Bull in a china shop
Companies burdened with debt and dependent on discretionary spending by consumers are currently as fragile as the finest crystal or bone china. So, sadly, there's no surprise that Waterford Wedgwood - which had net debt around £470m last spring - has called in the receiver in Ireland and has gone into administration under insolvency procedures in the UK.
Almost everything that Waterford Wedgwood manufactures is a nice-to-have rather than a must-have. And most of us are thinking twice about shelling out on nice-to-haves.
WW's collapse is a resonant event that speaks of a noxious global squeeze on consumer spending. But although it has more history than most of the FTSE-100 companies combined - Waterford, Royal Doulton and Wedgwood are great names from Britain and Ireland's industrial past - WW is not a huge company.
Global sales are £650m. In the UK, it employs 1,900. Of these, around 600 work in manufacturing at Barlaston.
There are 5,800 employees outside the UK. And (lest you've forgotten that we live in a globalised world where production gravitates to low-cost economies) the biggest manufacturing centre is Indonesia, where there are 1,500 staff.
The brands will surely survive under new owners. And my understanding is that there have already been expressions of interest from possible buyers of the brands.
However, what happens to its manufacturing plant - and that of many other companies like it - is what matters. Even if in WW's case there are just a few hundred British manufacturing jobs at stake, the UK can ill afford to see yet more precious exporting capacity relocated to more productive competitor economies.
That said, for biggish British companies this morning, there's some good news on this, the first proper business day of the new year.
What I mean by this is that there's no news of any significance from them - and that's good news.
If trading by retailers over Christmas had been even worse than investors had been led to expect, there would have been emergency announcements by those retailers (under Stock Exchange rules).
So in the coming few days we can expect the likes of Marks & Spencer, Next and Debenhams to say - in their scheduled trading updates - that turnover per square foot of selling space is falling pretty sharply and that profit margins have been squeezed by heavy discounting and promotions. But we knew that.
And we can be fairly confident that they remain on course to meet much reduced expectations for their profits this year (a bit over £600m in the case of Marks & Spencer, down from £1.1bn last year, or an eye-watering drop of around 45%).
More generally, the question to be asked is whether most of the bad stuff that could happen to companies is already discounted in stock market prices.
Analysts are forecasting that the earnings of European companies will fall fairly sharply this year and that those of US businesses will drop in the first half before recovering. The outlook is more mixed in Asia.
Against that ostensibly gloomy background, stock markets have been rising fairly generally over the past two or three weeks. The FTSE-100 is now more than 20% above its low point of last year. The S&P 500 is 26% off its 2008 bottom. Asian stocks have been rising solidly for the past eight days.
Shome mishtake, shurely?
Not at all.
Stock markets are looking at the prospects for 2010 and 2011. And however rotten 2009 will turn out to be, in the form of companies going kaput and unemployment rising sharply, investors are increasingly confident that armageddon has been avoided.
They look at the way that central banks have slashed interest rates and are - in effect - dropping money from helicopters. They look at Barack Obama's plan to pump something over $700bn into the US economy in the form of tax cuts and public spending. And they conclude that an economic turn for the better must surely come towards the end of 2009.
Here are a couple of almost needless words of caution.
Stock markets aren't always right (we've all learned that painful lesson in the past couple of years, haven't we?).
And, as and when we see the green shoots, they may be fragile, stunted and spotted with a disease called inflation.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~42~RS~)
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"Bull in a china shop"
....and I thought this was going to be a full and frank article about Gordon Brown's hopeless attempt at being PM, while still being the real Chancellor, working his puppet Alistair !!
Well at least he's "saving the world including the USA (mustn't forget to mention the USA as many times as possible !!)
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"It would work much better..."
said Gordon on the Andrew Marr Show
"..if all the G20 countries adopted the same policy of pumping cash into the economies rather than just GB in isolation."
Very true Mr. Brown.
Similarly, if I owe 100 quid to a bank and I get 20 of my friends to all put 5 quid into a financial stimulus fund, then we will all end up owing only 5 quid each.
Great Idea. You are a Genius.
Because if my friends don't do this, then I can blame them for my 100 quid debt.
Brilliant. Stunning. Visionary.
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Did I spot a little bit of positivity? Most unusual.
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Is someone calling the floor?
"Here are a couple of almost needless words of caution."
...is that optimism or are you saying another frost is due?
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Wise words of caution because many have repeatedly underestimated the severity of the downturn. People seem to want to write economic history before it has happened.
The economy is very different to the 30's or even the eighties. There are substantial and variable time lags between events and policy changes and the resulting effects. There is much more to be played out.
Even people who are maxed out with credit will be in denial for months before they come to terms with living beyond their means and take action.
Government policy is in confusion and far from Cameron fantasy of Labour returning to intervention Brown is continuing the love affair with finance capital and free enterprise - perhaps more worship than love!
It is difficult to see how we can move on economically before doing cold turkey on personal and corporate debt and the government should be prioritising protecting the weak and poor.
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The stock markets seem to reflect a consensus that nominal GDP should bottom out in 2009. That doesn't mean that the recession/depression will end - it might mean that, but it might just mean that inflation will have taken hold. Either way, investors will then want to be holding shares rather than cash.
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Waterford/Royal Doulton/Wedgwood:
Sales circa 650 million sterling
DEBT AT 470 million sterling
Compared to my business 31/12/08
Sales at 713 million sterling
Cash at bank 491 million sterling
Trade creditors 17 million sterling
Sales ledger 147 million sterling
stock 102 million sterling
assets 79 million sterling
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Why do companies such as WW and Woolworths, companies which were obviously in the latter stages of their corporate lives, borrow so much money instead of downsizing. Is it because the directors prefer to keep the company artificially large so they can justify large salaries? It appears that companies nowadays prefer to "rev the nuts off" their assets and risk blowing up rather than down size to a managable level. Perhaps if the shareholders were not mostly pension funds, managed by the same people that lent them money, this would not be such a common theme. Have you noticed how the private firms such as JCB can agree to pay cuts, whilst the PLCs prefer to make redunduncies? I put the greedy company directors of PLC firms in the same bag as the greedy bankers. They only look as far into the future as their own retirement dates.
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Why did this happen?
As a small business, and by small I am a self employed shoe repairer and key cutter on the high street, a one man band, I am hearing a lot of independents like me are finding that the one big killer is Business rates.
Robert, this is one that I would like you to get your teeth into, because there are gross inequities if you are on the high street or an out of town super/hypermarket.
We should all pay the same rate per square foot/metre, doesnt matter where you are, otherwise they will just kill the high streets up and down the country.
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Inflation will be the worry.
All this new money has to go somewhere and affect the real economy.
All this money has to be repayed by those paying tax, or as surely as eggs are eggs the real value of money will devalue.
A recovery of 5% in economic activity offset by a 10% hike in prices, is still a 5% reduction in activity. Is this the sort of recovery we can expect in 2010/11 ?
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...nice to see a bit of positive spin for a change Robert! Unfortunately, it looks like a 'dead cat bounce to me', but there we are. We will see when the actual numbers come out from the retailers over the next 2 weeks and decide then. By the way, am I alone in wondering how the stores will go about replacing the stock that they have just about given away when most of it is imported? I see what you mean about inflation!
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Nice to see some positive news
A Curzon, who cares what your business has if you have to shout it out a comment that means nothing to anyone but your ego again!
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Robert this seems a strangely muted and half-hearted attempt on your part to report some bad news but dress it up with a positive spin. Have your bosses given you new running orders for '09 to lay off the doom and gloom?
But what about us, your loyal readers. We need our daily fix, especially in these cold, grey, dark January days when we like to keep our SAD levels maxed out.
SO GIVE US A BREAK. Otherwise we'll just carry on posting to yesterday's blog about bank lending!
PS: we are still doomed to suffer through a severe downturn of unknown and unpredictable length; it can not be avoided and we (UK, US etc) had it coming to us
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Robert:
'And they conclude that an economic turn for the better must surely come towards the end of 2009.'
We'll see. I think that any predictions will fall well short of how bad it's really going to get. Even this one.
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Perhaps it is time that the UK/Europe only accepted imports from companies that can PROVE they treat their workers in an acceptable manner? NO child labour; NO cheap labour; NO environmentally unacceptable practices; proper provision for the retired.
If the UK (reluctantly) and Europe (somewhat more enthusiastically) requires home-based companies to do these things, then surely it is only right that companies importing goods to Europe/the UK should be required to do the same.
Apart from helping to create a level playing field, it would do more to raise standards in poorer countries than any number of aid packages?
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creditcrunchpoor post 13
I run a proper business which has paid
down debt holds reserves for a RAINY
day.I employ as many people as WW.
If i can do it why cant all these
OVERPAID CHIEF EXECUTIVES DO IT?
Sorry if my post offended YOU.
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A very generalised report written by a guy in an office, well (?) paid by a service sector media corporation..
Completely - as usual - ignoring the 'human' effect.
So long as the name survives (and the state, naturally), individuals don't matter, right?
AH said as much.
GC
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Its all well and good being optimistic but no amount of spending or borrowing is going to change the fact that the last 20 years economic growth was a piece of accounting fraud.
The economy was never that good.
Now we have to wait for the money that never was to trickle out of everyones accounts over the next two or three years before we get close to the bottom we may be able to rebuild from - but only if we dont keep trying the same stupid tricks.
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Governement should not be in the business of price fixing, whether that be through interest rates, bailouts, money supply etc etc. Markets find their own level and this is what we are seeing. Bad businesses should be allowed to fail and we should return to a sound money backed by gold.
We have spend too long living in a debt fuelled bubble and the things that the government are doing are just going to prolong the pain and make it worse.
I am writing from my depreciating home, where I, along wiith millions of others, were swept up in the fervour of GB's ponzi housing scheme that made us all feel rich, but hid the truth that we have de-industrialised and caannot live on a budget deficit perpetually. Foreign countires are wising up to the fact that they do all the graft and then lend us the money to but things that we cannot afford.
The age of western over-consumption is coming to an end and borrowing even more money to delay the inevitable is not the answer.
The future does not have to be disasterous but different. Are you prepared?
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That stock turn is looking a bit dodgy Mr Curzon!
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AC Post 18 - no offence taken but the numbers are irrelevant all you needed to say were those points made in your 2nd post, we are well past bragging rights.
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Well thats alright then, the shops were giving stuff away over the past 2 weeks, which may have something to do with them being busy.
So all these blogs for nothing, it will all be over in 2010, in time for the new Dr Who to take over. My kids will be pleased as I will be able to afford the merchandise.
Back to work then, if my business goes down the pan, I can start again next year. Will that be January 2010 or a bit later in the year?
Well that is good news, shame you did not tell us before Christmas, I could have enjoyed it more. Never mind not long til next year.
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Another casualty of the credit fueled lifestyle.
Business prudence is just a larger version of good housekeeping-is, not living beyond your means.
Not a difficult principle, surely?
GB take note-and leave 10 Downing street now!
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Oddly enough, at the moment Marks is unlikely to be saying that: you can't get into some Marks stores for the foreign trippers benefitting from the cheap pound. The others have less presence and so may be more at risk.
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What the heck are they doing with debt of £470 million?
Who put them in that position? Did they walk off with the real value in the company when they swapped it for debt? Totally criminal.
Still, hopefully Gordon can get us all borrowing again as that's surely what's best for us all. Not.
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Stock markets rising 26% on zero volume means nothing, just someone taking a punt in the hopes others will follow when they get back. Such statistics would be more credible if they were volume-weighted.
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"Barack Obama's plan to pump something over $700 billion into the US economy" is actually nothing of the kind. The money will be borrowed by selling gilts. So he will take the money back out again when he sells the gilts. The only way to truly "pump money into the economy" is by printing it (currently known as quantitative easing) - and that will just cause inflation and not affect output at all, as we know from past experience. Mr Obama's policies are the same as those of the discredited UK government and will fail just as spectacularly. We need CUTS in public spending not increases.
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Robert. I have moaned and moaned about your constant negative approach over the last 6 months. Well at last I congratulate you on actually seeing a story from a positive point and not all about your own self importance. I really believe that every bit of positive news should be embraced and then maybe we may put some confidence back into the economy. Well done Robert on playing your part in stopping the constant flow of negative views.
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@25
When I visited Marks' in the sales you couldnt move for the market traders restocking thier stalls.
You cant tell me that one bloke needs one womens jumper 26 times in 10 different sizes
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berkshireterrier
Our stock is always too high if you saw
the breakdown you would understand
why it looks too high.
Plus theres work in progress in the
figure.
Re WW
I still dont see why so many firms
carry so much debt particularly when
theres so little evidence of investment
in so many UK factories.
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RE Gordy
Theres a petition on Downing Street
WEB site for his resignation!!!!!!!
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Now when did you last buy anyone Waterford crystal or Wedgwood anything?
Even my mum doesn't buy these things anymore.
The only person I know who did buy these things is dead, but would be over 100 if she was alive .
In the meantime young and old people are forever buying chatzkies for their flats ....what has happened is a fundamental failure to appeal to new buyers and to enlist the best designers.
Who wants a crummy vase at £100 when a fiver buys something trendier at Ikea?
7
Alexander, you can obviously afford it, and with your import /export/design/financial acumen....I think you should buy WW!
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FTSE-100 is now more than 20% above its low point of last year. The S&P 500 is 26% off its 2008 bottom. Asian stocks have been rising solidly for the past eight days.
I'd have thought it was obvious. With the yanks and Brown printing as much money as they can while paper is still cheap this stock market increase is just folk buying assets, any assets, before their cash becomes worthless.
Inflation is going to go ballistic at some point this year with 85bn of government squandering sloshing about the system. And certainly in 2009/2010 when we'll be looking at 150bn of government squandering just to meet the payroll.
I'm pencilling in summer/autumn for a return to the property market. The smarter money is buying stocks and shares while the pound is still worth the paper it's printed on but having lacked the courage to go all into Swiss Francs last year I reckon that I'm better off having my cash tied up in a devaluing house than in a devaluing currency.
I still think there's a fairly wide window of opportunity in the second half of 2009 to get a good deal on a house before it becomes apparent to Joe Public that rampant inflation will be wiping out folks debts from 2010 onwards and they'd be better off hanging onto the house and let 1970's style inflation work its magic.
