Impending recession - quiet at work?
Discussion
With all this talk of impending recession I would have thought we'd be quiet at work - but far from it!
We are busier than ever and the phone hasn't stopped ringing with more bookings.
Is this the same in all types of business at the moment or is it just the motor trade?
If it carries on like this we may have to look at taking on more staff - or do you think things are going to slow down soon?
We are busier than ever and the phone hasn't stopped ringing with more bookings.
Is this the same in all types of business at the moment or is it just the motor trade?
If it carries on like this we may have to look at taking on more staff - or do you think things are going to slow down soon?
However......once you go further back in industry (away from the showroom, shop or whatever) the signs are all together much more bleak.
Soaring fuel prices and increasing demand from developing nations has pushed commodity raw mateiral prices sky high. As a result a lot of big bulk chemical businesses are no longer profitable, ceasing trading and therefore creating shortage in supply which in turn pushes costs even higher. These are the sorts of material used to make everything from shampoo to washing powder to pot noodles.
So far this has not really been passed onto the consumer (you & me) and the finaical hurt is being asbored by the manufacturing companies. This is obviously not sustainable, so in the very near future costs to the consumer are going to rise significantly and unemployment will increase as more business become unprofitable.
For the last 6 months I have been working on trying to mitigate as much of these spiralling price hikes for our company as possible. Unless we see a recession soon or China sinks into the sea, prices for things are going to keep going up up an up...
Soaring fuel prices and increasing demand from developing nations has pushed commodity raw mateiral prices sky high. As a result a lot of big bulk chemical businesses are no longer profitable, ceasing trading and therefore creating shortage in supply which in turn pushes costs even higher. These are the sorts of material used to make everything from shampoo to washing powder to pot noodles.
So far this has not really been passed onto the consumer (you & me) and the finaical hurt is being asbored by the manufacturing companies. This is obviously not sustainable, so in the very near future costs to the consumer are going to rise significantly and unemployment will increase as more business become unprofitable.
For the last 6 months I have been working on trying to mitigate as much of these spiralling price hikes for our company as possible. Unless we see a recession soon or China sinks into the sea, prices for things are going to keep going up up an up...
Building contractor prices are below QS estimates for the first time in 7 years, and I am findings lots of trades have a gap which they can fit us in.
Also - the banks are finding debt finance quiet.
However that is about it - engineers, surveyors and architects seems to be as busy as ever because there is a lag on this sort of thing.
Give it 24 months and things might be very different... Or not.
Also - the banks are finding debt finance quiet.
However that is about it - engineers, surveyors and architects seems to be as busy as ever because there is a lag on this sort of thing.
Give it 24 months and things might be very different... Or not.
Thud_Mcguffin said:
However......once you go further back in industry (away from the showroom, shop or whatever) the signs are all together much more bleak.
Soaring fuel prices and increasing demand from developing nations has pushed commodity raw mateiral prices sky high. As a result a lot of big bulk chemical businesses are no longer profitable, ceasing trading and therefore creating shortage in supply which in turn pushes costs even higher. These are the sorts of material used to make everything from shampoo to washing powder to pot noodles.
So far this has not really been passed onto the consumer (you & me) and the finaical hurt is being asbored by the manufacturing companies. This is obviously not sustainable, so in the very near future costs to the consumer are going to rise significantly and unemployment will increase as more business become unprofitable.
For the last 6 months I have been working on trying to mitigate as much of these spiralling price hikes for our company as possible. Unless we see a recession soon or China sinks into the sea, prices for things are going to keep going up up an up...
This seems reasonable to me.... I've been assuming that many companies, especially in the engineering sector, have been surviving against the strong pound, high material cost and relatively low demand, by using their ability to invest in the stock market. Presumably if that goes pop, redundancies will be on the cards for many of the companies who have managed to keep away from them?Soaring fuel prices and increasing demand from developing nations has pushed commodity raw mateiral prices sky high. As a result a lot of big bulk chemical businesses are no longer profitable, ceasing trading and therefore creating shortage in supply which in turn pushes costs even higher. These are the sorts of material used to make everything from shampoo to washing powder to pot noodles.
So far this has not really been passed onto the consumer (you & me) and the finaical hurt is being asbored by the manufacturing companies. This is obviously not sustainable, so in the very near future costs to the consumer are going to rise significantly and unemployment will increase as more business become unprofitable.
