Wednesday, 15 October 2008

Moody business cycles

Did someone say the cycle was dead? It now appears increasingly that the business cycle is simply an offshoot of the natural cycles of human moods. This really should not surprise those who understand business is the outcome of human endeavour. Staying permanently happy, as being permanently sad, is mentally destabilising. As a tangential illustration which country is credited with possessing a forced and widespread optimism? And which country has the highest per capita usage of therapists?

Imagine the cycles, as with moods, as oscillating springs. Now imagine Alan Greenspan, a quite clever little boy in his nursery, being given the spring and being asked to remove one half of the oscillation. What happens when little Alan eventually has to let go of the spring. The reverse oscillation will be particularly violent.

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