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Tag: save
2008-11-13 18:30:00| PR Newswire: Government and Policy
2008-11-13 12:23:23| Guardian Unlimited Business - more business news
Everyone is thrashing around wondering what's happening to the economy, where it will end and where to hide the savings (under the bed? in gold coins? in the garden shed?). If it helps, try thinking about the rich western nations as being like those dodgy Latin American regimes we so deplored in the past.I got this idea, not from the got-out-in-time Goldman Sachs economist, Gavyn Davies, who uses the same analogy to provide an interesting remedy (we may have to turn on the printing presses, he says) in today's Guardian, but from a debate I heard at the Royal Society of Arts (RSA) last night.Here a clutch of distinguished scholars of John Maynard Keynes plus one free market man and a no-growth advocate discussed what the great economist would have made of it and what lessons he still has for us.Unreconstructed Marxists have been rising from the grave to make similar claims for the old bearded rascal since the financial crisis turned into a global depression. Keynes being a more empirical brain than the unemployed German Hegelian (keener on the arts too) he probably has more to tell us, though Marx, Joseph Schumpeter and Keynes shared one insight at odds with until-recent modern orthodoxy.They all knew that capitalism is inherently unstable, that it soars and collapses a mixture of "mania and panic" as we all now know too. There have been at least half a dozen such shocks in the past 25 years the Thatcher-Reagan era, you might say though this is the big one, as Vulcanologists might put it.The question is what to do about it? As Robert (Lord) Skidelsky, formidable author of a three-volume biography of Lord Keynes), reminded his RSA audience, there are alternatives between the unfettered 19th century capitalism of the kind that Marx predicted would destroy itself and his remedy: communism. For a long time in the mid-20th century we managed the system quite well. Once we are over the shock of realising that the future is not always the same as the past and that "everyone doing the same as everyone else" is bound to end in tears, there is lots we can do to save ourselves using our "animal spirits" as JMK himself would have advised.Skidelsky and others think the IMF largely Keynes's creation at Bretton Woods, New Hampshire in 1945 must be greatly expanded (its current resources a barely one sixth of China's reserves) as a very large global insurance system, bailing out countries in trouble rich ones, as well as emerging economies. We know that too in Britain because we had to borrow from the IMF in the crisis of 1976.Where did the Latin American analogy spring from last night? Martin Wolf, the FT economics columnist and a weighty public intellectual on both sides of the Atlantic. We often watched floods of foreign capital pouring into Latin American emerging markets, whose "stable" dictatorships appeared to offer scope for investment and profits.It led to over-valued assets (think 19th railway stock?) and to exchange rate problems. It's never wise to carry debt in someone else's currency: imagine how scary it would be if we all held dollar or euro denominated debt to service as the pound plunges. Anyway, in Latin America there would be a crash and the system would freeze up.That's what's now happened to the rich west, agreed our experts, who also included jolly LSE professor and Labour peer, Meghnad Desai, a nice cultural historian called John Naish (it's just the right time to get our unsustainable, mindless consumer culture under control, Naish told us) and Andrew Lilico, head of Europe Economics, a financial consultancy.Gordon Brown, who reads the text books, would certainly agree. Do they expect much of a Bretton Woods II deal to come out of this weekend's Washington meeting of the G20 states? No, just talk, it will take longer and more pain to get progress.Back in 1945, explained Skidelsky, Keynes realised that countries which run big trade and financial surpluses poised a major threat because they are inherently deflationary: by not spending the money which others give them for their goods they reduce purchasing power.I think I have that right. In 1945 the threat lay in the US, which had (if I recall) about half of global output, the only country not wrecked by war. Keynes even thought such surpluses might have to be confiscated to make the system work. Fat chance! Fortunately the US accidentally solved the recycling problem by becoming the world's biggest borrower instead. So where does all the hot money come from now, the equivalent of those s and $s pouring into Argentina and Brazil? From Germany and Japan the two big creditor countries now - from the oil-rich Middle East and, of course, from China.Where did they invest the money, the $1.75 trillion they had to put under the bed? Mostly in four countries: the US. Australia, Spain and the UK, which embraced huge house price bubbles and a cheap money consumer spending spree. It will not happen again. We have - as previously noted here drowned in Asian liquidity. How foolish could we and our governments be to think it could go on for ever, how foolish of then Fed chairman, Alan Greenspan, to think it the low-inflation, cheap money boom was down to his genius, as Lord Desai remarked at the RSA. It just happened as the balance in the world economy shifted east.Indeed, Skidelsky admitted that a weakness of Keynes's world view was that he thought in terms of the European and Anglo-Saxon world and its prosperity, not in terms of the wider world.The audience at the venerable RSA, located in 18th John Adam St behind Charing Cross station and currently very lively, was full of clever economists too and talk of "Ricardian equivalence" is way above my pay grade. I apologise to the panel for any misunderstandings.If I concentrate hard I can just about understand the "liquidity trap". So will you soon enough. It's what we now face, as even the TV news bulletins are beginning to acknowledge. Interest rates plunge close to zero, rendering monetary policy close to impotent as a means of stimulating demand. Savers don't expect much return on their savings (and remember, most savers are really pensioners or would-be pensioners), so they hoard. Prices are expected to fall, so people postpone purchases. The dread deflation falling prices are nastier than rising ones takes hold, as it did in 90s Japan. Banks become unwilling to lend we know that already, the feckless opposite of the past decade's feck and the system freezes.What to do? Lilico was mostly the odd man out, but he too said that monetary policy, interest rate and money supply management which has dominated the decades since Thatcher used it to strangle inflation is going to be pushed aside in favour of a restoration of fiscal policy, tax and spend.Fiscal policy dominated world economic management after we pulled our way out of the great depression and for 30 years after the second world war. It's back because only governments have the credit rating to borrow on the massive scale now needed to unblock the works.Gavyn Davies says governments may have to end up printing money too. That would mean resumed inflation, but as noted a spot of inflation may be what we'll need. No less a figure than Ben Bernanke,