Printing cash. Look to your history books. It's what Labour do.
Rampant inflation is nailed on. The only question is timing.
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Alexander Curzon - just looked you up as a director at Companies House - only two directors with your name - one is a director of a small company therefore can not have assets and turnover you describe, the other is director of a non trading company.
Therefore either you are just making your company performance up (perhaps you own a company on My Sims??) or Alexander Curzon is a pseudonym (bit of a strange one if it is?).
Look forward to reading your response!
PS If you are hoarding £490 million in cash perhaps you should be spending it all (sorry correction say 75% of it) now on assets and investment to stimulate the economy and give some of the rest of us who are still trying to build companies up a little break!
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FAO: Mr. Curzon
Can I have a job please?
Anyone wanting a return just now should play RBS shares - you'd be 10-15% up just now if you bought in at the low pre-Christmas.
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A large part of our problems are caused by poor credit control and large companies continuing to delay payment to smaller businesses and owner managed ones. Many SME's will go under because of this and also because directors and family members take "too much money " out of their company in perks, motor expenses, entertaining, private expenses........being in the accountancy profession I've seen it done time and time again. As for listed companies, directors should forfeit or defer their bonuses ( and that includes banks ) during lean times and make sure the employee gets paid. We are in for a long hard slog despite what dear Gordon keeps telling us. Watch him change his tune in a few months time
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Can anyone explain to me why we've had a blanket reduction in interest rates?
I didn't think repaying mortgages at the old interest rates was an issue. Record borrowing for the past 10yrs!
And I though the issue with borrowing at the moment was the lack of funds, not the cost of repaying!
So why at the cost of Billions are the government so determined to push the cost of borrowing down even further....
At most leave it as it was and spend the money somewhere else please! There is no doubt, a need to help the economy, but this is the most random way of distributing it you could imagine!
........ and a thought, if you are trying to attract more funding from overseas (as we don't seem to be able to save enough domestically to fund the borrowing demand) wouldn't higher rates and a better return be what investors are looking for?
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@ Mr Curzon,
The reason you can do it and they can't is because they're playing a completely different game.
From my observation running a PLC seems to mean,
- borrowing money;
- making acquisitions to grow "headline results*";
- calling this expenditure goodwill,
- never taking this goodwill it to the income statement,
- telling the market you created a massive amount of value,
- patting yourself on the back
- cashing in your share options
- retiring somewhere warm with your winnings....
Generating cash is neither here nor there! :p
*actual results taking into account all the money you actually spent don't seem to be so important!
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Robert, I've always considered you to be quite impartial, even when there were others condemning your Northern Rock scoops.
BUT today what I read sounds almost like a press release from the Chancellor, "better by the end of the year'!! -- no chance.
We'll have a quick burst of deflation, followed by a long run of inflation, which, if we are not careful, could tip over to Mugabe style Hyper inflation
This follows a "political Correspondent" selling GB's jobs package for him on the breakfast news sunday morning, he also sounded more like a Labour Party Spokesman rather than an impartial commentator
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Robert, you talk about stock markets regaining ground, anything to do with the war that has just kicked off in the Middle East? war = profit and all that.
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post 36
I dont use limited company status
so theres no record at company house.
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Another over leveraged company goes under.Let us be honest, this company was cripled by debt with some poor strategic decisions made in the past. Re structuring might be a positive result for this company.
You could blame government for allowing a credit and housing bubble to develop, the regulators for not tackling the issues earlier, banks, sterling etc. The reality is that management and owners failed.
Retailers will be basing their expectations for next year on the christmas period sales. Even though sales were down significantly I expect those seasonal sales to have been a last hurrah, before the real pull back occurs during January and February.
This new year peoples thoughts have not been with dieting or what positive steps they will take this year, but how they will hang on and what they can do without. We may be technically a long way from depression, but there are more than a few out there who are feeling depressed, especially since the government seems determined to stretch the downturn out as long as possible.
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Whilst pay rises lag behind Inflation (real Inflation) Consumer Demand will continue to shrink.
Britain needs manufacturing businesses that can create more of our own needs, and hopefully something worth exporting.
Nothing has actually changed from last January, except that unemployment has grown.
The fall in the value of sterling will help in forcing us all to buy fewer imports, and those we do buy will cost much much more.
And it seems strange how Bank Depositors are complaining all the time.
Had they invested their money in Bank Shares they would have lost every penny.
Funny how Bank Shareholders (Pension Funds mostly) are portrayed as Villains instead of the reality that they are just more victims of the confidence tricks played by certain traders in the Bond markets.
The failure of the Ratings agencies and the Accountancy profession in general has yet to be properly addressed.
I believe the current stock market trend is a victory of optimism over common sense.
No business relying solely on British consumers is likely to do very well for the forseeable future.
Perhaps in 2020 things will be different !
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Very interesting. Robert Peston posts a comment that effectively calls the bottom of the stock market - meaning the only way is up - and virtually nobody posts a comment.
Good news really is no news after all!
Not that the worst is over - the lagging indicators are housing and employment. I work as an estate agent in housing and am expecting another tough year. My business model is non high street though, so my cost base is minimal.
A lot of businesses will have models like mine before this recession is finished.
Happy new year to all you bloggers!
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This crunch is hard to predict seeing as it unfolds in a manner that suggest some application of chaos theory will be introduced in hindsight.
Of course we will end up on the ground but what we hit on the way down to temporarily arrest the fall is not.
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41 gvheard55:
Very good point - it seems to me that the Labour spin-machine is going into overdrive - any bets on the date of the election? My money would be on early May. GB would like to get himself five more years before the economy turns even nastier. Heaven help us if he succeeds.
On this subject, the opinion polls are intriguing. At no point have Labour fallen seriously behind the Tories, and polls seem to show Labour support holding up remarkably well given the economic crisis. But are the polls to be believed? EVERYONE that I talk to, irrespective of age, occupation or income, views Brown and his crew with uttter contempt - so how come the polls are not reflecting this?
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Your last line speak volumes - inflation will follow, I would expect in the second half of this year.
Why? Well take my employer as a case study. As subsidiary of a Eurozone company, we buy nearly 50% of all our product from them, and pretty well everything else we resell to UK manufacturers also comes from other Eurozone countries or the USA. Our costs have reisen over the last 12 months by 20 - 30%, purley due to the weakness of sterling. To maintain the business we have to raise our prices - not by these percentages, but by more than the UK inflation rate.
As between them, the Eurozone and US Dollar area accounts for the overwhelming majority of the UK's imports, the above is not unique to my employer. The higher cost will filter through to the UK consumer.
Without intentionally riling the anti-Euro lobby, had the UK been part of said currency, then in real terms our costs would hardly have increased at all on Euro purchases, and the effect of the dollar rate would have been less. Those facts are without question.
As the UK is a net importer, perhaps the political parties should have paid more attention to this down side, rather than pandering to the Daily Mail and Sun reader when we had the chance to join at a more sensible rate.
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You seem to have rather missed the point here. The big retailers have done what they needed over Christmas to survive – chase cashflow, regardless of profit. The difference is this year they won’t be re-investing it in new stock, but in reducing debt to improve gearing.
Gearing is that wonderful word which meant that you weren’t a good executive unless you were borrowing up to the maximum debt to equity ratio – now with a much reduced asset base due to the property crash, the amount borrowed must fall dramatically, even if the banks were lending as they did before.
The banks are not the culprit here. Would you lend the same amount to a business when its asset base is 25% smaller? Would you lend at the same multiple of earnings when you know the profitability has been halved? Would you lend on the same terms when you know the chances of the business failing is twice what it was?
What this will lead to is a crisis in manufacturing as the orders won’t be coming in. At the same time most manufacturers source at least some components from abroad and massive price rises here for currency reasons will increase their costs – yet retailers will resist price rises and even enforce price cuts. Double whammy.
Clever retailers also know the best way to minimise stock is to close poorly performing stores, not renew leases etc. and spread their stock round the others. Job losses will rise dramatically as the chains become slimmer and fitter and clever ones will use this to reduce staff wages and benefits, get rid of restrictive practices etc.
We have not reached the end of the retail crisis – just the end of the beginning.
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The defining future for British manufacturing will be what happens to the WW production unit at Barlaston.
I would have thought we needed a domestic ceramic supplier as we can't eat off the floor.
So how about a strategic purchase, eh Gordon?
Come on man, put our money where you whinge from!
An efficiently UK production plant, free of debt and properly run, should be able to knock the socks off any imported crockery.
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Robert - 2 days in a row with the positive slant. It looks as if my comment on your blog yesterday can hold more water. You are now de facto a spin doctor?
So look here Robert:-
http://www.contractjournal.com/Articles/2009/01/05/63348/uk-construction-shrinks-at-fastest-rate-on-record.html
Construction leads the economy - it always has by about 1.5 years - and the latest results are the worst ever and do not look like they will turn any time soon.
The FT100 is on a bounce, not a steady rise, it will soon remember what state the economy is in and continue on its downward path.
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post 37 25 and no hope??
NO HOPE??
NO HOPE IS LIVING IN GAZA OR
SIMILAR!
So get up,get going,theres plenty to do
but your future is yours to create.
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Mr Curzon - okay so my curiosity roused I have googled you - having read your entry on linkedln I shall not be corresponding with you in any way in the future - one of the most objectionable self congratulatory pieces about yourself I have ever read.
I am an honest and dedicated individual who is not looking for a millionaire lifestyle and I am not looking to communicate with the likes of you.
You seem to be self obsessed and run your company by spending all day on Robert Peston blogs and possibly many others too.
GrimUpNorth77
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The company has borrowed over 60,000 pounds per employee, to keep them in a job so the company can award its management team with bonuses and perks.
The total debt is greater than the revenues of the entire business but management blames the credit crunch for the liquidity crisis.
Amazing lack of accountability & responsibility from a bunch of titled business men who couldn't run a hot bath let alone a decent company. Shame on all of them. Pity the employees who will pay the price for management's short sightedness and greed and shame on the banks for allowing such wreckless lending.
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The latest news from Construction industry purchasing is very bad, but not at all unexpected. Given the scale of proposed construction projects (Olympics et al), there must be concern over the shortage of skilled workers and for the many sub contractors who will be needing to order large quantities of materials. This industry has has never been understood by banks (eg NatWest manager who asked me in 1998 what industrial thermal insulation was) so is the government fully conversant with these problems?
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This comment was removed because the moderators found it broke the House Rules.
post 54 grump up north
So sorry for offending you.
The ATTITUDE is intended as CHEEK.
As for spending time on here i am in
Moscow between meetings. . .
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I run a company with £13 billion turnover.
I have £20 billion in the bank.
In between high-profile meetings and press conferences I thought I'd just pop in and post on Pesto's blog. Repeatedly. Whilst making even more millions.
:-)
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#45 supercalmdown you are absolutely right about the blame that should be laid at the door of the ratings agencies and accountants; and let's not forget all the so-called regulators
the behaviour of Moody's and Standard and Poors in the US is nothing short of a disgrace but then they were effectively being paid to give those AAA ratings by the companies they gave them to! and the SEC? look at the Madoff scandal
Michael Lewis, author of Liar's Poker wrote a very interesting op ed piece in the NY Times on Jan 4th; posting a link doesn't work on here but you can Google it
PS: my earlier post, which the moderators removed for some reason, was simply saying that alexander curzon isn't boasting but making a valid point about greedy CEOs, such as the Detroit Big 3, whose behaviour Henry Ford would presumably find disgraceful
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"we live in a globalised world where production gravitates to low-cost economies"
This is a massive overgeneralisation which assume the cost of labour is the biggest expenditure in a modern manufacturing.
For some manufacturing tasks, such as assembly or packaging, this could certainly be the case.
But what about the manufacture of advanced components and complication machinery? These are capital intensive activities - a factory owner in China might invest $1,000,000 per factory worked in captial investment.
Your assumption that manufacturing goes to low-wage countries as a matter of course is misguided - take Germany or Japan or Switzerland, which have economies with a large manufacturing base.
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Stocket markets tradiationally rally a couple of % over the Xmas / New Year Period (particularly well documented for the US indices) so treat the market performance of the last couple of weeks with caution.
Low trading volumes and no new really bad news from the big (listed) companies. Lots of the bad news over the last 3 weeks has come from privately held firms not public ones. If your competitors are doing far worse or disappearing it could be regarded as positive news for you.
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This comment was removed because the moderators found it broke the House Rules.
what a shame some posters don't understand Alex C's sense of humour!
Very dry, sharp and direct!
There are many successful business people who have not relied on lines of credit in recent years.
Their success is knowing their market,spending wisely, keeping their operations slim and trim, and not taking monies out of their businesses for themselves at the risk of the business.
These folk are direct, outspoken, hard nosed, and a pleasure to meet!
These people know how to run a business-they are also great employers-firm but fair.
Our government could learn a great deal from them.
I would like to see Alex C as treasurer or PM
No woffle, no smoke and mirrors-straight forward, telling it like it is.
What a refreshing change that would make-a politician who tells the truth, and can answer a simple question simply!
I've signed the petition for GB to resign, so has Tony Blair apparently (I do suspect a caseof identity theft!) anyone else?
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Nope, I don't believe the markets are correct in indicating better or, dare I say, good times by 2010/2011.
If someone could tell me on what basis national economies will be functioning normally again by then, and global economic and financial systems doing the same, I'd like to hear from them.
Just a quick look at the ludicrous economic assumptions and forecasts made by our own government for the next 5 - 8 years tells me that as far as the UK is concerned, we're in a serious mess for a decade ... possibly longer.
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I've just looked up Hairy Houseoflords on Companies House - you don't really seem to be a director at all?? Or is that a pseudonym?
;-)
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This article seems pretty sound to me. WW sold luxury items to a dwindling customer base. They carried a load of debt. Companies like this are the ones that will go first in a recession.
If you are one of their employees and lost your job today, that won't sound very nice, but it's still true. Hopefully the upturn (whenever it is) will create a new breed of companies with stronger business models and a sensible approach to debt which will lead to the creation of decent, stable jobs.
As for the argument about trying to buoy up the economy via public spending vs letting things take their course, it seems like an argument drawn along political lines.
