~Vēġó~ wrote:I tort de recession done pass....
Service: Advisory, Transactions & Restructuring, Restructuring
Type: Press release
Date: 3/5/2009
Two more years of recession?When asked how long the current credit crisis will last, Mick McLoughlin, Global Head of Restructuring at KPMG, tends to take issue with the question. He maintains that we are no longer in the grips of a credit crisis. Instead, he maintains that we have moved on to something far more difficult to escape from; a crisis of confidence.
Governments, the media and employers alike all have a role to play in restoring that confidence. In the meantime, he believes there’s a huge amount of work required to address the excesses of the past five years — and that alone could take a further two years.
Mick McLoughlin explains:
Two years. Two years to undertake all the corporate restructuring work which should have taken place from 2003 to 2008. That’s my standard answer at the moment when people ask me how long I think this crisis, this global recession, will last.We need consumer confidence to return and we need a stable corporate base. Neither of these things will appear overnight. At the heart of it all though is job security. Businesses should never under-estimate the effect that redundancy — or the fear of redundancy — can have on consumer confidence. Sadly, with businesses shedding jobs left, right and center, it will be hard to rebuild that confidence.
So, why are so many businesses struggling to come to terms with this crisis? Quite simply, they’re struggling now because they should have been restructured years ago. In the five years up until 2008, far too many businesses were refinanced when they ran into trouble, when I believe that what they actually needed was some rather more severe medicine.
The reason? Because the money was there to do it. As a result, businesses which should have been overhauled — or even wound up — were rewarded with yet more cash. Now we are confronted with the fall-out of those decisions. Too late to be restructured or saved, businesses are going to the wall and the unemployed totals continue to climb.
There is no magic trick to restore confidence across whole societies. What I think is needed is an extended period — again, probably a couple of years — of stability; a period characterized by a lack of further, catastrophic corporate surprises; a period during which people can again feel secure in their employment. In short, two years of complete and utter boredom. Only then might we see consumers making the sort of big ticket purchases which signify that confidence has returned.
This lack of confidence also affects those businesses which are well run, which have adapted their strategies and models accordingly and which — crucially — still have cash. On its own, even the most well run business cannot affect confidence and stimulate demand — and is suffering accordingly.
On the plus side, many senior management teams are about to receive an incredible injection of concentrated experience in managing through a downturn. That shot of experience should hopefully, give us a generation of business leaders well equipped to drive things forward. At the moment though, such experience is very thin on the ground as virtually no senior manager under the age of 50 is going to have any experience of working in anything other than benign economic conditions.
Returning to the point about redundancies, smart businesses should be considering how they can reshape their business in line with current economic conditions, whilst avoiding the costs and stigma which can come with initiating redundancy programs. With this in mind, and in the interests of maintaining confidence, I believe that it is far better to employ five people for four days, than to employ four people for five days.
When asked what businesses should focus on in the short term, I advise they look at the three ‘Cs’; credibility, cash and communication:
credibility means having credible plans and forecasts for the business going forward. You cannot underestimate just how bad things can get at times like this so any future scenario planning should be credible
we all know that cash is king — but even more so now. You can actually run an insolvent business for years. Being insolvent won’t necessarily put you out of business but running out of cash will
as for communication, that’s about avoiding future nasty surprises for your stakeholders, creditors, employees, unions etc. Manage the message, make sure it’s credible and get it out there in an organized fashion.
I think we’ll also see a changing of the dominant skills sets represented at Board level. No company will be able to afford to just have sales people and M&A specialists running the business. Risk expertise should become one of the most in-demand skill sets as the composition of a typical Board changes to offer a more well-rounded blend of skills and experience. Even they will not be able to engender an improvement in consumer confidence though. For that, we’ll all have to sit and wait — for a couple more years yet.
Mick McLoughlin is Global Head of Restructuring at KPMG and a partner in the UK firm.
New recession fear as UK economy stalls
By Adrian Lowery
Last updated at 3:11 PM on 1st February 2011British households were staring a new recession in the face today as the UK economy crashed in the last quarter of 2010, with a shock 0.5% contraction.
VW badges on a production line
Economic growth slammed into reverse in the three months to December, according to data from the Office for National Statistics, after 0.7% growth in the third quarter and 1.1% in the second.
It is the first economic shrinkage since the third quarter of 2009 and a massively worse performance than the 0.4% growth that economists had been expecting.
The data will inflame fears Britain is heading for a double-dip recession and a bout of Seventies-style 'stagflation' - a painful mix of weak growth, high unemployment and rising inflation.
Consumer inflation last week came in higher than expected at 3.7% in December.
Hetal Mehta of Daiwa Capital Markets called it 'a horrendous figure': 'An absolute disaster for the economy,' she added.
'While today's GDP figures are backward looking, they are nevertheless crucial to understanding the resilience of the economy to shocks. It seems that the economy is incredibly vulnerable.
'And with the fiscal tightening yet to fully bite, we will have to brace ourselves for a bumpy ride.'The dismal figure will put an end to the debate over whether interest rates should go up: the Bank of England had come under pressure recently to act on price pressures.
But its insistence that the real economy still requires support from the loosest possible monetary policy looks to have been vindicated by the chronically weak fourth quarter.
