Economic Crisis in a Nutshell

After many news and talk shows rambling about the recent global economic crisis, it has finally caught on into layperson's everyday topic. Since there is an indication that our lives are worse off than in the past few years, whether in the form of decreased revenue or sentimental awareness of peers and colleagues talking about their consumption drip. But how a vast and intricately complex topic as global economy becomes understandable to everyone's sense?

To talk about the crisis, one can speculate that any business owners should better explain it with their experiences than a scholarly expert in the field of data mining and analysis. Is it? The question posted is intended to be sarcastic, of course.

The crisis in a nutshell explained.
Take a medium-sized florist as an example. One day in a business life of a florist "Les Fleurs" usually goes on like this: the shop opens, every well-trained staff greets the customers, some higher-level executives take and ship the international (mostly online) orders and execute them to delegated personnel, delivery takes place during the day, the accountants cash in and register the daily account, the shop closes in the evening just in time for everyone to go home and enjoy their dinner.

Two years after the opening, this shop happened to be catching the big wave of globalisation and the chic of the moment. The shop owner considered investing into a second branch, third, fourth, ... until the business goes global with shops in major metropolitan cities worldwide. Any online orders from Seattle that once has to be in bulk can now be made by any love doves. The empire starts to be stable, with everyone thinking of this Les Fleurs as a generic name for florist shop, the likes of Starbucks for coffee.

Then, the multimillion-dollar business is more complex: more staffs, organisational hierachy, sales goal that is projected to grow every year, while the demand for flowers is steady or starting to decline. The company has to cut costs by lowering the unnecessary luxuries: the business-class travel expense, mid-year seminars, client entertainment, and such are cut partially or completely. The situation is not improving, which leads to more cut and somehow positions that once were considered crucial are now nothing to the company. Technological improvement has led to staff lay-off. Fees are incurred to the customers. All of the "necessary" measures to keep the company giant afloat has a negative consequence. Customers are retracting their orders, diverting to cheaper local alternatives. Revenue pool has drained off and in a matter of years dried up. The merger & acquisition, which was the last card a year ago, has become impossible as potential investors do not see any potentials any more.

Suddenly, the glory and legends of Les Fleurs come to an end. Any businesses depending on this shop also suffer a great deal as a change towards opening a new account at new florist shops does not mean a big discount they once enjoyed. Botanical gardens supplying beautiful flowers to the shop have an excess which leads to a lower price and lesser revenue. Some have to close altogether as it is difficult or impossible to find another big name to supply flowers to. The chain of reaction continues as ex-employees have to find new jobs which might take a couple of months. The consumption by these employees and its suppliers drops and hurts the economy as a whole. Internationally, the consequence has a wider impact as the synergistic effect might as well equal a national income of some isolated small island in the Pacific Ocean.

If there are more businesses or these vicious cycle happens to big wigs, it is not difficult at all to start the panic in the minds of everyone, like spreading the wildfire in late autumn.

Now, the next step to recovery does not come from watching the programme of the same name on CNN but the government has to intervene and smoothen the path for mid-income consumers to continue spending rather than saving and hurting the whole economy.