Dot Com Burst to Credit Bubble

Today, we had a discussion on ethnocentrism in class. Ethnocentrism refers to degree of preference to goods and services produced in one's own country. India ranks low on ethnocentric scale, while USA ranks very high.

The Bill Clinton government capitalized on this trait of American consumers. In Dot Com burst scenario, American consumers who are shopoholics, became skeptic about buying. As there were lay-offs and credit crunch was on upsurge, these shopoholics abandoned their marked trait of shopping, which was an agony for businesses. At the same time occured the 9/11 incident and that's when businesses built on American ethnocentrism. 

Consumers were encouraged to shop, not for self, but for America. Banks provided easy credit, adding ease to desire for shopping. Well, the idea was great. Marketers majorly aim to sell sentiments than anything else, but the utility of this idea was overestimated.

As consumers kept on buying on credit, we encountered what is called sub-prime crisis, that led to formation of so-called credit bubble. All these led to worst ever economic recession, that has adversely affected almost all businesses in the world.  

Well, nothing is sustainable, neither prosperity nor haplessness. Click here to read more on sustainablity. As such, there are solutions to the contemporary economic crisis by economic gurus. I will elaborate on latter in my next post.