Wednesday, January 14, 2009
What recession?...
Everyone I speak to when I ask "how's business?" say that they are "doing ok, not much difference really...." To be fair most of these people are small businesses, who run their own barbers, bike shops, book shops or newsagents, etc themselves. I myself am up in terms of year on year sales revenue, but then my business is still growing and coming from a low base, so it's hard to tell what that indicates. Even some of the big stores groups we read about under headlines such as "More city gloom!" are only showing falling sales of around 2 to 3%. So is this so called recession based on just pessimistic expectations? Are we in effect talking ourselves into it? Should we be saving for the rainy days ahead, or should we be, as the Government are trying to encourage, spending our way out of recession? Just carry on as normal I reckon. We might even emerge better off for it all. Prices in most shops will have come down to more reasonable levels, restaurants might stop ripping us all off and start giving us all value for money and many businesses will be more streamlined and therefore more efficient in a year or so's time....
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3 comments:
In part I blame the media. The BBC in particular seem to relish the credit crunch. Almost every headline story is about the terrible state of the economy, financial doom and gloom, more job loses, the list goes on.
What we should be talking about is how to invest in our businesses, how the UK is now very competitive due to the weakness of the pound, and how we should be planning ahead for growth not languishing in despair.
Take an economic downturn and hurl tax payers licence money at it and the next thing you have is the worst depression ever.
The media are certainly the ones excaudating the highs and emphasising the lows.
Any business or individual that didn't borrow too much in the goods times should be safe and stable. It's only those that were reckless and chased every last ounce of profit and became blind to common sense and good old fashioned style economy that have come a cropper.
There are lessons to be learnt for the future. Stick to what you're good at, and just get better at that. Never borrow more than you can afford or spend more than you have. Don’t think that the good times will be here forever and try to put something away for a rainy day. Otherwise we could all be the next Lehman Brothers.
I have been saying for a long time that the media have been talking us into a recession, and it seems they may have suceeded. I agree with Graham that the BBC have been particularly bad in this respect; you can almost see the look of glee on the faces of their reporters when they announce the latest round of job cuts, financial gloom etc. Why they should adopt this stance is hard to guess, but cushioned by licence payer's money, and safe in their well paid jobs they know that the recession will not really affect them.
I could also mention a few newspapers, but then as we all know good news doesn't sell papers, and anyway why let the truth get in the way of a good story?
The real damage caused by these mischevious and misleading reports is the loss of confidence they cause. The whole financial system is based on trust, and when that trust evaporates we start to see markets go into free-fall, and panic sets in. There is no doubt that the banks must take the lion's share of the blame for the mess in the world's finacial system, but the bodies responsible for auditing the banks, and other financial institutions, must also take their share as well.
Lessons are definitely to be learned from all this; the most important being don't live beyond your means. Unfortunately too many people were tempted by the bank's offer of easy credit, but then the banks themselves were motivated by greed. I have long thought that despite what they say, banks don't really understand business. They don't appreciate that it takes time to grow a business and that it often requires sensible investment over a long term period. All banks are really interested in is a short term, high return on their investment; their investment normally meaning other people's money(ie yours and mine).
Even now though, after being bailed out by the taxpayer, banks are still paying out obscene bonuses to so-called top executives, whilst at the same time refusing perfectly reasonable requests for sound loans, from companies that are looking to invest for the future.
The City, in particular, gets carried away by its over-optimisitic expectations regarding company performance and growth. If a company does not post a record increase in profits, year on year, then it is performing badly. Sorry, in my book as long as a company's sales are holding their own, and at least keeping pace with inflation, then I don't think that company is doing too bad.
Like Tonbridge Blogger I too have my doubts that the recession is as bad as the media would have us believe. I hope events will prove me right. As for the BBC, it should keep its mouth shut and not waste licence payers' hard earned cash on spreading doom and gloom.
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