The Muffin Effect – It was after the Iron Maiden show back in February that I decided that probably time again to continue blogging. I had started back in 2006, a few days into my MBA course I needed a channel to vent out my feelings and blogging seemed to be the way out. I had recently acquired a new laptop and while Floyd and Indian Ocean played at the background the lazy Sundays back in Manipal gave me enough time to blog.
Don’t quite remember when I stopped and why too, but when I did decide to continue thought of creating a new blog altogether.
I never quite gave much thought about the name. The current one was found while researching on the Sub Prime crisis and the current recession which has hit us hard. The Australians it seems are very anxious to know how would they avoid recession have turned to some unexpected strange economic indicators in order to find answers. They obviously don’t trust their official data and their so called “pundits” are turning to find signals right from Muffin sales to home brewing kits. What they did find was that muffin sales were holding up. Advocates of "the muffin effect," as it was dubbed by the Australian Financial Review recently, believe that when the economy slams into reverse, office commuters deny themselves their usual muffin with their morning cup of coffee. Being a person who did get hit by the recession and still move on the theory was quite fascinating to me, though it seemed quite strange that refusing one muffin would hardly cause the economy to turn around. The term however was “Catchy”. But I still don’t know what made me name my blog after it.
Fast forward to the present day I was chatting with my elder brother based in Baltimore. He was going through my blog and put in a query – “Why The Muffin Effect”. Though my “mates” from down under might think muffin effect a mean to track the recession their neighbors across the north pacific ocean think otherwise. In the US the muffin effect is used to describe the massive overhang of fat when ones jeans or pants are way too tight. This look resembles the way a muffin explodes over the edge of its little paper holder.
Recession to overhanging fat, quite a journey eh. Fat is required but overhanging fat coupled with way too tight jeans aren’t a pretty sight. The US created quite some amount of “excess fat” in terms of giving “subprime” and “high adjustable mortgage loans”. Trimming down on the “fat” was never considered and the “muffin effect” was getting uglier by the day. An increase in loan incentives such as easy initial terms and a long-term trend of rising housing prices had encouraged borrowers to assume difficult mortgages in the belief they would be able to quickly refinance at more favorable terms. However, once interest rates began to rise and housing prices started to drop moderately in 2006–2007 in many parts of the U.S., refinancing became more difficult. Defaults and foreclosure activity increased dramatically as easy initial terms expired, home prices failed to go up as anticipated, and ARM interest rates reset higher. Foreclosures accelerated in the United States in late 2006 and triggered a global financial crisis through 2007 and 2008.
Suddenly it seems strange that the financial crisis has crept down to the farthest corners of the world by way of a “Muffin”. All of us who do cook would always peep through the oven glass to take a look at The Muffin rising slowly and tearing though the paper edges of its holder. The sight gives satisfaction to the efforts. But these days we would want our muffins to be trimmer. LEAN is the order of the day and the trick is to use lesser quantities of the mixture.
No comments:
Post a Comment