Tories have to be seen to be committed Adam Smith style economics i.e low tax, low public spending, small government, unfettered markets. This has brought prosperity and also slump (isn't that the nature of capitalism?)
Labour have been forced to abandon some of their "new labour" credentials and return to high public spending and borrowing in order to stimulate the economy and protect us from the worst of the recession. Which this succeed? I think only in a limited way, if at all.
Many of these ideas will lead to job creation heavily biased toward the South East. Browns mania for public private collaboration will lead to a new "gravy train" for every half-baked management consultant in the land, and plenty of associated wastage in "hospitality", "launch meetings" and "fact-finding trips".
If this was hadled correctly maybe it would make a difference but I don't have much confidence based on past performance.
Interesting times....
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ok further posts negated my post #63 which was moderated for some reason.
what i wanted to say to robert was not to be fooled into thinking the stock exchange has anything to do with business...it is just a casino.
so WW had sales of £650m and debts of £471m who on earth lent them this kind of money on that turnover? this is exactly the lending that GB wants the banks to offer now.....how foolish!
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I have some read some great posts on here! At least not everyone is fooled.
Basically the WW directors have fraudently borrowed beyond the means of the company, whilst paying themselves lots for rotting WW into the dirt.
How come no one is in prison yet?
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Robert, best take a look at the stock markets again...
Bank shares taking a tumble, FTSE, CAC and DAX in the red too.
Why's that I wonder?! Not something to do with a possible further bank bail out surely?
Maybe this Russian gas business, or perhaps the rapidly contracting economies in Asia?
Stand by folks! Another bumpy few days approaching!
Crikey! This is better than the Revolution ride at Blackpool!
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Tigerjayj
Based on his own testimony (he doesn't put audited accounts into the public domain through Companies House) Mr Curzon is a very astute businessman but sense of humour? - I don't think so!
I find his posts to be somewhat preachy (so definitely PM material) and lacking the touch of merriment displayed by say Sasha Clarkson.
My earlier, tongue in cheek, comment about stock turn resulted in a justifying post - or have I missed a tongue in check rejoinder!
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Interesting article on corporate debt..
http://www.telegraph.co.uk/finance/financetopics/recession/4123631/Corporate-Britain-faces-110bn-debt-time-bomb.html
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To comment on the original blog - I must agree with many others who view the debt/turnover ratio as a disgrace both for the directors and also the finance providers.
My expanding company has gone from a £5million turnover to a £20 million turnover in two years on an o/d facility of £400 thousand. Finance provision from our bankers has been a constant hindrance to our progression as a company and all this money being scattered to the winds by all the banks but not coming in our direction has been very frustrating.
By September 08 we had finally got ourselves on a more solid financial platform and had gained a great reputation with many major customers. However since then UK orders have nearly ceased (we provide high value services mainly); Europe where we are much more competitive now due to the Euro is also a sleeping market and only the Middle East is keeping us going.
In many ways I am delighted we do not have a high level of bank debt (currently none) however how many more companies like ours are suffering due to the neglect and profligacy of others.
I blame the government for not regulating where regulation was needed (everyone knew the debt bubble would burst but no one would put a lid on it); I blame the banks for bad lending and lending on the wrong criteria of security over property and nothing else (eg a sound business model with no assets never had a chance of funding even though it was often more financially sound than the property investment - but the bankers operated in a world where property was safe and did not need to invest in trading propositions they were required to understand); I blame directors and individuals for a requirement to have now and pay for later with an 'I want' rather than an 'I need' mentality.
Do I blame myself? I feel in some way I must be responsible but it is difficult to see where I could have influenced what has happened around me.
However I have already had to sit down and make three people redundant to protect the other forty seven and there may need to be others to follow in order for us to survive what i think is going to be a long and very painful process - making people redundant is a horrible thing to do and I wish the banking billions could somehow have been redirected through trading companies to generate investment and jobs rather than simply filling in the banking black hole of 5 years bonuses.
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Pity no 10 can't even spell
http://petitions.number10.gov.uk/Fianance/
First time I've looked at the no 10 site in a while and what a load of tosh about yer man from the manse.
Just off to communicate with Hughie Green down the porcelain telephone............
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La la its just gone 5.30pm out here.
Tigerjjay thanks for the UPPER!!
Grumpupnorth77 has sent me to
Coventry cos i am a BAD person.
I feel very sorry for the WW employees
the bosses have emptied the
cupboards so as they say UP NORTH
"Theres NOWT left".
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I see the pound is holding up against the euro at the moment but still falling against other international currencies.
I suppose it could be something to do with Europeans buying pounds to take advantage of all this cheap shopping here.
Short lived though 'cos when the shops have converted their old stock into cash and have to import new stock as they will it will be far more expensive and no longer so attractive to oversees buyers.
One more short lived respite.
Unless of course sterling falls completely through the floor.
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I read with interest what was written about Alexander Curzon and I'm impressed, at face value, he seems to have the right ideas as to how to run a business. -ie, not borrow borrow borrow, but to maximise profits and actually make money.
Reading some of the other comments about him, sounds like sour grapes and probably envy.
Lets face it, Britain is on its knees through idiot 'managers' and 'directors' unable to manage effectively, being in charge.
Its the 'lions led by donkeys' all over again.
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#51
Good grief Stanilic... The Treasury and the City have put a huge amount of effort into deindustrialising the UK by either ensuring what industry we have is not UK owned or just making sure it goes bust.
They've even just recently flogged their remaining share in the company that builds our nuclear bombs to the Americans so
you don't seriously think they'd actually use taxpayers pennies to buy WW do you?
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We are all doomed, run for the HILLS!
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BBC Breaking News!!
Every company in Britain goes into administration!
Other TOP stories this Monday afternoon!!
Football unaffected by recession!
Israeli invasion diverts attention from recession!
Company closures - it's a guinea a minute says one liquidiator!
Sheffield mum's triplets bring joy during recession!
Another soldier killed (his family have been informed)
Repossessions, foreclosures, liquidations, court orders, seizures up - and nobody came..
GC
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BerkshireTerrier post 71
Re sashaclarkson
Yes you are correct he is a brilliant poster who gets into the detail and
makes many valid points.
Re WW,as in Woolworths and the
others the debt levels are shocking.
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Of course there is no bad news yet from the big companies. But that hasn't stopped the media reporting the slide into administration of companies that would, in all probability, have ended up there without recession but with restricted credit as if it were a feature of the recession.
Woolies didn't fold because of recession but because of an incompetent business strategy. Whittards was a lost cause when credit got tight. And so on. These were companies that would have lost out in any event. It's the 'credit crunch' that got them, not the demand side contraction. In fact, they may even have been able to gain a stay of execution and ride out the latter if it hadn't been for the former.
Commentators need to separate REAL recessionary effects in which damped demand reduces margins and hence profits, leading to closure, on the one hand and the effects of restricted lending and debt finance availability on the other. It may even be GOOD news that companies that only kept the wolf from the door by borrowing, putting off creditors etc are folding since it is precisely that approach (financing your business on the back of delayed payments to other suppliers or passing of refinancing as a 'sound business strategy') that would exacerbate recessionary effects for small and medium sized supplier businesses and push them to the wall.
Oh, and for more good news have a look at what is happening to the better tech stocks on the NASDAQ, or even the performance of the companies in the FTSE Techmark 100 here. If a recession allows research intensive tech businesses like these to gain share value even as they proclaim the intention not to cut research and development spend, something must be going right.
This recession doesn't have to be a depression, Robert.
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Inflation? A modest dose would mop up a bit of debt...it's quite an attractive option...if only inflation had brakes!
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Pesto has caught Zanu-Nulabour's 'Obama as Messiah' disease - even the Archbishop of Canterbury has rumbled that one!
DEBT - huge, persistent, intractable, open and hidden, that is the PROBLEM not the SOLUTION. This process has a long way to go yet.
Jonah, Ali and (it has to be said) Mervyn have cut rates to the point where investors are actually WITHDRAWING DEPOSITS with banks that now rely on the same as never before for their lending.
Jonah's 'do something' cry seems to be more akin to Corporal Jones' DONT PANIC. Running around opening the sea valves and water-tight compartments might count as 'action', but the result will be a true disaster zone.
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Hello Robert, I've been watching your coverage of the unfolding credit crisis and UK's tumble into recession for some months now.
While your plain English explanations of how we have got into such a mess are welcome, I am baffled as to why you and other journalists are letting politicians, central bankers and other financial institutions get away with what I can only describe as muted, sometimes even deferential questioning.
The government is borrowing from the tax payer to stimulate.... more borrowing.... to get us out of a crisis caused by... excessive borrowing by people who could ill afford to repay their loans. We are creating a bigger house of cards to replace the house of cards that has just fallen down.
I watched Andrew Marr's interview with Gordon Brown on Sunday. Hardly tough questioning for a PM who is borrowing billions to bail out private companies without any mandate from the electorate. Borrowing that will raise taxes and strangle government spending on public services for years to come.
The ordinary punter is never going to get to interview Gordon Brown, Mervyn King, Adair Turner or the chairmen of any of the big banks. But you and other BBC journalists can, and do so regularly.
I would dearly like to see you and fellow journalists give the people responsible for this a real grilling for getting us in this mess. If their answer is - ah, we didn't know what was going on - that is simply unacceptable. If a home secretary has to resign because he or she is unaware of what is happening in their department, on their watch, surely some of these people deserve to fall on their swords - if not voluntarily, then at least as a result of intense media scrutiny and public criticism.
The public's anxiety about the future and bewilderment at the scale and speed of the collapse will, must, eventually lead to anger. Anger about the irresponsible lending and sharp fianancial practices banks have engaged in - on both sides of the Atlantic. Financial practices that have damaged both borrowers, savers and investors - shareholders, pension funds, and wannabe homeowners alike. Vince Cable and a minority of other economists were warning of irresponsible lending by the banks five years ago. I remember Evan Davis covering UK consumer borrowing (ex mortgages) hitting the £1trillion mark. If the warning signs had been spotted five years ago, why did we wait until the **** hit the fan before acting to stamp out clearly untenable, disreputable banking practices?
Is it not time for some tougher questions for the people in charge?
Over to you....
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who pays for the 2/3rd reduction relief for £200,000 and less mortgage payers? does brown know what hes doing?
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#72
Excellent article
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I enjoy your articles Peston but you're no Dow theorist are you? Frankly your opinion on stock markets should be filed in big time scoops small time brain. Should it go with your whisper it softly RBS might be a good buy at 65p post bailout? We all make mistakes but saying stocks are rising because people are picking winners for 2010? Sigh. People are fools and always want to pick next week's winners. Institutional investors are not taking their positions in the market, the big players are on holiday; daily market volume is well below average this time of year. No big movement means slow upward pressure in the market. Market psychology is made by precedent and followers.
This is a bear market rally and whereas in October last year many fund managers were split down the middle on whether equity prices would bounce or crash, I hazard a guess half those canvassed won't be in a job by March.
Always, always, always a crash in October is re-tested by March the next year. The bounce occurs then. Answer me this if a much smaller dot-com induced bust uncovered huge irregularities in Enron what will be uncovered in the finance desert we're now in? Regardless of retailers results, what happens when they come to re-negotiate debt in the new year? If shares are at fair value now what happens when people are pricing them up through government-inflationary pressure and irrational future profit?
With Bernanke's printing press they're storing up huge imbalances in the market. People are not cleverer than the market, if a big recession is avoided the next one just get's bigger. I don't think the so called shift in power to the East, will be shifting cash out West next time; probably because their growth is a laughable pack of cards in China and the Middle East.
We're in a bear rally.
Sure say when fund managers are unanimously glum and people like me saying it's this bad, then that's the time to invest. I say Peston why don't you start investing your money now and tell us online exactly what it's doing; do it only on investments that you'll refuse to comment on. Bit convenient that you say the market's recovering but you can't play in it. I'll be out till march I might miss the bounce but I won't be around for the re-test.
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Re 51 - Stanilic (or is is stalin-ic?) - Goverment to buy a ceramic company - surely you are joking? - we might as well declare ourselves the peoples' republic of Gordistan.
We need less Government not more. Get out of the way Gordo and let the markets sort this out.
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Mr Curzon - time for a Gordon Brown (in the good old days this used to be called a U turn) - I have read the emails of support from other bloggers and your 'Coventry' communication which is hard not to respond to - so here I am back for more!
Many bloggers have very strong views including yourself and it is easy to criticise what is and has been done because it is not working - but if GB did give you the call to come in and advise the Treasury as TigerJayj suggests what do you think should be being done at the moment?
The options seem to be
1) Sit on hands and watch the world collapse so we can rebuild it.
2) Current action - throw more and more money at the problem in a sh*t or bust (literally) approach that is so heavily criticised on all these blogs.
3) Throw the money at the problem in a different way.
4) Nationalise the banks.
5) Resign and let the Tories have a go - then re review first four options with a different political party.
Sorry for my comments earlier and I look forward to your well informed and knowledgeable response.
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Intrigued, I did a quick internet search for the businesses listed in the profile for Alexander Curzon, but can find no evidence any of them exist / have existed.
Can you substantiate something? It would lend some credibility to your assertions on here.
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Yes, they are forgetting me, and the thousands (millions?) like me. I have lost over 7.5 % of my income over the past two months alone due to falling interest rates, with further to fall (and this doesn't count the loss in the two preceeding months before I started counting). So Mr. Brown and FTSE participants, I have already taken a decision NOT to spend ANY money other than on essentials. Without us oldies to shore you up, oldies who saved all through the so called 'good' times, where will YOU all be? Grumpy old men have NOTHING on me!
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Re WW - Just as important as the loss of yet another exporter, would be the loss of highly skilled staff, if the factory at Barlaston were to close.
However, what chance do those skills stand when when posters such as those at 34 liken the quality products that they create to those that can be purchased from IKEA.
[By the way, I am not over 100 and have consistently purchased, and used with pleasure, Wedgwood dining sets for the last 15 years]
I hope the local council will make every effort to ensure that the factory sites are not allowed to be turned into yet more warehouses, retail parks or housing.
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ZiggyArbuthnott you've hit the nail onto the hand of the journo's pen . But as always the C in C is there for every momentously correct decision but anything that went wrong they were unaware of and it was delegated by another committee; the documentary The Fog of War on Robert McNamara is fascinating re this.