For the last 6 months I have been working on trying to mitigate as much of these spiralling price hikes for our company as possible. Unless we see a recession soon or China sinks into the sea, prices for things are going to keep going up up an up...
Yob Tar said:
With all this talk of impending recession I would have thought we'd be quiet at work - but far from it!
We are busier than ever and the phone hasn't stopped ringing with more bookings.
Is this the same in all types of business at the moment or is it just the motor trade?
If it carries on like this we may have to look at taking on more staff - or do you think things are going to slow down soon?
Nice way of advertising your business, I like it!We are busier than ever and the phone hasn't stopped ringing with more bookings.
Is this the same in all types of business at the moment or is it just the motor trade?
If it carries on like this we may have to look at taking on more staff - or do you think things are going to slow down soon?
The company I work for has just had its best January ever, and last January was a record too. Been trading since 1973. I sold twice as much in 2007 as I did in 2006, and 2008 has started off very well indeed. Meanwhile our industry as a whole is down 25% and folks are going to the wall. We're doing something right!
Same here in Yank land. We, and our competition are raking in the contracts. Numbers that were great 10 years ago are shown as alrming today. Two things to consider. First, this is an election year. Second, it seems economies are driven equally by psychology as they are hard economics.
shadowninja said:
Having read Schultz's "Bear Market Investing Strategies" things don't look so good.
I'm a freelance asset management systems consultant specialising in fixed income analytics. Current top-flight fund manager client is cutting costs i.e. including involuntary redundancies.I'd watch what the fund houses are doing more than the banks - the banks play all sorts of accounting games and it takes real
-ups before anyone on the 'outside' finds out that the bank is rotten - but even at Soc Gen the traders I know there are still getting the bonuses they were promised for 2007 performance. So I'm not surprised to hear the motor trade is rolling along now - there are still front-office City types getting their fat bonuses, and there are still young lairy traders who weren't around in the last recession and are happily blowing the money on toys, rather than scared and investing the whole lot in gold 
IMO the big hit will come when the retail banks dry up their credit card lending. I had a nightmare year last year and am currently up to my eyeballs in debt, lots being juggled around on credit cards (from 0% deal to 0% deal, etc. as best as I can play the game). I haven't defaulted on anything so my credit rating is very good, and I'm slowly chopping the debt down now. The credit cards are still offering me balance transfer deals, extending credit limits (£16.5k on one card, unsecured... I have 4 cards, and could easily get exposed beyond my ability to repay) and there's still plenty of liquidity there - I can switch balances between lenders etc. still. I can play the game - what about the people who know nothing about finance and just take what they're offered?? (subject for a P&P thread... why the
don't the government make basic finance part of the national curriculum?)If, heaven forbid, the retail banks panic and foreclose their credit cards (asking for repayment in full from people only just managing the minimum payment every month) then there'll be a huge crash. There will be individual bankruptcies, but even those who aren't up shit creek will cut back on discretionary spending big style. And with the markets the way they are - would you instead start saving? Where? A safe national bank like Northern Rock?
As soon as your average person on average money stops spending their disposable cash, retailers get hit. If the average people are also scared of banks collapsing and refuse to save/invest as well (by just holding cash or commodities) then the financial sector will suffer. Liquidity will dry up further and there'll be a real crisis. It's not there yet - there's a lot of scaremongering by the media about big bank losses, but most of these losses are either profits for someone else in the market, or not 'real value' losses at all.
Scare enough people though, enough to change behaviour wholesale, and there'll be a real problem. The banks had problems due to inter-bank liquidity drying up (banks were wary of lending to each other... which is central to the entire industry), but if the average person decides to reduce *their* liquidity (misuse of the term, but in other words, reducing spending and saving - a reduction in the overall volume of cashflows) then *all* the sources of value in the UK economy get battered. The media really have to face up to their responsibilities here - some of the reporting on the BBC business news website (Robert Peston in particular) is overly doom-mongering, and financial markets have a bad habit of being overly sentiment-driven... Homo sapiens economicus appears to be a very rare species, yet many of our financial analytical models assume the agents are 'rational investors'
I was interested in Fittster's 'gold bug' posts last year (is he still banging on about gold, or is he sitting there with a fat bag full of krugerrands, chuckling evilly at his profit with a fluffy white cat on his lap?) and had a look into it - I've got no money to invest so just watched the market, and it's going his way (nice one fella!) - but for the economy as a whole, if everyone wants commodities and to get out of equities and bonds... everyone's in trouble.
