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Tuesday, 6 September 2011

Recession or no recession? Economists might say ‘no’, but the Dutch ‘rich and famous’ say: “Oh yeah”

Under economic officials and pundits, there are often discussions on the two important questions:
·         whether a recession is going on or not?
·         if yes, when it started?

These questions are quite hard to answer, as it is quite hard to define and measure a recession. The official definition of the American agency NBER states:  "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."

Even this official definition is quite hard to measure, as the duration of the necessary time period is not defined clearly and the mentioned economic data might not all be bad during the period of the recession.

This leads to the phenomena that economists hesitate to call a period a recession, while the recession is already present in the hearts and minds of the people at Main Street, or as it is called in the Dutch situation 'Dorpsstraat'.

This 2011 recession (or what I rather prefer to call `the continued depression of 2008´) is definitely present in the hearts and minds of the Dutch citizens. 

And not only at ´the usual suspects´(lower class and middle class citizens), but also at the higher classes of the Dutch economy.

The Dutch newspaper De Telegraaf ( writes a story that illustrates very well how the recession hit all the Dutch citizens (link in Dutch).

Domestic violence in residential estates, due to financial worriesThe economic crisis causes so much tension in the high-priced estates in ´Het Gooi´ (compare with Hollywood / Beverly Hills area), that domestic violence is soaring. 
This is witnessed by mayor Elbert Roest of millionaires-village Laren.`In my community live about 1600 freelance professionals. You feel that tensions among those people grow, as this is the line of work that has taken some serious blows from the economic crisis. The recruitment of specialists is decreasing´, according to the mayor in De Telegraaf.   
‘The economic crisis is not very visible, but it is tangible. Tensions are soaring and this translates in an increase of domestic violence. The SUV múst remain driving, the children múst visit the prestigious Laren’ field hockey club and the credit card múst be used at the expensive shops of Laren. People are keeping up appearances and remain living in a façade. In the end, they can’t handle it anymore.’
Does this sound like a recession (depression), or does this sound like a recession (depression)?!

Forget the economists; the depression is up-and-running!

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