Robert Peston still bangs on about hedge funds after the fact; never once wrote an article on his worries whilst he was at the FT just a torrid peace on the louche money in Hedge Fund society. As if the hedge funds could ever possibly exist without financial legislation making a niche for them, or indeed the louche money available to them via retail/investment banking institutions.
To be fair to all the criticised politicians, Vince Cable would have been sacked if he'd have been Chancellor of the Exchequer. Policy that goes against the US economic phillosophy render's your party unelectable quicker than you can say Neil Kinnock. All these fools saying otherwise didn't have a clue that the credit crunch is just unpayable debt, probably like their credit cards.
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Robert,
Isn't it the case that most items are "nice to have" not "must haves"? Does one need a new car/tele/I-Pod/etc? Generally, no.
We buy them because we can and it makes us feel good (and may make the Jones jealous). If we all bought only what we needed, the world economy would collapse.
I suspect that Waterford/Wedgewood's collapse is mainly because they have failed to cater for a modern market, rather than one with its face firmly in the past. like some other recent failures. After all, having exported most production jobs, it can't be U.K. costs, can it? I'm no spring chicken, but the sort of stuff Wedgewood produces belongs firmly in my grandmothers parlour.
As for the future, perhaps the relief over Christmas of not having endless political/media doom mongers banging on has given us all a little more optimism about it, hence the rise in the markets? After all, doesn't the whole thing rely on the confidence of we individuals?
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Brown is going to pay interest on 200,000 pound mortgages.
Estimates for defaulting on mortgages next year stood at 500,000. Lets say they have an average loan of 100,000 pounds at say 4 percent. Wow - 2,000,000,000 - say 40million per week - where will all that money come form eh?
What if they will all be at the top limit?
What if the estimate of defaulters is low?
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Oooh, one of the most interesting blog days so far I think! Personally my business is small fry - tiny even - compared to Mr Curzon, but the gist is the same. Build a business up on a small amount of investment capital, and if you're successful in what you do and have the decent common sense to manage cash flow and take out REAL profits rather than imagined profits, that leaves you with cash reserves that allow expansion. It used to be termed 'organic growth'. Trouble is in more recent years this hasn't been an acceptable corporate policy, hence the massive over-leveraging of so many companies. There are plenty of normal business people out there who have their heads screwed on though. Of course, reserves can also be used to ride out the times when the order book goes dead. It's not rocket science. Somehow I can't quite believe that we're going to all wake up after the coming summer and everything's gonna be A-OK. But if you can tick over in the meantime and develop systems and practices to make you stronger come the eventual up-turn, then you're doing nicely thank you. It does amuse me that folk think that poor Robert is some how responsible for the twists and turns of the Casino known as the stock market...
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Bodgitt - as an ex-employee of WW I can assure you that the workforce haven't milked the company. Quite the opposite. For the last 4 years I was there we didn't have annual rise and I know for a fact that there's been none since.
In addition to that many of us also contributed to the Sharesave scheme (SAYE) and as a result I have a few thousand shares worth precisely zip, zilch, nowt, nada.... My fault, that 's the shares game.
WW isn't just a casualty of the credit crunch. This particular patient has been in intensive care for more years than I can remember. The lack of an ability to produce product at a price the Consumer wants to pay is the reason behind it.
The sad thing is that in common with a million companies out there a lot of good people have and will lose their jobs.
I'm sure the Company will survive with the whole lot reloctaing to Indonesia twinned with Stoke-on-Trent.
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Gordon Brownian solution to WW:
1 Everyone buy two dozen crystal vases.
2 Everyone smash their vases.
3 Everyone buy two dozen crystal vases.
4 Everyone smash their vases.
etc etc etc etc
Can anyone tell me what the difference is between this and what GB is presently proposing for the economy.
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So 'investors are increasingly confident that armageddon has been avoided' ?
Not only does that forget the $500 TRILLION derivatives overhang (ten times larger than the GDP of the whole planet!), but it ignores
The little problem of Energy and Growth.
Next year the world production of crude oil, for the first time in history, is likely to decline for geological, not political or economic, reasons. Peak Gas will follow some 10 years later.
2008 is the end of the Era of Growth (as growth is predicated on the availability of cheap energy) and the start of the Era of Decline.
The total production from 2009 onwards will decline by perhaps 4% on average every year, thus our primary energy sources will halve every 20 years or so. This ‘peaking’ has already happened in 60 oil producing countries around the world, incl USA (1972) and UK(1999) and now, from 2009, global production will also begin to decline.
That will kill off any attempted recovery through sky high oil prices.
The 1930s depression was bad enough, but this decline will be on a massively larger scale. To start with, it will be at least 40 years long. 40 years will take us to about 25% of current energy usage, which is about the level of energy we can expect from all renewable sources combined. So at that stage, provided Governments have been wise enough to have invested massively in renewable energy, renewables may be able to take over from fossil fuels and perhaps stabilise the world economy.
However, pumping trillions of dollars into rescuing banks and car manufacturers and further trillions into ‘restarting the economy’ may impoverish governments to a point where no investment will be possible where it is really needed, such as renewables.
So, what should we do now? I suggest:
a) embrace the Green New Deal (Google it) incl. £50 billion per year invested in renewables in UK. This £50 billion investment will be easily repaid through lower import bills for fossil fuels in the years to come.
b) forget about tax cuts or increases in current spending, they won’t do any good anyway and just add more and more to national (mine and yours) debt
c) and go sustainable ( meaning: if you can't continue doing the same thing for 2 generations without damage, then its not sustainable)
Checkout www.transitionnc.org/?q=node/73 for a few more facts of life
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If you believe:
bottoming out 2009
green shoots 2010
it's all media hype - we should be promoting good news
Then you are deluding yourself.
We have not yet seen the real crisis. The Credit Crunch has not yet worked through and the global financial markets are still in the trenches. In 2009 their contagion will push the 'real' economies of the World right over the edge.
Nowhere in the World is there a real glimmer of hope. Things are going to get much much worse as we finally realise that the old order has collapsed and we don't have a new one to replace it with.
It's not just us. Look at Germany it goes into this dilemma with both a higher rate of unemployment and a higher level of national debt. So how can it avoid putting increasing pressure upon the ECB to take decisions that favour Germany? The internal pressure for a return to the Mark may be more than the government can resist. If Germany goes then so does the Euro!
It didn't matter when Iceland nearly defaulted as a country. But what will the effects be of the same thing happening in Italy or Belgium?
We don't know how this crisis will play out. But make no mistake it's effects will be as disasterous as the 1930s - across the World
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A disease called inflation:
Please sir, can I have some more?
Firstly lets retrospectively index-link all government-inflation induced rises in government licenses, council taxes, postage stamp-rises, train fare increases , national insurance and superannuation and pension costs,flying taxes,parking charges, speeding fines,petrol and emissions taxes, income tax,palnning permits, back to 1997 and see how that would boost the economy .
Let's stop abusing public service workers with year-on -year sub-inflation pay rises.
Let's abolish MP pension scams and put them on a par with their other government colleagues on a 1/80 scale pa.
Without government inflation , inflation would be titchy.
Pre-crunch we had wage inflation and growth.Now we have price inflation with no wage inflation.... which produces deflation if the punters have no cash.
I think all the attempts to deflate the property bubble were the cause not the solution to the crash.
But a wee bit of inflation would do no harm at all right now....look at the Eurozone and their overnight 50% price hikes that they concealed from the official statistics.
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post 2 makes same mistake as Mrs T: that the micro-, indeed nano economics of the individual play to the same rules as the macroeconomics of states. They do not. All these macho 'economics of the cold-shower' merchants ( inc D Cameron) need to remember it is people's livlihoods ( and lives) that are at stake. G Brown may deserve 'nil points' for previously falling so wholeheartedly for the smoke and mirrors brigade in the City and Canary Wharf but that is not to say his solution to the present crisis ( shared by others) will not produce collectively less pain than the alternatives, even if this pain lasts longer. Cameron's alternative might well work, but the severe pain in the short term will kill more than it cures. I'm staying with G Brown: he knows he got us into the poo and I think he has the moral fibre to do his best to get us out.
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#48
"EVERYONE that I talk to, irrespective of age, occupation or income, views Brown and his crew with uttter contempt - so how come the polls are not reflecting this?"
Because when Labour win the election the polls will need to be in accordance?
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End of 2008.
Pound/ euro parity, more or less at 1.02. Check.
Sainsbury's and Shell well up from recommendation.Check
2009?
I'll be surprised if the footsie is below 5,000.
Say, 5311.
Why?? House prices won't fall so much as touted. Don't think they will fall another 16.2 %. Although GDP estimated figures will need adjusting downwards, preferably before 01/04/2009.
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Alexander Curzon
Have you lost your CAPS button. Are you no longer a CAPitalist, or is it just whilst you are in Moscow.
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post 91 torgoch
The businesses?
Well i could scan and post the bank
statements?
We keep a low profile you will see evidence of our retail operation in the coming months as each store is opened
up.
The marketing business is new to run
along side our retail operation.
The manufacturing warehouse/distribution set up is in China Poland & Czech republic and
the UK.
The Property/Venture Capital/Private
Equity set up is based in Surrey.
Obviously none of these operations except the new retail set up seek
publicity or a public forum.
I dont use a "Company" web site we pick and choose who we supply or fund/partner with.
So hope this helps?
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torgoch?
Perhaps as youve only posted once as
"torgoch" you would like to identify your self?
Youve found my email etc give it a GO?
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Government has to set up a bank and start offering mortgages and other loans at a cheaper rate. This will force banks to cut rates and compete, also if its done like this bankers cannot take what government gives as huge salaries and bonuses.
This will be far more cheaper in the long run as unemployment will cost much much more.
January is the time people are expecting more companies to go to the wall, government has to act now by cutting tax as well as pumping money directly into peoples hand.
When the ship starts to take in water you do what ever is needed to keep it a float to save the people, you cannot just let it go down.
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I’m surprised that I haven’t seen any financial journalist address the possibility of a conspiracy between governments and banks over the handling of the financial crisis.
Neither myself or my friends and colleagues who receive investment advice from banks were advised to liquidate our equities although we all had concerns about our investments before the crash of the stock market.
We all went to our advisors and wanted to liquidate and were persuaded not to.
My belief is that either the banks alone or the banks in conjunction with the government conspired to give false advice to investors and to use small investor’s holdings to shore up the stock market probably for the ‘greater good’ or to allow the banks and large investors to liquidate their holdings at a better price.
One of the examples of false information is that the US only now realizes it was in recession December 2007 a year later.
My personal investments are handled at arms length by a bank and they took absolutely no action to protect my capital during this crisis even given the increasingly strident warnings from ‘The Economist’ before the market plunged. It’s impossible to believe that me and my friends and ‘The Economist’ saw it coming but the banks and government did not.
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86
This whole thing on mortgage interest relief has me baffled.
As far as I know there is a maximum relief of base plus 1.5% for qualifying applicants.
Very few where this would cover their interest payments in full then.
Then there was this other deferred roll over interest announcement which seems to have gone very quiet since.
GB did mention it today somewhere but I have not really heard full details.
Perhaps the confusion is deliberate so anyone who applies won't find out what a waste of time it is until it's too late.
Surprised the media have not questioned this in more detail as well as those who have applied and what response they have had.
There will be many losing their jobs in the coming months who see this as a life saver in keeping their homes.
Does anyone else know any more about it?
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34# Alexander, you can obviously afford it, and with your import /export/design/financial acumen....I think you should buy WW!
Now don't go overloading him/her/ them... we're relying on 'em having enough time to take over as Chancellor for Tigerjayj :o)
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13# A Curzon, who cares what your business has if you have to shout it out a comment that means nothing to anyone but your ego again!
Curzon is just showing that with careful management etc there are profits to made, sales to be found and stock in to fulfill the majority of sales that have been found.
If WW had done the same they wouldn't be in the boat they now find themselves?
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Post 90 Grimupnorth
Thankyou for that.Its a kind gesture.
What would i do??
1: Election/Mass Resignations
2: Prosecute
3: Enquiry (Non Political)
4: Credit Controls
5: Raise bank rate to 6%
6: Build program for 30 or so Nuclear
Power stations
Extensive infrastructure program
Funded on 20/25/30 year Gilts
7: Complete spending review and audit
This is just an opener otherwise i will be
on her all night and i need to go now. .
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Only a fool would put their money into the stock market just now, the ship has sailed already, even though the government are hoping we all jump that way, having reduced interest to more or less zero for our savings, or to leap into the property market to prop prices up on dropping house prices.
The clever people with the inside information deal in shares, us plebs would only be the losers in the long run.
The stores that are closing now, should close, if they need to run up that much debt then it is not viable.
All those involved in the crash and that's what it is should be prosecuted,including Tony Blair and Gordon Brown, but that will never happen.
So now I get to watch the cash I have built up in my small business over the last eight years not earn interest and probably shrink due to the upcoming devaluation of the pound and thats not even taking into account the real cost of inflation or my pension which is falling in value faster than I can pump money into it.
In fact Im going to spend it all now, then tap the government for a loan in a few years time
Did anyone else go woooo messiah , when toryboy gave his speach at lunch time today. more hot air from another politician.
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I must admit to being surprised that the Housebuilders have lasted so long !
I have been expecting to hear of their insolvency any day.........
But then every over borrowed company could slip into Administration.
Mind you I would be suspicious of any management buyouts at this time.
How could the Shareholders be sure they were being treated fairly ?
But then perhaps it is possible to take fair play for granted.
Look at the way the Banks were forced to become Spanish subsidiaries.
Not our Banks, unless your a shareholder of a big Spanish Bank, with its own troubles I'm sure.
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There's an interesting assumption within many comments; that we need to somehow get back to the same economic performance of the last decade, and that the need to reduce debt in the next upturn will be bad because it will effect economic performance. This is of course true. Yet what we are going through is a very typical boom-bust cycle, a boom built upon very heavy debt and a bust caused by the unraveling of the assets on which those debts are based.
