Is 2008 a crisis year?

[telemax]

I'm with Jon123 on this.

I was in the UK 2 weeks ago, I've now started actually driving at the speed limits, I used to speed around all over the place, and I got there maybe only 10 minutes earlier, if that. Driving at the motorway limit I used about 25% less fuel than I used to.

However I noticed all those company Vectras and Mondeos still burning rubber at 100 mph, these guys are really costing their companies big money. Imagine if you have 20 sales reps out there all thrashing it, stick a tracker in their car about 50p per day cost, set it to overspeed warning, give it a week, and watch the fuel bills come down by hundreds a week for that many cars. I'm sure some of the reps wouldn't like it but then again it isn't their monry they are wasting.

Thats an example of the way companies can adapt to rising prices

 

[cjd]

The European Central Bank has today raised its interest rates in an attempt to reduce inflation. They admit that this will further slow down growth but they feel inflation is a bigger risk.

Good old Alistair Darling has also just announced that UK credit will be tightened further - bad news for house prices which will now fall further and faster.

And so it goes.

 

[telemax]

But then again the sooner houseprices fall back to affordable and sustainable levels the better in the long term

 

[quikshop]

But then again the sooner houseprices fall back to affordable and sustainable levels the better in the long term

Agreed, but the trouble is its always overdone. The booms inflate prices to silly levels and the sell-offs and price drops will be exactly the same, overdone.

 

[glencooley.com]

This is a good thread. Mind if I join?

Firstly its impossible to generalise this as although an "overall" picture can be painted it is very insular. Google, Tesco, GlenCooley.com arent seeing a difference in the economy apart from slightly higher living costs and having to pull my house off the market.

The issues isnt really recession but scaremongering and propaganda. The issue is liquidity and lifestlye changes. What this means is that some companies will suffer because they are lifestyle based or work on such tight margins that small shifts in liquidity (cash over the counter) means that they are squeezed. My local BMW dealer is doing well apparently and so is my local pub. But I see other companies struggling because they arent innovating or building sustainability. They are just competing in agressive or saturated market places like recruitment or retail.

See other things are also masking some of these numbers, for example the cost of war on 2 fronts for the the US and UK is pulling money out of the economy.

A shake up is always for the better as it stops complacency for a while at least until the next time round.

 

[Cornish Steve]

its impossible to generalise this as although an "overall" picture can be painted it is very insular. Google, Tesco, GlenCooley.com arent seeing a difference in the economy apart from slightly higher living costs and having to pull my house off the market.

In a downturn, staples and luxury goods tend to be affected minimally. Everyone has to buy food, etc., and the rich can always afford luxuries. It's the other markets that take the brunt of it. So, I'm not surprised to learn that Tesco and BMW continue to do just fine.

The issues isnt really recession but scaremongering and propaganda.

OK - after writing that, you are most welcome to join the discussion. Scaremongering and propaganda are what exaggerate the problems we have and could mean the downturn becomes a recession. This is why we need people to start appreciating where the economy is doing well, realise the world isn't going to end, and continue to spend money.

 

[cjd]

So, I'm not surprised to learn that Tesco and BMW continue to do just fine.

I agree with what you are saying but your examples are a bit off and the real situation demonstrates your point.

Tesco is struggling too - they have just had to introduce new cheap lines inorder to compete directly with the real cheap food brands of Aldi and Lidl (I don't use these places, obviously .

Tesco and Asda are to cut the cost of thousands of everyday groceries in a move that threatens to start an all-out supermarket price war.

Tesco, the country’s biggest retailer, will reduce the price of 3,000 items by up to 50 per cent from Monday in an attempt to win back customers struggling to cope with record petrol prices and energy bills.

Asda has promised to sell ten staple items, including bread, eggs and butter, for only 50p from today as part of a campaign that it claims will win over thousands of shoppers from rivals.

Supermarkets are having to reduce prices despite soaring costs because cash-strapped families are cutting back on their weekly shopping to afford higher electricity and gas charges, motoring expenses and mortgages.

http://business.timesonline.co.uk/tol/business/money/consumer_affairs/article4222239.ece

And as we heard earlier M&S Food is in freefall.

 

[telemax]

I agree with what you are saying but your examples are a bit off and the real situation demonstrates your point.

Tesco is struggling too - they have just had to introduce new cheap lines inorder to compete directly with the real cheap food brands of Aldi and Lidl (I don't use these places, obviously .



http://business.timesonline.co.uk/tol/business/money/consumer_affairs/article4222239.ece

And as we heard earlier M&S Food is in freefall.

