For when the rains return, and the land once again overflows with milk and honey, it is a strong farmer who doesn?t start thinking of a new dress for the wife and a new Mercedes for himself. Suddenly all constraints appear to dissolve and deep urges to expand are stirring, now that credit lines open up again with a flourish.
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Farmers went on a spree, and so did miners. Manufacturers also assumed indefinite support for their businesses. Cost increases weren?t resisted with the same vigour, and labour costs also rose as inflation reflected the higher import costs. Dividend payouts increased. And fixed investment jumped, often assuming that what otherwise would have been marginal propositions could now be depended upon to be sustainable.
Instead of mainly paying off debt, rigorously maintaining cost control and only conservatively expanding capacity, the 2001 windfall created many temptations that could ultimately not be resisted.
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