What the economy needs is a steady flow of investment, rather than this cycle of peaks and troughs - and this means cutting down on the peaks as well as filling in the troughs, and that means higher taxes in the good times to pay for the bad. It means that saving is not the solution to the financial crisis - and it means Browns failure should be registered in borrowing during 2001-7, not during 2008-20??. But then who really wanted even higher taxes 2001-7??!! Good economic policy is not politically prudent.
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Blimey if Next haven't done well they shouldn't have opened their shops at 6am on sale days.
Better start selling your old Tea and China on E-Bay...
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#61
"But what about the manufacture of advanced components and complication machinery?"
One of the few types of machinery sure to be working full tilt for the forseeable future.
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Just to clear the air!!!
I started work in a shopfitting business
in Kingston near london over 28 years
ago,cutting up wood.
Then a spell in retail ,the City as a clerk
then the motor trade even with a
ArthurDaley portocabin and railway
arches
where i lost and won a small fortune.
So however big or small the numbers
are its the same game.
Make profit conserve cash and reinvest
time and time again,control overheads
and MOST OF ALL give the PUNTERS
WHAT THEY WANT AND EXPECT.
Treat your staff and suppliers with
respect.
Do all you can to AVOID BORROWING!
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Waterford Wedgwood.
If I could just make a comment after reading those already posted.
We have supplied Wedgwood for many many years and are caught up in this administration.
It is correct that there have been many many bad decisions over the past few years and the directors should be ashamed of themselves that they have let a company, that has survived for 250 years, go under on their watch.
I could babble on for hours about this, but I wont.
What is not true though is that they produce products for grannies. I think the opposite is true, most grannies wouldn't give houseroom to much of the modern design that Wedgwood produce.
Yes they still have legacy product that does fit in this category but the current designs do not.
Clearly what they are surely guilty of, if that is the impression out there in the big wide world, is not marketing themselves well enough to change their image.
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78 Wee Scamp
89 truths33k3r
Thank you for the responses.
I have to come out of the closet as an old manufacturing man. However, I had to find work in the global economy some thirty years ago and so move all sorts of boxes around instead.
There is no better buzz than watching your product coming off the production line and knowing that it will please your customer.
Sadly, we don't do that any more. I last tried in the mid-Nineties to set up a factory in the UK but was given the bums rush by the City boys. Maybe they were right; it was a dumb thing to do at that time.
Now times have changed. How many unemployed are we going to have this time round? There is vacuous talk of a couple of million. I hope it will be as low as that, but I ain't sure any more. I saw what happened in the early Eighties and from what I can see this is going to be at least as bad, always assuming Gordon doesn't make it worse. Also this is not counting the three million we already have dumped on the scrapheap.
How are we going to find work for all these people? How are we going to feed all the people if there is no work for them?
We have to get back to making things again. It will require a massive adjustment in our mindset but good quality, value added goods will always be appreciated by someone somewhere.
That is how we will have to make our living in the future; not by borrowing, not by showing off our hairy chests, not by exposing the splendour of our loins, not by being posh, not by being clever but by working hard for not much to build that better mousetrap.
We just have to make things again and what we laughingly have to call the government needs to be provoked into that reality.
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This comment was removed because the moderators found it broke the House Rules.
The central banks need to operate with surgical accuracy.
There is a tiny window of opportunity in which interest rates can be raised towards the end of 2009/early 2010 that will enable them to avoid the worst of deflation or high inflation. They will have to raise rates in unison and in a co-ordinated fashion though.
IMHO the best moment for the authorities in this whole crisis was that day when c.8 central banks together across the world and all cut their rates simultaneously.
We need more co-ordinated global central bank action not retrenchment and parochial domestic banking!!!! (sulk....dolls expelled from pram).
Anyway, someone give the ECB a kick and tell them to get with the program.
BTW I hereby officially claim that I have invented a new term to describe sub-prime mortgages; "poorgages" :)
It's mine, I thought of it first!
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Alexander-Curzon.
Can you get us some gas while you are in Russia ?
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Is the Wedgwood debt a result of investing in factories overseas and the now huge cost increases for imports? How long sighted that now looks against the current exchange rate. I seem to recall Royal Doulton blaming such 'debt' for their need to close UK potbanks. Lions led by donkeys etc.........
I do hope the administrators take into account the new business realities that favour UK manufacturing and exports.
If they asset strip Wedgwoods for short term creditor needs ...........
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111 virtualsilver
The way it works is -
Those that survive only want to ignore those hit. Not everybody to be sure, but its is the general case. A survival mechanism if you want to be kind.
In order to ignore those who are hit the survivors like to hear two messages.
1 Those hit were of a lower order, low intellect, lacking in canniness, reckless, any negative attribute will do.
2 Those hit, and who may be innocent - because such an odd thing could possibly, just possibly maybe happen - are recieving support, which whilst it is not generous is still support. Because one should not be too generous, just in case the innocent are really members of group 1. Such support being administed by some entity which is detatched from the survivors as survivors must not get too close to the disaster.
Note - Survivors do not like to talk to or about those hit as it destroys the illusion that being hit only occurs to the ungodly not to the self righteous. Just drop a hypothetical scenario about somebody into the social buzz at the next dinner party and see what happens.
Now as a politican you know that those hit are not likely to regard you favourably if the disaster happened on your watch so you are only interested in the survivors. Getting clearer? So you make much ado about putting policies in place which cost very little but give the survivors an excuse to ignore those hit. Minimises the image of disaster amongst your remaining target group of voters, costs next to nothing so you still have money to sweeten the survivors in due course.
As those hit are not organised they have little collective voice, have little in the way of resources - so can be isolated and disempowered easily. The Politican moves on to talking about other issues, can't talk about yesterday forever can we, have to deal with todays problems not yesterdays we put measures in place to assist those blah blah blah, standard bull issued.
That is why there is much talk and little substance and little actual support, as a great many will find out. The politican refuses to accept anything went wrong, by accepting blame you accept liability. Oh - Look carefully at the text of the bankers wittering on about saying sorry and you will find they always suggest somebody else should say sorry but in a way that suggests somehow they are contrite, when they are not.
So I am afraid that those hit, or those observing those hit, telling the world what actually happened or is happening are by and large wasting their breath. Read the posts with this in mind and you will have more insight to the mentalities of some of the posters. You never know perhaps some of the posters will recognise themselves.
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another fine mess you got us into Gordon.......
According to figures contained in the Pre-Budget Report last November, Britain will give the EU £4billion in 2009-2010 In 2010-11, this will increase to £6.5billion.
But the Chancellor calculated the figures when £1 was worth 1.4 euros.
Now £1 will only buy around £1.04 euros. At the current exchange rate, Britain's contribution would effectively rise to £5.5billion in 2009-10 and about £8.6billion the following year.
This would leave a black hole in the Treasury's coffers of about £3.6billion.
Well done GB for also giving up the rebate!
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As a consultant perhaps I should have started my career in shoplifting, unlike Alexander Curzon's start in shopfitting
PS: Did any of you just hear that Ford's US sales in December were down by 32% and the other carmakers are expecting to do even worse; cars are a bit more use than porcelain geegaws but no-one wants 'em just now
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R.I.P. Sir Alan Walters
"He argued forcefully that Britain should maintain strict monetary targets, and that the money supply should not be manipulated for political reasons"
(wikipedia)
now we will see what happens when you dont!! won't we Gordon (the manipulator)
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haufdeed 123
How pathetic.
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121 alloddsox
Wasnt the marketing guy tied up with Waterford the fellow who went on endlessly about 'the brand is the brand is the brand'. All you had to do was to buy the 'brand' and stick the brand name on something and that was it. Trading on history essentially. And you can run the same product through the production line and sell it via different identies or brands at loads of varying prices and it didnt matter. You just charged the max for the 'brand'. The consumer wasnt that bright basically and selling your products at low prices elsewhere would not damage your 'brand'. The brand was the brand was the brand. Thought it was nonsense at the time. You never never think the customer is dumb. Load of bull in a china shop. Shame.
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@60 You're right it is a very good article in the NY Times. Even though it deals with the US of A's problems and the various 'cures' that have been tried. It's very easy to see the similarities with our problems
Don't know why you had problems getting the URLs to patch on to here, so I have taken the liberty of doing it.
http://www.nytimes.com/2009/01/04/opinion/04lewiseinhorn.html?_r=1 first four pages
http://www.nytimes.com/2009/01/04/opinion/04lewiseinhornb.html last three pages
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122 stanilic
.... times have changed...
No they havent that is the problem. There has been a period of mass self delusion and a bubble supporting businesses. Take the bubble away and you have at best a flat growth, almost certainly decline.
The problem of low cost labour elsewhere remains. The problem of lack of investment in the UK technology base remains. The problem of the growth in technical knowhow in the low labour cost economies giving technical edge as well as labour cost advantage is still there.
To manufacture in the West you have to have something which is not easily made in the East and it has to be sold globally. If you consider that envelope then there is possibility. It will not by definition provide mass employment like say shipbuilding.
Browns current employment proposal is laughable. Essentially it is filling holes in the road. It is not the basis for anything, it is just spending the taxpayers money, it cannot even be sustained because the taxpayer cannot afford it. It is short term. It is not a foundation for anything. The man is an intellectual dwarf.
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124 livewithinmeans
... surgical accuracy..
Like the US bombing with surgical accuracy in Iraq.
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allodsox 121
Very sorry to hear youve been caught up in the WW mess.
You are right the New Wedgwood products are FAB on the ceramic side,shame about the marketing or dare i say the lack of it.
I hope the Barlaston facility survives
as a manufacturing base.
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In a nutshell do exactly the opposite of everything I do regarding investments and you'll do remarkably well. That said I thank god I never came across Mr Madoff but I did buy Marconi shares four times on their way down in 2000 and RBS shares in March 2007.
As Bob Dylan once commented at least "when you've got nothing you've got nothing to loose".
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" 'alexandercurzon' is a 'Bull in a china shop'
but don't 'quote' me on 'that' "
I said
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To have any chance of some sort of recovery a much greater proportion of the working population needs to develop a stronger work ethic.
At Management level this means searching for long term wealth creation and not juggling balance sheets to ensure this years bonus. The greed level has increased exponentially over the last 30 years. I have watched £signs flashing as executives try to do what is needed to sell on a business without regard for long term building.
At many levels we seem no longer to grasp that a full days work should be given in return for a full days pay. - not helped by inadequacy of schooling and training for the 21st Century.
The problem seems particularly acute in the public sector and whilst there are many excellent dedicated people they are only as good as the weakest links. I have had the opportunity to observe with despair the lack of motivation and care in the NHS
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There are still billions (trillions) of toxic debt out there, which haven't hit the balance sheets yet.
It ain't over until it's over!
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You are counting your chickens while you still owe for the eggs, Robert.
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Happy New Year – well I hope so – three wishes –
I wish for more measured banking where loans are difficult, not showered like confetti. I fear there is not an culture of prudent lending in our banking system and an entire generation must learn to make a seismic shift in their way of thinking, living and working.
I wish for a return to prudent spending by everyone. We don’t need that new bauble or any of the other tat and glitter that fills our shops – let’s make it cool to be prudent and careful with our money. Gordon wants to spend his way out of this – well I’m sorry but this is not sensible. I asked in my first comment some weeks ago, why do we need continuous growth, and I firmly believe this question needs to be addressed else we are all on a continuous treadmill. One commenter a week or two ago recommended Money as Debt http://video.google.com/videoplay?docid=-9050474362583451279 this is well worth watching.
I wish for us to look upon this financial storm as an opportunity – see #100. For many it may be possible to take stock, change tack, take a gap year, get off the treadmill for a while. Others will not be so lucky and will be struggling to survive and put food on the table but good governance, a party in power who have the ability to use the situation to make real change, could help. We should massively invest in renewables, a better transport system, eco-houses.
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Kikidread 138
Youve been naughty again
are you back at work you seem a little
QUIET??????
Not breaking Wedgwood China I HOPE?
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Alex C - you're welcome - you talk sense (I have to say that - we seem to share the same thoughts!) Got to have a drink some time - perhaps I'll be in an airport at the same time as you!
Wonder if dear old Gordie has seen the petition on the No 10 website? He probably won't take any notice until it reaches several thousand - probably not even then!
I want to do what no reporter seems able to - pin him down to a straight answer to a question.
Let me at the lot of 'em!
Can't stand meaningless woffle from those who should know better!
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I've read today's blog: there are some angry people out there.
How about all those committed to Euro loans for one reason or another? Wipeout? Your future pound's worth is going to cause more headaches.
I feel like crowing in the manner of Mr. A Curzon because I pulled out of such commitments in April.
Crowing does not do any good.
I will not now consider foreign currency debt unless I have assets and income streams in those currencies just as I'd imagine Mr. Curzon has.
I am glad I am not retiring any time soon like many who are locked into the current state of the domestic and worldwide stock markets to only be told, "Carry on working".
Banks, currencies, stocks and bonds, governments and countries are all yo-yoing off the bottom when and if it comes. Even Mr. Mittal has seen huge paper losses.
I do not get the feeling that Mr. Curzon supports charitable ideals unless for tax reasons. I hope he counts Mr. Soros amongst his close circle.
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TigerjayJ
Seem to have been under seige on here
today,never mind its minus 13 outside
a mild Russian winter.
Seems being a sole trader is a sin?
Seeing WW go down is so depressing
i have quite a few pieces of Keith
Murray Wedgwood from the 30s and
some Skellern also Ravilious
Wedgwood.
Its a great pity. . .
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Firstly there is no new money the governemnt is borrowing it, so why should there be inflation.
Secondly, the problem is a shortage of money, so the government's own borrowing is crowding out commercial lending.
Thirdly, we are already experiencing deflation. The £ in my pocket is worth much more in shares, property and clothes than it was 2 years ago.
Lastly, I question whether keynes' policy suggestions designed for a world on the gold standard can work in a global economy with floating exchange rates.
Gordon, get on with printing the money and stop messing about. We don't want a huge national debt hanging over the country for decades.
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#147 your idea that there is no new money so there is no inflation is so simplistic that i can only believe you have your tongue firmly in your cheek!
How about the pound at its lowest levels for years, that makes imports more expensive so you will have inflation ........next where do you think the government is going to find all the money it wishes to borrow? with almost 0% interest rates they will not find any takers so they will have to print new money.....more inflation! need i go on?
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#147: Many contradictions.