The fund managers appear to be well aware of this... I wouldn't get too complacent if you have assets and wealth to retain.
I'm not filled with confidence at the moment. Soaring taxes, higher costs of living, huge fuel costs, massive mortgage-to-income ratios, and too many people managing cashflow via credit cards from month to month - all it takes is confidence to crash and a lot of people will be in a lot of trouble. It all comes down to cashflow in the end.
cyberface said:
shadowninja said:
Having read Schultz's "Bear Market Investing Strategies" things don't look so good.
I'm a freelance asset management systems consultant specialising in fixed income analytics. Current top-flight fund manager client is cutting costs i.e. including involuntary redundancies.I'd watch what the fund houses are doing more than the banks - the banks play all sorts of accounting games and it takes real
-ups before anyone on the 'outside' finds out that the bank is rotten - but even at Soc Gen the traders I know there are still getting the bonuses they were promised for 2007 performance. So I'm not surprised to hear the motor trade is rolling along now - there are still front-office City types getting their fat bonuses, and there are still young lairy traders who weren't around in the last recession and are happily blowing the money on toys, rather than scared and investing the whole lot in gold IMO the big hit will come when the retail banks dry up their credit card lending. I had a nightmare year last year and am currently up to my eyeballs in debt, lots being juggled around on credit cards (from 0% deal to 0% deal, etc. as best as I can play the game). I haven't defaulted on anything so my credit rating is very good, and I'm slowly chopping the debt down now. The credit cards are still offering me balance transfer deals, extending credit limits (£16.5k on one card, unsecured... I have 4 cards, and could easily get exposed beyond my ability to repay) and there's still plenty of liquidity there - I can switch balances between lenders etc. still. I can play the game - what about the people who know nothing about finance and just take what they're offered?? (subject for a P&P thread... why the
don't the government make basic finance part of the national curriculum?)If, heaven forbid, the retail banks panic and foreclose their credit cards (asking for repayment in full from people only just managing the minimum payment every month) then there'll be a huge crash. There will be individual bankruptcies, but even those who aren't up shit creek will cut back on discretionary spending big style. And with the markets the way they are - would you instead start saving? Where? A safe national bank like Northern Rock?
As soon as your average person on average money stops spending their disposable cash, retailers get hit. If the average people are also scared of banks collapsing and refuse to save/invest as well (by just holding cash or commodities) then the financial sector will suffer. Liquidity will dry up further and there'll be a real crisis. It's not there yet - there's a lot of scaremongering by the media about big bank losses, but most of these losses are either profits for someone else in the market, or not 'real value' losses at all.
Scare enough people though, enough to change behaviour wholesale, and there'll be a real problem. The banks had problems due to inter-bank liquidity drying up (banks were wary of lending to each other... which is central to the entire industry), but if the average person decides to reduce *their* liquidity (misuse of the term, but in other words, reducing spending and saving - a reduction in the overall volume of cashflows) then *all* the sources of value in the UK economy get battered. The media really have to face up to their responsibilities here - some of the reporting on the BBC business news website (Robert Peston in particular) is overly doom-mongering, and financial markets have a bad habit of being overly sentiment-driven... Homo sapiens economicus appears to be a very rare species, yet many of our financial analytical models assume the agents are 'rational investors'
I was interested in Fittster's 'gold bug' posts last year (is he still banging on about gold, or is he sitting there with a fat bag full of krugerrands, chuckling evilly at his profit with a fluffy white cat on his lap?) and had a look into it - I've got no money to invest so just watched the market, and it's going his way (nice one fella!) - but for the economy as a whole, if everyone wants commodities and to get out of equities and bonds... everyone's in trouble.
The fund managers appear to be well aware of this... I wouldn't get too complacent if you have assets and wealth to retain.
I'm not filled with confidence at the moment. Soaring taxes, higher costs of living, huge fuel costs, massive mortgage-to-income ratios, and too many people managing cashflow via credit cards from month to month - all it takes is confidence to crash and a lot of people will be in a lot of trouble. It all comes down to cashflow in the end.
Are you expecting bad news that day?
Gassing Station | Business | Top of Page | What's New | My Stuff