Recession – A Beginner’s Guide

Recession – the bane in any economist’s jargon-filled handbook. The flip side of economic growth, the beginning of the end, the rocky-est bottom imaginable. For an economy to stick their hands in the air and admit, ‘Okay, we have to face the facts – right now? Our economy SUCKS’, it is often both a difficult and degrading thing to do. Yet, as we’ve seen with the likes of Greece and Ireland, it has to be done if ever a country is to bring itself back to full strength. HA, I feel sorry for them, I’d hate for Britain to be in… wait, what? Britain has always been one of the powerhouses of the global economy – with a world-class university system, as well as being one of the first ever countries to industrialize, you’d think we’d hold our own and be king of the hill, right?

Sadly, just like our star-studded friend in tights at the beginning of the article – even the most powerful of people are not immune.

Standard economic theory, a la A-Level Macroeconomics, states that a recession is ‘six months when real GDP (growth) is negative and can also be characterised by a negative output gap within a domestic economy’. Yikes. Despite the Olympic Games providing a large boost to our economy’s growth, it was only ever going to be a pipe-dream that this would grant us sustained, economic growth. We have to take off our rose-tinted spectacles and realise that the economy is in need of a face lift. Despite good news that the unemployment rate declined last January, there are fears that as Britain takes off its gold-plated AAA rating and settles for a not-as-impressive AA1 rating, we will have to embrace the word we hate so much, as economists speculate Britain will delve into triple-dip recession *cue high-pitched girly scream*.

So what impacts will that bring for Our Majesty’s pride and joy? Let’s just say we shouldn’t welcome it with open arms as, well, the symptoms aren’t something to look forward to. Often you hear people just blame any old thing on the recession. ‘Seriously, how long is this bus taking? Buses are so late these days!’ ‘It’s the recession, the recession I tells ya! *shakes fist in air*’. Not everything can, but certainly we will see a reduction in capital investment, as a squeeze in company profit means Mr Boss Man might have to save up his coppers until the ‘calm of the storm; as well as a reduction in our disposable income as a consumer – which may mean that you Subway lovers might have to reduce your foot-longs to a six-inch. It certainly won’t prove beneficial to any active member in the domestic economy.

The Chancellor, after his annihilation by a Mr Ed. Balls, is being pressured to boost spending on infrastructure projects and housing if we don’t want to have a taste of this unappealing triple-dip – I for one, don’t want to remain at this rocky bottom. No Power Ranger, not even 007, can save us from recession. If we want to escape, then, we need to consider if our current economic plan is going to bring us out on top. If we do? Well, to mimic a favourite ‘Wallace and Gromit’ special of mine – it’ll only be by ‘a close shave’.

Joint Venture – Google and NASA

In the Economic climate, a firm or business may choose to grow in order to achieve a higher level of profit or acquire themselves at a higher position in that market. A specific example of how to do this is a joint venture. A company can choose to merge together with another in order to exploit other markets, or they can ‘join’ together to pursue a common goal. This is not the same as a merge (an example being the Cadbury/Kraft merge mentioned in my previous post), but merely a collaborative work in reaching a mutually strategic target. Firms may come together for joint-research projects. An example of this is with Google and NASA in recent years.

NASA Ames Research Centre, located in California’s Silicon Valley, and Google inc. decided to collaborate on numerous technology focused, R&D projects that will pair some of the world’s most influential technology. The companies signed an MOU that planned operations for large-scale data management, widely distributed computing, bio-info-nano convergence, and a development of the entrepreneurial space industry. It also highlights plans for Google to develop up to 1 million square feet within the NASA Research Park at Moffett Field.

NASA Ames Centre Director G. Scott Hubbard believes that the partnership ‘Presents an enormous range of potential benefits to the space program. Just a few examples are new sensors and materials from collaborations on bio-info-nano convergence, improved analysis of engineering problems, as well as Earth, life and space science discoveries from supercomputing and data mining, and bringing entrepreneurs into the space program.’ It is clear that the joint venture will benefit both companies in different ways, but G. Scott Hubbard believes that “While our joint efforts will benefit both organizations, the real winner will be the American public.”.

The companies may have chosen to do this joint venture because “Google and NASA share a common desire to bring a universe of information to people around the world,” said Eric Schmidt, Google chief executive officer. “Imagine having a wide selection of images from the Apollo space mission at your fingertips whenever you want it. That’s just one small example of how this collaboration could help broaden technology’s role in making the world a better place.” He believed that while it would benefit both companies in relevance to profits and an expansion in their individual markets, it would also benefit the consumers who use their products on a day-to-day basis.