Borrowing is inflationary in the short term, it IS new money. However, it is ultimately deflationary, as it must be repaid with interest. So long as the interest is paid with production and not more borrowing (which compounds), all is well, there is no runaway debt spiral and no contraction. We are in our present position because we failed to maintain the balance, we spent too much of our borrowing on consumption and forgot to finance sufficient production to enable us to repay the debt. More borrowing will not help; in the fullness of time it will make things considerably worse, as it already has over the last ten years.
How is it possible to celebrate the rising purchasing power of your pound sterling against falling assets and call for printing to inflate away the debt at the same time? To inflate away the debt, the purchasing power of your sterling must fall to zero.
What must be properly understood is we are talking about default, and it can be accomplished in two ways which forces the loss onto two distinct groups of people. Default by nonperformance forces the loss onto the writer of the debt - but at least he can recover assets. Default by devaluation, monetisation, etc forces the loss onto all holders of sterling, and there is no asset recovery for us except perhaps the government claiming to hold something in trust. We must be careful not to volunteer ourselves for the burden. The government must also take care it does not assume responsibility for more debt that it can service through the low tax revenues of a depression. Otherwise it may not be able to obtain the funding for a recovery in the aftermath of the bad debt being cleared.
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Rather early to call the bottom yet. Last January we had a big rise in the Footsie and look where it went. This government have no idea about business and the media is letting them get away with numerous pronouncements daily that have no substance and are rarely delivered. It is very depressing to hear numerous ministers on the radio and tv telling us how they are hepling hard pressed families, etc. Ironic really when they have assisted in getting us all into this. It would be nice if just one of them took some responsibility for their part in our broken economy.
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Do I detect optimism breaking out on Roberts blog?
How droll.
All that Brown bashing was great fun, he is after all such an easy target but we only all have so much bile to spend I guess. I felt better for gettting rid of some of mine anyway...thanks Gordon.
So the stock markets are becoming mildly optimistic about 2010 /2011 are they.
Personaly I think they are simply benefitting from very low interest rates on the lines of 'I will get nothing from putting it in a bank (if i ever see it again at all) so I may as well pull it out from under my matress and buy some cheap shares and hang around for the long haul'.
That is fine but it does not escape from the fact that we do not make much here anymore, are not self sufficiet in food and energy we have no money left to shop with and are strangled from inovating our way out of it by a nanny over regulated risk averse state sector we cant afford.
Lets enjoy a bit of optimism for a day or two to build up our stores of bile again. I have a feeling we will have plenty of oportunity to use it in the weeks and months to come.
The fundamentals of the country are still worse than most other countires in our league but I need a break as well.
Belated happy new year everyone...normal service will resume shortly, just you wait for the accountants to properly wake up from thier christmas excesses and start counting the beans again.
Jericoa
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146 alexander curzon
Bechtel are sole traders I believe, at least that is what they told me in their London offices once. Massive outfit. Most duck sole trading to go the company route to avoid liability. So unusual. Takes a certain amount of bottle or ego whichever label fits. I dont know why you post figures though, too provocative, like a kiss me quick hat in the wrong pub. It is due to be as cold here, minus 12 in places the valleys, are you sure you are not in the valleys.
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Happy New Year everyone – s' novim godom Alexander!
Thank you for your kind words, and you too BerkshireTerrier
I'm sorry that conflicting styles are causing bloggers to become irritated with each other. Yes, we British have a preference for self-effacement, but if as bloggers we want our views to be taken seriously, we should be prepared to explain how we have earned that right.
If you want to know what the fuss is about, look at Alexander Curzon's linkedin entry, especially on his education. I certainly understand where he is coming from.
His attitude reminds me of several former students of mine who, against the odds, have made something out of nothing. All too often with the people who were supposed to help them hoping they would fail. But they didn't! Rough diamonds perhaps, but WYSIWYG. They deserve to blow their own trumpet. Personally, I'm far from modest about some things too – especially, to do with maths, where after being written off in school, I eventually proved the b****rds wrong in spectacular style. That kind of experience tends to make you belligerent!
On the other hand, I do really admire people who can create a real business. I may have plenty of knowledge, but I'm afraid I haven't got the bottle to take the risks. But the prosperity of Britain has always depended upon those who are prepared to risk everything for a dream. Think of the Abraham Darbys, the Stephensons and Brunel. They thought big – and I'm sure they sometimes boasted about it. These people changed not just Britain, but the world.
If we British are to earn our living and regain some respect in the world, we had better find some things we are good at and then blow our trumpets for all we are worth!
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ALex C
Sounds like you need a goodly dose of Vodka to warm your cockles.
Lots of Wedgewood pieces in my family too-family heirlooms which will always be treasured, regardless of value.
You hit the nail on the head really - collectability, memory and tradition
hey ho, would join you in a Vodka, but fallen prey to that Winter Vomiting thingy - I'll toast you in a couple of days!
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141. At 9:10pm on 05 Jan 2009, WerringtonSilent wrote:
You are counting your chickens while you still owe for the eggs,
Robert.
+
so my friend you're counting your chickens before they hatch, golden chickens too,
sipreano
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#147 "Lastly, I question whether keynes' policy suggestions designed for a world on the gold standard can work in a global economy with floating exchange rates."
Keynes was vehemently opposed to the gold standard. In fact, he didn't really believe in money lending either. In chapter 12 of "The General Theory.." he wrote: The only radical cure for the crises of confidence which afflict the economic life of the modern world would be to allow the individual no choice between consuming his income and ordering the production of the specific capital asset which .... impresses him as the most promising investment available to him.
What I want to know is who lent Waterford Wedgwood all the money? I am coming to the conclusion that the only permissible investment should be to take an equity stake. If the banks weren't allowed to be secured creditors, they might be more careful, and take more interest in how their investment was managed.
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A modest proposal -
There is a straight forward way for the U.S at least to settle its debts with Japan. They could give them Hawaii. There are plenty of precedents of hard up nations doing the equivalent of selling a kidney to raise cash. Alaska and the Louisiana purchase to name but two, not to mention various bits we had to give the U.S. when our backs were against the wall in 1940. I'm also sure there are other parts of the US that would interest the Chinese and the Saudis et al should seriously consider purchasing Israel. Incidentally, bloggers may be interested to surf around researching just how generous and understanding the US was to its debtors after WW1 when it was #1 creditor nation.
What goes around comes around.
Yours Aye,
Graucho.
P.S. We, alas, sold off all the family silver and our spare organs to pay for 2 world wars and monetarism years ago.
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153 sashaclarkson
Sorry but Victorian engineers are not a relevent model for anything in todays UK. Only similar role model is software in the states, eg Bill Gates, the Yahoo and Google boys. Mistake to hold up Victorians as an example, that is where half of the UKs problem has come from. That and having an Empire. Superiority complex. Unstable trade network.
156 WW loans do not make any sense, debt to earnings ratio mad. Looks like dramatically shrinking turnover with debt carried forward or asset strip or is that unkind. More of this ilk to follow this quarter, are they pushed or do they jump. Interesting the emotions provoked, like woolies, all about decades ago but NO current purchases.
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"Shome mishtake, shurely?"
No partaking too liberally of the Christmas (and New Year) spirits, are we ??
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Stop - stop - stop making fatuous comments on the stock market. Comments like these (market pricing in a recovery in 2010/11) will only come back to haunt you!
The market is tough enough to call on an hour to hour basis, let alone make sweeping statements about the future.
It is the trap that most journalists fall into. Watch the market and then come up with an explanation. If the FTSE is down all next week what will you say then? Market pricing in a recession all through 2010/11?
btw....keep the negative stance. We aint seen nuthin' yet.
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"An efficiently UK production plant, free of debt and properly run, should be able to knock the socks off any imported crockery."
At 50 quid a plate, WW will have to go a long way to knock the socks off the one quid shops that sell plates at 50p each !!
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#61 "But what about the manufacture of advanced components and complication machinery? These are capital intensive activities - a factory owner in China might invest $1,000,000 per factory worked in captial investment."
I seriously doubt that $1,000,000 per factory will produce the computer that you are using to post here and they (the computers and their component bits) are mostly manufactured in China !! So are your mobile phones, and music (MP3) players, DVD players and new digital-capable TVs !!
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#53 and RP
Not yet.
The FSA just pulled the bottom out from under, allowing shorting again.
That's what happens when you're run by such financial illuminati as Turner (Merrill Lynch) and Crosby (HBOS).
Perhaps they should lead the way into unemployment. Personally, if immorality is still a principle of the Stock Market, then that's an additional reason not to play.
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Factories in China are closing at a phenomenal rate.... they've been hit by the rest of the world, well the prudent ones, tightening their belts.
Wonder what is going to happen to all the housing stock that their entrepeneurs bought?
I wonder if the price of metals etc will hit a low, would that mean the local church gets to keep its new lead on the roof?
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#106 "Have you lost your CAPS button. Are you no longer a CAPitalist, or is it just whilst you are in Moscow."
Methinks someone either bought him a CAPS LOCK key or a whole new keyboard for Christmas !! :-)
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If I remember rightly, Waterfords bought Wedgwood when Wedgwood was making a profit and Waterfords was making a loss !! Since the deal was believed to be leveraged (borrowed) based on Wedgwood's profitability, the loan to profit ratio became skewed when the group accounts were consolidated i.e. Waterfords' losses offset Wedgwood's profits.
What I would like to know is this - Is Wedgwood still a going concern on its own ??
From what I can gather, in the Far East, Wedgwood is still selling very well whereas hardly anyone I know buys Waterfords' crystal products. They are considered over-priced and do not match other European crystal manufacturers in price or design. As one acquaintance puts it - it's just a load of blarney !!
I know this sounds crazy when porcelain was invented and produced in the Far East for centuries and it was Josiah (the First) Wedgwood's desire to muscle in on that market that gave rise to this company !!
Perhaps, splitting the group and returning Wedgwood to British/English ownership might not be a bad thing !!
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#158 I'm firmly with 153 on Victorian engineers.
One thing they DID have (among many attributes, not the least of which was having a thoroughgoing grasp of engineering) was 'can do'.
Unlike today where mostly it's 'can't do' or 'don't know how to' and the longer engineering falls into demise the worse it's going to get. Citing the Empire and some superiority complex blah blah, utter rot.
GC
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We are only now seeing the TIP of the Iceberg.
Majority of people are either employed by the state or service industries.
Service industries will shed jobs all through 2009 and beyond - staff are low skill and easily replaced when market improves.
Real jobs in manufacturing will also bleed away in 2009 but what a lost opportunity to put the country on a proper footing.
Real jobs are in Manufacturing (Wealth creation and added value).
How to increase manufacturing sector?
1. Corp tax reduced to 5% for real Manuacturers employing people in UK
2. Income tax & NI reduced for people working in Manufacturing (Reduced to 0% for 2 years on external companies relocating to UK)
3. Full Grant to cover all costs for students studying engingeering and other manufacturing focussed qualifications.
4. Tax relief on Mortgages for people working in Manufacturing
A lot of these measures will offset low wage rates elswhere around the world - I am sure you can think of more.
Germany is doing well and will continue doing well - New Industrial revolution part 3?
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Curzon....
Your numbers don't add up!!!!
You couldn't be that good at business and that stupid with your money!!!
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168 and others.
I am sorry but I think the widespread nostalgic view of manufacturing is misplaced, and as for Germany doing well, look at the numbers.
Even the Taiwanese have largely andandoned manufacturing to their Chinese neighbours, in favour of light assembly.
A service based economy may have its faults and, yes, jobs will be shed, but there is only so far you can go with people-based businesses. That is not the case with manufacturing where factory closures can see thousands of jobs cut and communities ruined in one fell swoop. I for one am glad we do not have numerous uncompetitive manufacturing businesses employing large numbers of people as we go through this recession.
There seems to be a perception that a pound of profit selling a financial service or a takeaway meal is not as real as making and selling a widget. Not true, and the fact is that a pound saved by importing a manufactured product rather than making it (maybe at a loss) is a pound available to spend on something else. Don't get me wrong, I would be very glad to see the devaluation of the pound create export opportunities and revive those UK manufacturers which have a long term future. But to try to turn the clock back and build a large manufacturing base? Not only is it not going to happen, it would be a big mistake.
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thinkb4
Ha Ha Its not a full P & L Account.
If mine dont look right are you of the
view WW do??
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Mr Peston is optimistic bordering on negligent in offering this view of things 'surely getting better towards the end of 2009'.
For whom? Certainly not the 1900 people out of a job after Waterford's demise. And by the way - £600M global turnover....'not a large company'. (What is then? RBS? HBOS? They want another 50 billion quid already.)
I understand we need to manage expectations, but can we take the blinkers off please and offer a broader view?
Russian debt and its effect on the Euro.
Britain's horrendous debt and its effect on the pound.
The rate of unemployment growth in the UK.
The rate of government bailout money usage set against Britain's toxic credit rating for borowing more.
The plight of millions on fixed income - with the biggest baby bulge in UK history about to retire.
The fact that only more debt for consumers can get this global 'system' working again.
The prices retailers had to offer in all shops at Christmas just to get any footfall.
The plunge off a cliff that will take place in UK retail now the annual gift-fest is over.
The knock-on effect in countless sectors: automotive, technology, telecoms, advertising, building etc etc etc
The likelihood that Brown's much-trumpeted relief for mortgage borrowers will benefit only a tiny percentage of those in trouble.
We don't want prophecies of doom, but this wishful thinking is the very stuffy that got us to this place we're in - and are still a long-long way from being out of.
A stock market unaffected by collapsing business in non-financial sectors? Don't make me laugh.
More balance and more reality please- and a damn sight more stoicism from the people involved. Available entirely free at:
www.notbornyesterday.org
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WW is not a victim of the 'consumer' credit crunch. It isn't a victim. It has made a loss for five years. Its biggest lenders are some of its shareholders but one of the troubled irish banks is also a lender. Its a shame the dollar was weak diluting earnings during this time but that's international trade for you.
I have some Wedgewood. I bought a set about 10 years ago. It is a simple, classic but modernish design. This was discontinued about 5 years ago. In the past, one of the great joys of these brands was that you could replace pieces for ever. Now you can't and therefore its not an heirloom, why would you pay the prices. No doubt some consultant with little feel for the product said 'reduce the sku's'. Unfortunately you reduce your sales too.
