The economy and the summer

“A company is like a bicycle, either you keep moving or you fall down."  John D. Wright’s quote captured what usually happens to the economy during the Summer.

 “A company is like a bicycle, either you keep moving or you fall down."  John D. Wright’s quote captured what usually happens to the economy during the Summer. Businessman, investors and politicians go on Holidays too, and although  the pedal rhythm doesn’t stop, it reduces. As a result, activity slows down, and previous problems  hidden by top speed emerge starting risky falls.

In Fact, throughout history, during those months, have been registered many crises and financial panics. An History review of the past 40 years, 13 of the 17 significant events for the Economy occurs during the Summer.

In the 90’s where summers rough years. This period starts with Kuwait invasion by the Iraqis in August 1990, ending with the Gulf War. Its economical effects where that Spanish Stock Market drops 31,4% in the two and a half following months. Just one year later, Markets troubled again with the Soviet Union’s coup attempt against President Mijail Gorbachov.

Beginning June 1992, previous Summer-Time, Danish NO to Maastricht shook European Monetary System (Libra and Lira left EMS and Peseta was devaluated).

In 1998, Holidays weren’t smoothly either. On the one hand August 17th triggers Russian Financial crisis. On the other hand, in September, the most important Hedge fund, Long Term Capital Management (LTCM) collapsed. In four months it lusts more than $4.500 million, and was closed to provoke  a financial earthquake. At the end of September, FED pump $2.600 million to rescue it.

Too many events for a time dressed to dolce far niente. Coincidence or causality? Summer time is not the cause of economical difficulties or uncertainty market, but the special feature of those months, which allow them to easily emerge, experts says. So that, we can’t relax at all and we have to keep thinking in our business, to come back holidays with good strategies.

*Source: Actualidad Economica