But M&S has been in freefall in boom times too

 

[glencooley.com]

I agree with what you are saying but your examples are a bit off and the real situation demonstrates your point.

Tesco is struggling too - they have just had to introduce new cheap lines inorder to compete directly with the real cheap food brands of Aldi and Lidl (I don't use these places, obviously .



http://business.timesonline.co.uk/tol/business/money/consumer_affairs/article4222239.ece

And as we heard earlier M&S Food is in freefall.

Tesco is not in free fall. Nor is it suffering.

They plan to open another 50+ shops and are making billions in profit. I think a case of relativity is needed here.

BMW are making money along side porsche, ferrari and bugatti.......so quite frankly.......because money isnt on the street doesnt mean its not there.

Aldi and morrisons are no threat to tesco.......why because they are multinational and also everywhere. A squeeze on veg prices wont hit the bottom line but mean the toilet paper makers in india will get hit.

You will see a decline in luxury and shopping bills but not profitability nor in the capital wealth that has accumulated over the last 10 years (new money) there are a whole raft of silly misconceptions over this that are adding to the panic............grrrrr

 

[cjd]

Tesco is not in free fall. Nor is it suffering.

I did not say that Tesco is in free fall; I said M&S is and it is hard to argue otherwise:

Tesco are doing the right things and going down market in order to keep sales that they would have otherwise lost - but it will hit their margins.

They've spent the last few years introducing high margin, value add lines - 'Tesco Finest'. It must break their hearts to go back to competing on price.

They'll do ok - they'll squeeze their suppliers - but it's not a good sign.

Just heard too that the USA has announced its 6th successive month of increasing unemployment and is now at levels not seen since the early 90s. That is an even worse sign.

 

[Gillie]

Tesco have put on hold a percentage of planned expansion ....

There are problems out there and acknowledging and making adjustments surely is the way to go? Debating this matter about is there or isn't there is merely a bun fight over stats!

Fact ... fuel, mortgages rates, food and energy are all increasing in price and some at a very silly rate, and house prices are falling and in some places drastically!

Fact ... there is only so much money the consumer has to spend, therefore the essentials will take precedence, and the luxury items will come a poor second.

Fact ... if you hide your head in the sand and big it up, you will go under!

As someone who is dealing with lenders, and businesses all day every day, I can see the downtrend, and as someone who has her head on her shoulders, I am now approaching clients with a wider variety and knowledge that will hopefully help them out, but being realistic, I know that a smaller percentage of them will get what they need.

This is not hype and scaremongering, merely me reacting to market conditions.

 

[The Panda]

One nice bit of news I heard on the radio was that newspapers were now suffering with advertising revenue dropping. I bet they did not think of that when they went headline hunting with scaremonger headlines about a recession coming. They should have thought about that before they started panicking the public and bringing about a self made prophesy. The more they go on about it the more fuel they throw on the fire, the same with TV. If they all stopped harping on about how bad it is then maybe the public would stop hiding behind curtains and start spending again. There is no shortage of money, just people are not spending it thats all.

 

[Matt1959]

. There is no shortage of money, just people are not spending it thats all.

Thats one hell of a generalistion how do you arrive at that?

 

[The Panda]

OK, maybe that is too general. There is no doubt things are going up and people are cutting back but it is the very worst off in the first place that drive the economy to the biggest extent because there are so many more of them compared to middle incomes. So when a slowdown does come along they are the first hit and they stop spending but I am still seeing middle income people having new double glazing fitted, building a new extension or having new carpets. So the money is out there, just not in the hands of the main spending stream.

 

[Adamos]

Personally I think that 2008 is a definitely crisis year! Question is where people spend the money? I want to know that and go for the market

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http://www.AdultMugs.co.ukhttp://www.AdultMugs.co.uk

 

[Mattonella Tile Studio]

Personally I think that 2008 is a definitely crisis year! Question is where people spend the money? I want to know that and go for the market

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http://www.AdultMugs.co.uk

Buy an oil refinery.

 

[Adamos]

It's a great idea. I will do it tomorrow, cause I do not have a time today.

 

[Jon123]

We can't take measures to help grow the economy in case it overheats. Now that's a cautious approach for you.

The economy is overheating and that’s why everyone is cutting back. House prices are at the most unaffordable price to earning ratio ever this will be corrected by the current economic climate which has to continue to correct.

Cutting taxes still isn't the answer all it will do is increase inflation which will cause longer term problems and surely that is a given?