I found a replacement piece from a specialist replacement piece retailer which no doubt was bought at bargain basement clearout prices.
At one time they sold their stuff in John Lewis - visible to the UK masses. Volume there reduced to nothing.
Finally they seem to have used a strategy of working with 'household names' but really Martha Stewart, John Rocha, Gordon Ramsey etc. WHY would anyone pay top dollar to be linked to these people.
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Message 134 glenafon
I agree with your sentiments.
Perhaps I was being a tad previous. Times have not yet changed but they will change.
The challenge is going to be in excess of 5,000,000 unemployed and an unsustainable welfare bill. The only way out of that hole is to make things. Our economy has to change and it if doesn't then we must make the change happen.
It is true that what we make is going to be the challenge. This has to be good quality, value added product that people want to buy. I agree that R&D investment needs to be valued. We also need to look at more localised sourcing particularly of food and other staples.
The logic of labour cost is perfectly understood but with 5,000,000 unemployed and an unsustainable welfare bill, how expensive can you make your labour?
Also if sterling continues to fall against most major currencies things will be more expensive to import and cheaper to make here.
We don't need to compare ourselves to the Far East any more, just Eastern Europe and with Gordon Brown's help we will get there quite soon.
By the way Message 170 more balanceplease, I have noted that a Taiwan manufacturer has repatriated his China operation and reverted to employing migrant Philipinos.
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170 Not a nostalgic view through rose-tinted spectacles. British Industry vapourised due to utter imcompetence of their management - all visible effects - industrial disputes, dreadful design, non-existant reliability are just symptoms of this.
Service industries are predominantly low skill sectors.
We do have some successful manufacturing companies that have high value UK jobs - Good example is Triumph Motorcycles.
As a county we still struggle to appreciate, support and value manufacturing.
I worked for a major successful UK manufacturing company in the 80's that spent 1million pounds plus repackaging it's brand to look like an insurance company to support the share price - guess what - shares went up!!
The reasoning was that the City doesn't like 'dirty' engineering firms.
Germany, Japan and the US do and China and India definately sees the opportunity to move up the manufacturing food chain
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Mr Curzon - yesterday I queried whether you actually really did have a company with £713 million sales. This has been picked up on by several other posters and your responses do remain slightly evasive - I note the number of factories and locations but it is suprising that a company with a £713million turnover can be so invisible when 'googled' . Our company has a £20m t/over and registers many hits when googled for eg trade shows, trade magazines, our own publicity etc.
Please note that this does not affect the validity of your posts generally but it will undermine any future references to your company performance and strength.
Also post 114 stated you 'had to go' so couldn't illuminate me further with your plans for the government then at 5.35pm you posted again - are you able to continue post 114 now?
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#172, well said/put.
To fix a problem you first have to accept that a problem exists.
We'll be lucky to have an economy the size of Iceland's by the Spring, the way things are going.
No doubt Brown's answer will be to tell us all the things he's doing about it and a good 'telling off' from Hazel Blears.
GC
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#98 Westendstockie - My comment was aimed at the directors of WW rather than the work force as a whole. The industry has been in decline for years so why did they decide to borrow so much? You should only borrow to invest, not to protect a declining business. The directors decided to keep the company going by borrowing rather than taking the hard decisions of cutting back production. This has ended in the company folding. Scarily, if you can not see how short sighted that strategy was, then Gordon is more likely going to continue to do exactly the same with UK Plc. ie borrow our way out until we go bust.
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Robert, did you pass 'O' levels maths?
A 7% fall in sales means Next sold one in fourteen less shirts not one in 20.
http://news.bbc.co.uk/1/hi/business/7813142.stm
Having been to their post Christmas sale and seen the quality of the shirts I can understand why they are selling fewer.
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Curzon
Looked like a fully audited set of accounts to me, thank you for pointing that out
Anyway numbers still don't add up, looks like too much cash/stock or not enough TC's to support the sales - you can't have it both ways!
Or maybe you're just being creative..... :)
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Re 7 & and 17 (and many, many more), I note that on the "Linkedin.com" entry for Alexander Curzon, he states that is "sick to death of know it all graduates who..spend all day on the internet".
Different chap perhaps.
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Robert Curzon-if there is one way to annoy people in England it is by being successful. I hope you really are, and thanks for taking time out to blog on here.
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#7 alexandercurzon
On second life my business is also trading very well and i lost weight over christmas and my disciples and employees voted me business person of the year.
I think i made $100m in 5 minutes. You and me must be very similar in that rather than enjoy our tens of millions we prefer to be here most days blogging.
Didn't you invent fire as well.
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Curzon
Tedious
there are a couple of auctioneers looking for you to put your hand in the ring for some crappy flats somewhere
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.The 16% fall in house prices and the drop in retail sales figures are not a surprise? Accepted it is impossible for the economy to remain static but the levels of growth experienced over the last few years were always unsustainable... It was bound to slow down at some time. As mentioned earlier businesses like WW and Woolies were excessively leveraged. They presumably like Madoff assumed that constant growth would not end before the equity had been bought by yet another sucker. Agreed that the financial breakdown has accelerated the slowdown but surely the FTSE had to drop and consumer prices drop back before the economy is in balance. Then we can go back to 2-3% growth until the next time. Too much intervention will just move the balance either to a tax burden or worse to an extension of the lines of credit which will never be paid off. The best thing all governments can do is insist on buying locally manufactured goods and financing ecological projects which will never be economical enough for private equity. Waste recycling, Sun and Wind farms are the best use of our money in the long term leave the market to finance the auto industry and the banks.
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#13 - I agree - could we have a seperate blog where alexandercurzon can appreciate himself unhindered by other posters?
alexandercurzon - you have undoubtedly done very well for yourself - and you have my unreserved congratulations and best wishes but sometimes I fail to see how narcissism contributes to the debate.
In terms of the "excessive" £491m of debt finance relative to £650m of sales, how many of us normal people have mortgages of less than 76% of their annual salary. I know it's comparing apples and pears but this "frightening" level of debt is peanuts compared to most households.
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Thank you 175 - service industries alone are not enough to keep an over-populated UK fed, fueled and competitive and able to withstand a 'see if I care' service workforce, and M&A bonus-chasing by the City of London and senior 'management'.
Change cometh.
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hi red lenin #133 glad you found the NY Times story interesting and thanks for adding the link to it last night
here's something that might make us all smile whilst waiting for Robert's latest scoop and/or dodgy stock-market tip of the day
http://www.theglobeandmail.com/servlet/story/RTGAM.20081223.wvbunny/VideoStory/VideoLineup/Life
you'll need to turn on the sound; it's from the globe and mail and is an animated explanation for children of how credit works and the financial crisis developed; I think it's aimed at primary school kids but could be useful for explaining a few things to:
all politicians (except Vince Cable)
all bankers
the regulators
everybody in Iceland (the country, not the shop where we're all going to have to buy our groceries soon, instead of at Waitrose)
and with all due respect, some people on this blog and even Mr Peston if he continues with his positive reassurances
but not Mssrs Madoff or Murdle, who already understand how to take carrots away from rabbits
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Looking at WW's total debt is slightly misleading.
At 4/08 it had €480m total debt. Of this, €155m was senior debt, €205m mezzanine debt, €40m "subordinated" debt and €80m of "debt component of preference shares".
In other words (and depending how you want to characterise the different debt instruments), over half is "quasi equity", invested presumably in anticipation of a turnaround and or synergies that never materialised.
Not that that necessarily makes the management more competent or the investment or lending decisions any better. It just explains a bit better how the debt might have accumulated.
In common with most of the recent failures, WW was probably an accident waiting to happen rather than a real victim of the credit crunch. I hope and expect that two sensibly financed and downsized businesses can be salvaged from the wreckage, with the majority of jobs saved.
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Alex Curzon told me the following (official rumour)
"I am an alien from the other world, from outer space, I don't have no land, no estate, no property, no house. Not on this earth. I live in space - I'm only a visitor here. Some people are only here to collect property. I am here with my suitcase to collect only the good brains.
It was only four tracks on the machine, but I was picking up twenty from the extra terrestrial squad."
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167 guycroft
You dont get it do you.
It is not about technical excellence it is about making money out of technical excellence. Implementation.
I don't think Brunel made money for anybody. Its like the concorde concept - brilliant technically but doomed from the start. What is the point in travelling very fast over the Atlantic just to be stuck in traffic and processes at each end that expand in time. Lets make a passenger Jumbo Jet out of a aircraft design to do a real job, a military troop and equipment mover, oh somebody has done that.
It is about being in at the start of a technology and having the implementation right. The nearest comparison is the personal computer and the internet. Implementation in the US not here. It is not about stuff like the BBC Acorn, volume of uptake is key.
The Victorian engineers are not relevent to today in the UK. Sorry but you are being romantic. Can you see anything new coming along in this country. The government will not even put public money into the next generation internet infrastructure in direct contrast to Obama in the US who is making it a priority. Sensible bloke
I am an engineer - I admire the victorian engineering, I admire the individuals. I dont think they are role model for today.
I wont write about the problems of inheriting a delapitated manufacturing base and all the problems of believing that because the industrial revolution started here we are the best. When other countries were able to build brand new and copy. And I wont write about the structural trade and political admin problems of the inheritance of the empire when for example two of the countries where snatched illegally by a couple of thugs against London wishes, Clive of India, a thug from Market Drayton. Essentially a commercial company seized India; and Cecil Rhodes a con man with guns. There is not enough space. Go to Liverpool and look at the architecture, take a look at the carvings glorifying slavery, done after slavery was abolished, and then you might see it was the wrong foundation. Easy money in dubious circumstances, the very thing you are protesting about.
There is only one market big enough to carry new technology implementation through on a big scale and that is the US. It is not Europe, it is too fragmented and nationalistic. China maybe in a few years. The UK - never.
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I have noticed lots of blog’ers on here who have been around for some time, are now starting to turn on each other.
Is this the first sign of the civil unrest that is to follow? It is being precipitated by opposing views on what we should do to solve the problems. That said a common view seems to have prevailed, Gordon Brown needs to call an election before even more end up paying for his misdemeanours.
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Gowdon Borwn’s Plan,
As stated by others is to borrow to consume, well the thing is this is actually ok as long as we PRODUCE goods in order that we can TRADE with our partners around the world.
Can anyone spot the problem here? Our borrowing (on the fiat currency is limited) due to the fact that we cannot trade as we manufacture ZIP!.
When will GB realise that the game is up and he has destroyed our economy and left us in a position where we cannot take advantage of our situation? The answer is he won’t realise this as he is so preoccupied with his ‘career’ to care about what’s happening with the rest of us.
And all of this from a ‘Christian’, the man is an evil wretch of a human being!
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174 stanilic
I know what you were saying but it is extremely difficult to see historical mass manufacturing returning. Manufacturing has to be driven by demand. You might think the minimum wage is rubbish but it is high compared with other countries.
We manufacture on a small scale and sell around the world. You have to make something that cannot be made in the East easily and you have to sell globally as it is a minority market. As soon as it is a major market then the volumes mean you have to look at mass production and that means relocating to a low labour area, we have looked at Morrocco as a future option but decide to stay small as a policy. Therefore the strategy here is to be flexible above all and float with the minority market boundary. Ethics and environmental issues are important. There are some signs of manufacturing returning to the West driven by transportation costs but it will take time. And it will remain relatively small compared to historical levels. The bubble going has made no difference here. The landscape remains the same, but we never sought to operate in a short term time frame or to sell to the bubble brains.
It is a completely different sector but a good comparison - In Canada you can book a wilderness experience canoeing on the Lakes. It is programmed so that as you go around one corner and vacate the next canoe enters on a different route. The Lakes are populated but contact is minimal, the consumer gets a individual wilderness experience from a standard format. We use a similar approach in the market place and sell individuality of consumer product, ie being special.
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189 morebalanceplease
Debt is debt whether it on a mezzenine or not. I think you are spot on with saying WW was an accident waiting to happen, I think there are more due. The speed of the collapse means monolithic businesses do not have time to restructure, they do not even know where the floor is. However only certain types of business will be affected.
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192 javaman1984
It is the nature of argument that it crystalises positions and people adopt positions they would not necessarily first seek. Further it is part of the nature of the blog that complex concepts have to be stated shortform which can lead to misinterpretation, and sometimes the reader not absorbing the intended message, sometimes because of mis statement. It is a ground ripe for conflict. Further it is part of the current process as you have identified that emotion is about. I posted months ago that fear would be used as a tool to push through the bailout and once unleashed it would have consequences. That in the UK Brown would trumpet progress too early, that the tribal members would cluster around the tribal leader in time of threat but anger would develope as that emotion, which Brown welcomes because it supports him, could not be sustained. That anger would then develope. You aint see nothin yet. There are posters on the blog who are worried, it is understandable. Whether it spills onto the streets I doubt. Victims tend to suffer alone not organise into a group. The pain is still as real. Anyway gotta go
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andrew curzon
Well you have made an impression! I think you have been mentioned on here more times than Robert Peston he he
Would there be any chance of you sorting out the pub industry please? Honest people every day are closing there pub doors and handing back keys. Enterprise or Punch could do with some serious 'long term management' before this industry also 'bites the dust', which may be two other casualties for 2009...
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Glanafon,
yes Bechtel still are set up as sole traders. You should see the size of the windows they clean and the amount of hours they budget to do the round!
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grimupnorth
I flit in and out on here during the day
or night it depends where i am and
what else needs doing.
This blog is an excellent VIBE meter
to get a feel as to how people think.
Re trade shows we/i dont do them as
exhibitors we/i do attend a fair number.
So i am sorry you cant turn me up?
You can easily email or phone.
To other bloggers:
I didnt post my numbers to annoy
anybody and i accept it was OTT to
post them.
I just wanted to compare a properly
run business with YET ANOTHER
IN DEBT UK BUSINESS.
As regards accounts the numbers were
from our year end consolidated figures.
There are many cash rich businesses in
the uk most of which are in private
hands think Barclay brothers etc. .
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Grimupnorth
With regard to post 114 re GORDY etc
Best email at least then i will know
who i am talking to?
sashaclarkson & tigerjayj and a few others will want to be included.
