universe will be simpler; solitude will not be solitude, poverty will not be poverty, nor weakness weakness.” •    Learning how to save. The truth is we are “spenders” and not “savers”. We earn a few dollars a day/week, we spend what we earn in just a snap of a finger without bothering to save for rainy days. These three principles of a crisis management plan if applied will lead us to expect a brighter tomorrow while facing the economic financial crisis today.