Amit Kara at UBS said that the monetary policy committee will 'find it very difficult to embark on an early rate hiking cycle with data such as this, and as such we are comfortable with our Q3 rate hike view'.
The fall in GDP will shake confidence in the ability of the private sector to pick up the slack in the economy as Chancellor George Osborne's austerity cuts kick in this year - support for which could be tested severely if some revival in growth is not indicated in the coming months.
The severe weather last month was almost entirely to blame for the unexpected plunge, the ONS said.
The decline in GDP was driven by a 0.5% drop in the key services sector, which makes up more than 75% of the total economy. With this drop, total growth in 2010 stands at 1.4%, far below analysts' forecasts.
A spokesman for the ONS said that, without the weather, GDP output in the fourth quarter was still likely to have been flat at 0%.
The pound suffered on the currency exchanges as the news saw forex traders sell off sterling. The pound fell by 2.5 cents against the dollar, from $1.600 to $1.575, and by 1.4 cents against the euro, from €1.172 to €1.158.
Read more:
http://www.thisismoney.co.uk/money/news ... z1S2ZrMTm5Blow to Osborne as shrinking economy fuels new fears of double dip recession
By Daily Mail
Last updated at 8:43 AM on 12th July 2011
Grim estimates: Warnings that economy has not grown since last summer are a headache for Chancellor George Osborne
Warnings that the economy shrank in the second quarter of the year last night raised concerns of a double-dip recession.
In a bitter blow to George Osborne, leading economists predicted that gross domestic product fell by 0.2 per cent between April and June.
That would mean the economy has not grown since last summer, having flatlined between October and the end of March.
Labour urged the Chancellor to water down his deficit-busting plans to bolster economic growth.
Angela Eagle, shadow chief secretary to the Treasury, said: 'Without strong growth it will be much harder to get the deficit down. It's time David Cameron and George Osborne, who made a political choice to put up VAT and cut too far and too fast, understood that.'
Economists at Citigroup, one of the world's biggest banks, and investment bank Scotia Capital said the economy shrank by 0.2 per cent in the second quarter.
That would put Britain on the brink of a dreaded double-dip recession and deal a hammer blow to Mr Osborne's credibility. A recession is defined as two consecutive quarters of contraction.
Others experts were more upbeat, but few are forecasting strong enough growth to suggest the recovery is gaining traction.
A report by the British Chambers of Commerce today predicts growth of 0.3 per cent - well below the 0.8 per cent needed to put the recovery back on track.
The Office for National Statistics will publish the official figure on July 26.
Alan Clarke, of Scotia Capital, said: 'It is going to be a long hard slog.'
The economy grew by 1.3 per cent last year. The bounce was led by a buoyant manufacturing sector but the recovery in factory output appears to be running out of steam, and it looks unlikely that the economy will grow by 1.7 per cent this year, as expected by the Treasury.
A Treasury spokesman said: 'We always maintained the recovery would be choppy.'
Read more:
http://www.thisismoney.co.uk/money/news ... z1S2bLd4eINews Feed
People's World's
May 2011
Labor-backed think tank: Job slump will continue
WASHINGTON - There's bad news for the nation's 14 million unemployed: Two top experts at the Economic Policy Institute say the jobs slump will continue.
As a matter of fact, forecasts EPI economist Josh Bivens, it could last as long as five more years before the economy gets back to where it was in 2007.
The continuing job losses mean the federal government should concentrate on getting people into jobs, or - in the case of state and local governments - saving them, not on budget-cutting. Cuts could actually hurt any recovery effort, add Bivens and EPI Senior Economist Heidi Shierholz.
"We've got a lot of time for more stimulus spending to help the economy because we're going to be in this jobs hole for a long time," Bivens told a July 6 telephone press conference. But congressional passage of such a stimulus is unlikely, Shierholz said.
Bivens and Shierholz spoke on the second anniversary of mainstream economists' 2009 declaration that the recession - which began when the housing "bubble" burst 18 months before - had officially ended.
But it doesn't seem like that to workers, who have seen unemployment rocket to 9.1 percent, millions of homes either in foreclosure or with their mortgages "underwater," and the bald fact that companies aren't hiring new workers. And workers' median weekly income, after adjusting for inflation, has dropped, starting in the first Bush crash of 2001.
"The worker who says the recession never ended" since 2001 "has a point," Shierholz said. "We had the first recession, then a paltry expansion and then this."
The one bright spot from the latest recession having bottomed out, she said, is that at least companies seem not be laying off people in droves anymore, as they were in the depths of the crash in 2008 and 2009.
But they aren't adding enough jobs to bring the unemployment rate down or to increase the percentage of people in the labor force, which is at its lowest point in decades. It's only when people start returning to the workforce, Shierholz said, that they will begin to believe the Great Recession is over.
One reason businesses aren't adding jobs, the two said, is that this recession, like the dot-com bust of the late 1990s and the 2001 slump, is caused by financial factors rather than the normal causes of recessions. Families' worsening finances, including the $8 trillion in lost home value in this crash, force them to cut consumer spending and it shows no signs of rebounding, the two economists said.
http://www.thebellforum.com/showthread. ... 1&p=384232IF ALL THIS IS HAPPENING OUTSIDE, WHAT DO YOU THINK WILL HAPPEN HERE EVENTUALLY?
IF YOU FAIL TO PREPARE, PREPARE TO FAIL!!
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