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200:
could you look at the gaza blog please
http://www.bbc.co.uk/blogs/theeditors/2009/01/reporting_from_gaza.html
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Since I have an IQ of 3,746 it's fair to say that I will always be right.
Being a multibillionaire velcro toilet seat salesman it's clear I know how the economy works.
Everything is now good. You can all start spending and investing again. If you do your bit there won't be a need for mass redundancies or recession.
All hail me. I love me.
Couldn't agree with myself more.
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#188 somali_pirate_SP500
Good Video. They missed out the bank interest, no?
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#96 peterbaldwin
"Brown is going to pay interest on 200,000 pound mortgages.
..- where will all that money come from eh? "
ermmmm? GB will print it. He cannot borrow it if interest is 1-2%.
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#99 sosraboc
"Gordon Brownian solution to WW:
1 Everyone buy two dozen crystal vases.
2 Everyone smash their vases.
etc etc etc etc
Can anyone tell me what the difference is between this and what GB is presently proposing for the economy?"
+
Yep! People at WW would keep their jobs.
But no vases will be broken deliberately.
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I find this wholly encouraging, thank you Robert/Mandy. I no longer have any concerns regarding Russian manipulation of fossil fuel supplies and it's effect, nor about inflation (which must surely equal growth,right?)
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#48 friendlycard
"But are the polls to be believed? EVERYONE that I talk to, irrespective of age, occupation or income, views Brown and his crew with uttter contempt - so how come the polls are not reflecting this?"
+
Have you ever been polled? No? Nor me!
We must both live outside of London, then?
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#185 uk05184
" .... Then we can go back to 2-3% growth until the next time."
+
There can be no more GROWTH and no more next time. We have hit the buffers on the railway of resources.
This will need to sink in.
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Sadly, there is a nasty undercurrent of envy, contempt and prejudice in this country for anyone who is successful and/or educated at degree level and beyond.
Many of these critics of success have a massive chip on their shoulder. It is endemic of our current society-resentment and lack of respect for education.
My husband is fantastic at sales and as a managing director, but due to profound dyslexia and being accused of being 'thick' and 'stupid' he still views high level education as worthless. Indeed, he has called me 'thick' on occasion!
The difficulty is each side is blinkered thinking their skills are better than the other.
I genuinely believe that everyone has skills which are as useful, and just as important as each other.Each side needs the other to survive. Academics and practicals need to learn respect for each other, and to value each others skills.
Just as I say to my husband-there is no absolutely correct way to get the result, just different ways of thinking. The definition of clever is not confined to exam qualifications, nor purely practical expertise.
This underlying prejudice on both sides needs sorting-once and for all. Ultimately, common sense and a decent working ethic (not being afraid to work long hard hours) is what makes a person successful-nothing more or less.
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A Happy New Year to you Robert. Good to have you back. Hope you keep warm and well
throughout the year. You are both a "nice to have" and "a must have" - both entertaining
and informative. Long may you carry on with the good work.
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#191 - Me? I don't get it? I think not.
The ONLY trouble with Victorian engineering was that the very foundations that encompassed it, 'no-limits, fit-for-duty and durability'- were all forgotten in the economic and social wreckage that followed the 1st world war.
You might be an engineer - plenty think they are - but you're definitely no historian! Never use history selectively. All countries of the world have dark pasts, some - not the UK - much more recent than others.
GC
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#44 brickfielder
"Another over leveraged company goes under. Let us be honest, this company was crippled by debt ...."
+
May we expect other leveraged buyout companies in trouble?
A number of them come to mind, ManU for one.
Any other suggestions?
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#209 - Actually TigerJayJ - believe it or not, I agree with you entirely. There is definitely a mentality of slating anyone who does well in life and taking great pleasure in the demise of those people. In the UK, it's riches to rags stories that fill people with satisfaction, not rags to riches!
alexandercurzon, just to clarify, I have no grudge against you for your success, indeed I admire and aspire but can't help agreeing that some of your comments are a little self serving. That said, you have accepted that part of the criticism levelled at you so fair play.
Unfortunately, I still can't resist the banter...
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I am with alexandercurzon, mismanaged companies seem to be getting all the news at the moment. Most of these were on life support during a boom. Preston should do a blog on some companies that are set up well for this part of the cycle.
As for the UK, I am "comparatively optimistic" that when a recovery comes we will be in a better position, FTSE fell the least % in 2008 compared with all other major markets, a good indication of the investor perceived risk for UK. The £ has dropped like a stone meanwhile property prices have dropped too, both were overvalued. We have an increasingly available skilled workforce. If you have some money to invest your Yen/Dollar/Euro will go much further in the UK compared with 12 months ago and anything you export will be competitively priced.
Back to Wedge Water
How could there be any surprise or sympathy (other than for the real workers making the stuff) when a company with nearly half a billion in debt finally goes belly up. They are the same as these car companies that go into debt to pay themselves bonuses and the shareholders large dividends so they don't get voted off the board. They claim to be profitable because in the good times they can still service their ever increasing mountain of debt and sell a % more cars. When the difficult times hit suddenly they can discount the stock, and expect a bail out from the government.
Banks have given too much money to people and companies who can not pay back the interest never mind the capital.
I am hoping there are more companies like alexandercurzon's that have kept their head during the good times. (as I suspect I will be looking for a job myself in a few weeks)
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re: 213. 3671276 wrote:
"...There is definitely a mentality of slating anyone who does well in life and taking great pleasure in the demise of those people. In the UK, it's riches to rags stories that fill people with satisfaction, not rags to riches!.."
+
in the uk there is a ceiling / limit to level of wealth before people consider it obscene
in the us there is no such ceiling for wealth, in fact wealth is bigger than religion
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136 alexandercurzon
Thanks for the good wishes
I hope Wedgwood survive - they have good people working for them. The fat needs scraping off the top. With better leadership it would do well.
I could write a book --but I suspect that wouldn't sell either.
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#214, you forgot to take account of currency changes. Yes the FTSE has only dropped about a third but you also have it is worth a third less on top of that because of currency fluctuations. If I had 1000 dollars in June switched in to GBP bought FTSE index for DEC2008 and switched back to dollars yesterday would my loss only be 333USD?( it would be around 490USD ).
In terms of perceived risk, look at the GBP. It has been dropping like a stone.
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211 guycroft
Sorry Guy I dont agree. You are welcome to your point of view. Personally as an engineer I would have prefered to have lived in victorian times but they have gone and will not be coming back. The first engineering company I worked for, a major one, still had victorian overhead drive shafts and leather pulleys to victorian production machinery. Cast iron pillars supporting the floors. Talk about trapped in the past. There is a thing called overengineering and a thing called progress. They were competing with - amongst others - a German company rebuilt and refitted under the marshall plan. So, no I cannot agree with you on this one.
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Isn't it curious that there is no current of support to bail out WW - similar(ish) size to Jaguar / Land Rover, allegedl;y viable in te long term. Is it just that the current regime don't buy ww - more to the Opposition's taste perhaps? or that there aren't any marginal Consituencies in Stoke?
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#218 glanafon
"There is a thing called overengineering and a thing called progress."
The Germans have a new invention to save money. As you walk along the Strasse and the light are out to save money, you dial a number on your mobile, enter a code and the lights come on.
Would it not be 'progress' to install PIRs on each lamp so that if anything cam along , the light went on?
- Sorry, wandered OT.
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Bull in China Shop?
Ought to be 'Bear in Crystal Works'.
Wedgewood were doing OK.
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#209 "This underlying prejudice on both sides needs sorting-once and for all. Ultimately, common sense and a decent working ethic (not being afraid to work long hard hours) is what makes a person successful-nothing more or less."
Well said !! Couldn't agree more !! There are too many who think that their's is the right AND *ONLY* way !!
Old English saying about cats and skins....
#221 - I agree with your view. Please see my comment #166
The future for Wedgwood will depend on the ever-expanding middle classes of the East and they do seem to like these products. Perhaps they have a history of appreciating Fine China !!
OTOH, they have *NO* history of appreciating glassware - fine or otherwise !! Therefore Waterfords has to depend on an ever-shrinking Western middle class !!
Therefore, I am of the opinion that breaking up that group is the only way to go. They serve two totally different markets and cannot go on indefinitely using one to subsidise the other !!
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220 toldyouitwould
Well that sounds quite clever. Not that smart here. Here in Darkest Wales one recent solution to cope with high energy costs was to just turn the street lights off. Quite nice in some respects and quite Dark Ages in others. Until there was uproar and in one village some old bloke used his personal savings to pay 300 quid to turn them on, and another village paid, 16K I think it was, out of funds to keep them on. Then the next thing was at one of the Local Gov HQs they banned xmas tree light powered by the mains as it was using mains power and the street lights were a sensitive issue, told the staff to use battery powered xmas tree lights if they wanted something on. Hmm disposable batteries are 2 percent energy efficient, good thinking.
I just do not understand how in a developed country which claims to be concerned about emmisions some technology is not used as a priority to cut down on energy consumption in lighting. The big thing currently is low energy lights, ie fluorescent tubes packaged like incandescent light bulbs. It is already superceded by LEDs which are much more efficent. Why on all of these lights that are on at night, particularly in buildings and shops, dont they insist that LED technology is used. Beats me. In the local supermarket on some isles every shelf is lit by a long fluorescent tube. The energy cost must be quite something.
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re. Waterford/Wedgewood
there was a journalist comment in one of the Sunday broadsheets about how many companies would be doing really well er ... if it wasn't for the amount of debt they were carrying... !
and I think he was serious. He thought companies just like WW should have been allowed to have their cake and eat it.
If I had borrowed, say, an unnecessary 10million through one of my companies, I could have my riverside penthouse, the new Aston Martin, a 2 million holiday home, a lot of hidden assets, and an incompetent financial director..... oh and the company would also be doing great guns if it wasn't for the debt we were now carrying. (I would have put some of the cash into R+D and capital equipment, honest)
I would bet that a significant proportion of FTSE 250 companies are barely solvent in the objective sense, relying on inflated figures for property, intellectual assets, brand-valuations, stock-in-hand etc and unrealistic future-growth targets to disguise their desperate straights. Such managements have been racking up debt and looting the funds for the past decade.
What on earth have the auditors doing?
There are a lot of listed companies who have not been improving their product lines, seeking new markets, challenging or invigorating their management and looking to the future. Just like in football management, if you stand still, you die.
The like of Woolworth, WW, General Motors are just the obvious and earliest casualties. There are lots of walking wounded out there, doing nothing much but pray for a miracle.
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#217 I did not forget to take this into account. Stock markets are not collectively priced in a single currency which is what you are attempting to do. You can not assume the link, if Stirling increase in value it does not follow that the stock market drops in value to compensate so it is wrong to apply this only when Stirling drops.
While the example you point out is true it further illustrates my point which is looking forward rather than back to June, UK stocks are now cheaper when viewed from another currency you get more stock now for your dollar. So I ask you, just before a recovery where to invest that dollar?
The pound was too high partly because our higher interest rates were always higher than the Euro zone, currently they are not I think its more about return. Already the Euro has dropped 7% since its high against Stirling, why? the theory is that it is expected the ECB will drop rates lower than the Stirling this week.
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"It would work much better..."
said Gordon on the Andrew Marr Show
"..if all the G20 countries adopted the same policy of pumping cash into the economies rather than just GB in isolation."
Very true Mr. Brown.
Similarly, if I owe 100 quid to a bank and I get 20 of my friends to all put 5 quid into a financial stimulus fund, then we will all end up owing only 5 quid each.
Great Idea. You are a Genius.
Because if my friends don't do this, then I can blame them for my 100 quid debt.
Brilliant. Stunning. Visionary.
But, hey...
If the Bank bundles up all the £100 debts... securitises them... sells them off to 'whoever'... the Bank can then lend out all those £100's again... Keep on doing this... time after time, after time, after time... then we all have enough cash to spend to keep 'GB' afloat and a world leader... when the 'brownies' come to get us... Nationalise the Banks... Print money... Add the spice of a little inflation... Pounds are reduced to the worth pence... but the beauty of it all is that we can all then afford to repay the equivalent inflation adjusted debt... which will be wonderfull...
Sorry, must get back to my friends Gordie and Allastair on cloud-cuckoo land...
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when discussing the high street banks the media has focused on the rates available on mortgages and compared this with rates available to savers.
there are two areas of personal credit which have a major impact on consumers
a) credit cards......not unusual to be paying 25 per cent apr
b) agreed overdrafts....my rate is currently 17.5 per cent.
both these areas have proved resistant to falls in the base rate and i believe have a phenomenal affect on consumer spending decisions in the UK. Now that we are majority shareholders in 2 of the main banks we have the ability to directly influence the market immediately...whereas confidence in the house market will not be restored in the next 12 months.
From my personal perspective I believe that I am being gouged by my bank...and i believe that there is now the real possibility of mobilising political will to reduce the "gouging" of the workers who are dependent upon their current accounts to perform most transactions.
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A pessimists life is full of suprises, an optimists full of dissapointments, I am a pessimist, lets imagine Honda and Nissan pull out of Britain, the new American President fails to halt the decline in their car industry and GM and Ford pull out, Mr Tata decides to cut his losses and move JLR to india, and cease steel production at his UK plants, I believe we will be very sorry that we allowed all these overseas companies to swallow up our industries, but as I said in the beginning I am a pessimist and I hope my life is still full of suprises.
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Robert Peston & the BBC - I cannot take anymore of your reporting of the "news" - all you do is report the bad/depressing news - yes, it is incredibly difficult times but there are a lot of businesses/individuals that are doing some great stuff at the moment - YOU ARE NOT HELPING ONE JOT!!!!!
I have been in Banking for 22 years and am not naive BUT the Banks (dispite all the mistakes of our hierachy) are DELIVERING to the right viable individuals/businesses.
In my opinion, and many of my acquaintances, the current media reporting is destroying the UK - either you stop your negative reporting and start mentioning positives(15k jobs from Morrisons/Tescos for example) or you may find you are the ultimate failures here - WHAT HAPPENED TO BALANCED REPORTING?!!!
STOP IT, STOP IT, STOP IT!!!
ps. please shoot Preston, noboby likes him anyway........squeak squeak...
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