What the government needs to do is supplement the item's that are increasing drastically .i.e the government fix's the price of bread, milk, poultry, fuel, energy and absorbs the increase instead of cutting taxes. By doing that it will curb extortionate inflation and help the millions of low earners. Get rid of the 1000's of wasters in councils who waste forest full of trees writing pointless letters with 100's of people paid to put the letters in the envelopes and then 100's more people examining there practise and reporting back to 100's of other people that overlook the people overlooking.

But because the government will not do this because it skint, we have to make the changes and the best way to do this is cut our costs and form co-ops to increase spending power and become more effecient with our own money.

Look at the mess bush is in, he gave out an obscene amount of billions to the US citizens and has it really done any good? Highest oil price ever yesterday, Weak dollar, Unemployment increasing, the list goes on. During a downturn people should reflect on there own habits and that too many people are living beyond there means and trying to compete with the Jones next door. Always wanting the newest cars, game consoles, bigger houses, boats etc..

 

[Cornish Steve]

What the government needs to do is supplement the item's that are increasing drastically .i.e the government fix's the price of bread, milk, poultry, fuel, energy and absorbs the increase instead of cutting taxes.

Centralised planning and overbearing government is that last thing we want - just look at history. Free the markets and the economy will grow.

Look at the mess bush is in, he gave out an obscene amount of billions to the US citizens and has it really done any good?

The incentive refunds worked a charm the last time around. The US economy was slowing, the government (president and congress working together) sent sizable tax refunds to everyone, people began to spend again, and the economy picked up. It's too early to know whether the same will happen this time, but the economy did grow a little more in the most recently reported quarter.

 

[cjd]

Centralised planning and overbearing government is that last thing we want - just look at history. Free the markets and the economy will grow.

There is no such thing as a free market and there never has been. Governments, Associations (unions and trade groups) and Individuals have always controlled trade.

The incentive refunds worked a charm the last time around. The US economy was slowing, the government (president and congress working together) sent sizable tax refunds to everyone, people began to spend again, and the economy picked up. It's too early to know whether the same will happen this time, but the economy did grow a little more in the most recently reported quarter.

And this is an example of centralised planning by government and intervention in the 'free' economy.

 

[Cornish Steve]

And this is an example of centralised planning by government and intervention in the 'free' economy.

It's an example of the government acting - temporarily, at least - to do undo its mistake in imposing high taxes. The moment the money hit people's pockets, they started to spend again. Better, and less costly, would have been to simply have a lower tax rate in the first place.

 

[cjd]

It's an example of the government acting - temporarily, at least ........

Correct, which is an example of the government intervening in a market in what you call a 'communist' centrally planned way.

The only difference is that you agreed with its actions this time.

 

[Moneyman]

It is funny how some people still think the money is "still out there". It isnt. At the moment most people havent needed any more because they have a job and things are looking fine from their point of view. but go out and try to borrow some and you will see things are not what they were. When sales are down it takes quite a while for this to filter out but the effects are cumulative. Look at bank borrowing statistics. Half last year. sooner or later it will get to your pocket.

 

[Debtbuster]

Money is tight and things are getting worse. Enquiries at our office have trebled in the past 6 months from people worried sick about their debts.

Mortgage brokers are ringing up to become agents for us as their work dries up.

The CAB has had a 70% increase in people looking for help with unsecured debts. The Council of Mortgage lenders estimate that 60,000 home will be repossessed this year, nearly the same as the 90's figure of 75,000.

But the debt collecting leeches are having a good time!

 

[cjd]

I see the US's centrally planned, communist government has just rescued the IndiMac Bank, after it collapsed. It was one of the US's largest mortgage lenders.

Even worse though, the country's two major housing loan comapnies Freddie Mac and Fannie Mae - are in dire trouble too - their share prices fell by almost 50% and it seems like one or both may go down. The problem with these two is that they hold almost 50% of all the mortgages in the US.

Expect things to get worse.

 

[quikshop]

The article is here. This bank concentrated on self-certification mortgages, mostly from self-employed who did not or could not prove their income so it was high risk even when the economy was ok. This is the 5th US financial institution to fail since the credit crunch started.

In an act of desperation to prevent two major financial institutions from collapsing, the US Government said yesterday that it will do whatever it takes to keep Freddie Mac and Fannie Mae trading.

They have between them around 5 trillion dollars of loan notes, as cjd said, 50% of all US mortgages!

If some of the earlier posters still think the US economy is not in meltdown then I want whatever you guys are smoking

Unfortunately Britain is on the coast line and in the direct path of this approaching financial tsunami.

 

[max737]

Yeah, it looks like a big crisis, it started quietly, most businesses and even US banks were lying to themselves, and they were trying to think the crisis is temporary, and were adjusting their interest rates weekly, but now they are waking up.!