Posted on 06/03/2009 10:46:57 PM PDT by TigerLikesRooster
Corporate ‘I don’t know’ factor rises
By Peggy Hollinger in Paris
Published: June 4 2009 02:53 | Last updated: June 4 2009 02:53
Business leaders have lost their sense of direction in the face of the global economic crisis and 40 per cent are unable to pick growth opportunities for their companies, according to a survey of the world’s top corporate decision-makers.
“We have never experienced such a big ‘I don’t know’ before,” said Marc Lhermitte, Ernst & Young partner.
“These are people who like to have opinions.”
The findings, published in E&Y’s European attractiveness survey, reveal the depth of uncertainty besetting the world’s business community in 2009. Companies are favouring Europe as a safer destination than further afield for foreign direct investment, while many are retrenching to historical home markets to reduce risks.
A quarter of the 809 business leaders surveyed declined to identify the business sectors most likely to fuel a European recovery.
But almost three-quarters were optimistic about Europe’s ability to resist the crisis.
(Excerpt) Read more at ft.com ...
Ping!
Well, that, and the uncertainty caused by 0bama’s current and future policies.
That's very true. Another way of looking at it is that no one knows how to make money during deflationary periods.
In the opposite, inflation, you can make money via a "buy and hold" business model where you buy a building, lease it to tenants, and over time the rent pays off the mortgage, leaving you with a building, no debt, and income from your tenants. That's the business model, anyway.
But during deflation, the value of your building declines each year. Worse, deflation lowers the rent that you collect each year.
But the debt doesn't decline similarly.
So you wind up with less income and less equity every year...the opposite of making a profit.
Thus, the "buy and hold" business model doesn't work during deflation...
...so you get the MBS kids coming out of college saying "I don't know" how to make money in this economy.
And hence, this thread.
“MBS kids” should be “MBA kids” above!
Why is this a suprise to anyone?
Corporate America and the rest of the world is in denial.
We will all learn soon enough the price for thinking that anything in this world is without a price.
Nor is El Arbusto blameless here. Clancy's old novel, ''Debt of Honor'', or at least the ending of it, might be quite beneficial to the nation at large, should it occur.
How do you clear out the deadwood when many are the result of instruction from previous deadwood?
It’s the old “a copy of a copy of a copy...” with the resultant degradation each copy.
Ethics? see above.
Why do so many business, even law schools have to recently incorporate mandatory ethics courses into their curriculum?
College ed is delayed by (some mandatory) remedial high school classes.
Yeah, but is it a known unknown or is it an unknown unknown?
This is expected when the government of the USA ignores the rule of law in favor of crony capitalism/fascism.
Corporate and muni bondholders got a big freakin wakeup call with GM and Chrysler and it wasn't pretty at all.
Like waking up in Helen Thomas' bed naked unpleasant.
Under 0bama, the only certainty as I see it is that “business” aka “businesses” aka “entrepreneurs” aka “corporations” of whatever form factor are ultimately targets of opportunity for increased taxation, enforced enhancement of workers’ rights, increased compliance with unknowable levels of bureaucracy in agencies yet-to-be-created; and general business restrictions of unknowable degree and severity. It’s a minefield, I tell ya.
It’s just impossible to forecast business conditions, and it is very, very difficult to perceive and stake out a niche that cannot be readily copied. As someone who has had two very successful businesses, I don’t see much that appeals to me. Part of that is not being so youthfully energetic as I once was, but part is not wanting to tangle with this load of bureaucrats and the constrictions they slobber at the jowls to impose. This would be true, I imagine, in a healthy economy. In a contracting or stagnating one, it’s worse.
Nice work they are doing.
“Corporate and muni bondholders got a big freakin wakeup call with GM and Chrysler and it wasn’t pretty at all.”
Consider the following thought exercise: Suppose that municipal and/or state gen’l obligation bonds receive the same or simlar “treatment”. Many state-based pension plans for teachers, firemen, etc; are *mandated by law* to keep paying those pensions. The interest coupon on most munis is a function of the state’s wanting to preserve it creditworthiness. It is NOT unheard of for bonds to suspend payment of their coupons, and if ever there was a situation where this might occur, I’d suggest this (in the case of CA) could sure be it. WE SAW the 0bama admin threaten to withhold normally scheduled payments to CA when CA threatened to reduce home-caregiver wages. I believe those workers are SEIU, and they do NOT make any kind of high wage, typically $10-$12/hour. But again, my generic point is that the gov’t can now apparently leapfrog over black-letter law and normal state jurisdiction to the disavantage of anyone unfortunately enough to be caught in the tailwind.
I bring this up because nobody with functioning neurons is unaware of the Chrysler bond atrocity. But the wider implications are not trivial.
“What Zero and Fed are creating together is the maximally unfavorable condition for business, from either maximized uncertainly or increasing direct government control of business.
Nice work they are doing”
You said it, a lot more cogently than I did!
One could argue that one should go to cash and hold the cash. As the general price level falls, the cash has more buying power and that the “return” on the cash. You have 5% more buying power this quarter as prices fall. The .01% interest is frosting! Hope this helps...
T thought it meant a Master of B.S. degree from one of them fancy Ivy League skuls!
The risk of an economic collapse is growing each day as states become insolvent as unemployment rises and sales tax receipts fall. We could see a freeze up like nobody can believe.
I have to agree with you, no doubt.
What I am seeing here in NC is this: Our Guv Bev, the SRM (state run media), state and local politicians are busy with their feints, diatribe, deceit, etc.
Fact is from their own words, NC legislatures passed a $22 billion state budget. Now the media is reporting a $4 billion shortfall in revenues even with the $6 billion Porkulus handout from 0 & Co. ($6 billion Timmy hopes the Chicoms are going to loan us in the future).
So, for conversation purposes, that's roughly a -20% miscalculation the igits made.
In my book, that tells me the economy, at least in NC, is much much worse than they are and have been reporting.
I'd say the old economic engine has spun a bearing and thrown a rod through the block. Right now, we are just rolling along, soon to come to a stop.
Of course Guv Bev, and the NC Legislature (Dims) are 'crying' that the only solution is to raise taxes. NC, with former Gov Sleazy Easley, have been on a drunken spending spree the last 6 years leaving what people are employed and working with a massive hangover.
Many state & local retirement pension plans were partly (some largely, like CA) invested in 'hedge' funds that were tied directly to the global CDS, CDO, derivatives Ponzi Scheme orgy.
In turn elected officials at all levels of goobermint were basing spending on always continued future growth and reshuffled those pension funds to allow for more up front spending. Such fiscal / financial behavior is akin to O.D.'ing on ecstasy---the money drug and feeling good about it all at the time as the body's cortical functions become overstressed and slowly fades.
Now economically speaking, as a state and a country, the roosters now have come home to roost and the hens aren't laying any more because the farmer did not save enough to store up on feed for lean times.
0 recently made a statement that 'we' (the common folk) are going to suffer....he wasn't lying.
Or short term Treasuries. Until long bonds go to 20% then clip coupons for 30 years.
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