2008-11-12 01:04:36| Guardian Unlimited Business - more business news
Vodafone is to cut costs by £1bn, it said yesterday, after it dropped its annual sales forecast for the second time in four months. It blamed tough trading in Europe and slowing growth in emerging markets such as India.The company, which employs 47,000 staff across Europe, refused to say how many jobs would be lost but analysts estimated it could be several thousand as the group integrates "back-end" functions such as IT, testing, logistics and distribution across the continent.Vittorio Colao, the chief executive who took over from Arun Sarin in the summer, said the plans were designed to focus on improving profitability, rather than chasing revenues and continuing to increase its geographic footprint through major acquisitions."I truly believe that if we rebalance the back-end structure of the business and leave commercial decisions close to the customer with a very thin layer of coordination [between them] ... we will have a very lean, fast, simple and hopefully winning company," he said.His plan came as Vodafone dropped its forecast for annual group revenues to between £38.8bn and £39.7bn. In July it said revenues would be at the bottom end of its earlier forecast of between £39.8bn and £40.7bn.Colao said his focus would be more on profitability than sales. He faces an uphill struggle: for the six months to the end of September, profits before financial charges were in effect flat. The reported rise of 10.5%, to £5.8bn, was due solely to foreign exchange benefits as the company makes the vast majority of its money outside the UK. Pre-tax profits of £3.3bn were down from £4.56bn as the company wrote down the value of its Turkish business by £1.7bn. The company bought into the Turkish market about three years ago and Colao admitted yesterday its turnaround plan had been hampered by the poor state of the company's mobile phone and distribution network in the country.The performance of the European operations suffered from the tough economic climate with margins decreasing from 38.2% to 36.2% on revenues down 1.1% - stripping out currency effects. Operating profits in the UK almost halved to £134m. Colao admitted the company had taken recent strong growth "for granted" and failed to keep up with the market. He said the company should not be afraid to cut prices to regain its position, while reducing costs by improving customer retention through better deals for more loyal customers or people who bring family members to the network.Revenue growth in emerging markets was up 25.7%, to £5.4bn, but that was driven mostly by its Indian business, acquired last year. Even there, growth had slowed and prices dropped by roughly 50% over the past few months amid intense competition. Stripping out India, organic growth in emerging markets was 8.8%.YellThe owner of Yellow Pages classified business directories is to cut about 1,300 jobs over the next 18 months. The company has operations in the US and Spain as well as Britain, and has already reduced its workforce from 15,200 to 13,900 over the past year.The chief executive, John Condron, said the group would make cuts of a "similar order" by March 2010 to help save a total of £250m by the end of the next financial year. He said the job cuts involved some redundancies but were also the result of not filling vacancies and revising growth plans it had made before the recession."People involved in new projects, IT support and growth programmes - these have gone. But the majority of sales front-end jobs have stayed," he said. "We're not cutting off arms and legs. We're taking out of the business the growth we had built in to take advantage of a climate we are not seeing now."He said Yell had to make sure it was in a position to take immediate advantage of a recovery. The company hopes it will prove resilient in the recession by retaining companies' loyalty as they trim their advertising budgets. But he warned of a "fear factor" among businesses."People's behaviour is reverting back to a kind of commercial hibernation," he said. "People seem to see a huge freeze in the economy and are cutting where they can - but they are not cutting out."Yell's cost reductions would offset falling revenues and should allow full-year earnings to come in "broadly flat" for the full year, the company said. Interim pre-tax profits were down 2.7% to £118.3m.Virgin MediaThe cable TV, phone and broadband operator Virgin Media said yesterday it would shed 2,200 employees, about 15% of its workforce, by the end of 2012. The job cuts are expected to fall heavily among call-centre staff as the company tries to integrate its component parts.The business was created more than two years ago by the merger of cable operators NTL and Telewest with Virgin Mobile. The company now operates at 76 locations across the UK with 11 major call centres from Glenrothes in Scotland to Teesside, Manchester and Trowbridge, in Wiltshire. "These changes are critical to ensuring Virgin Media is positioned to compete effectively and deliver on our customers' changing expectations," said Virgin Media chief executive, Neil Berkett. "Over the coming weeks and months, we will be developing more detailed proposals ... We recognise this brings with it significant uncertainty for our people and the communities where they work."Andy Kerr, deputy general secretary of the Communication Workers Union, said the news came "as a complete shock". "We are extremely disappointed at the way Virgin Media has made this surprise announcement, which will be very damaging for staff morale," he said.VodafoneTelecommunications industryYellVirgin MediaTelecomsguardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds
2008-11-11 00:43:51| Young Entrepreneur Forums
Forum: General Business Posted By: llcollins82 Post Time: 11-10-2008 at 06:07 PM
2008-11-09 01:39:15| Business Forum - Forums for the Small Business
Forum: Starting a Small Business Posted By: clareatxln Post Time: 09-11-2008 at 01:33 AM
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