I was with some foreigners this week from a range of countries and industries affected by the Credit Crunch. They say that the UK and UK press are the most gloomy about the whole situation. This brings the discussion onto what shape the economic data will make the recession. (Hope you are familiar with the letter-shapes that a graph can make…)
Martin Sorrell said in December that he thought the recession would be V shaped. In other words, steep decline but speedy recovery. Others have suggested that it’ll be W shaped, with a rally that looks like a recovery and turns out to be a false dawn. Sorrell famously also talked about the dot-com bust and slowdown as bath-shaped… down into the deep bottom of an extended U shape.
I’m thinking that the economic activity will be L shaped. We’ve had this rapid and massive re-rating of prices (look at the housing market, still off the cliff). But, things are levelling out – and, the Stock Market is doing a classic January rally which may indicate that all the bad news is now through with the tail end embezzlement cases after the real banking horrors.
The first theme for 2009 is Austerity. The world has so totally changed that almost every product needs repositioning. We care less for eco-green when we feel we are cutting back overall consumption. Conspicuous consumption is so totally over that places like Tom Dixon-designed club Paramount will suffer. Who wants a swanky champagne bar on top of the world when we all feel like we’re hurting?
See – the fabulous Pedlars catalogue series of Keep Calm and Carry on posters, shirts and tea towels…
Theme 2 – Timing. We’ve seen the demise of the Russian Oligarchs, David Ross, Tom Hunter. The end of the boom was like musical chairs… a good few people have missed their liquidity chance then and are left without a seat to comfortably sit out this round. But, take care with the W-shapes. Buying back into a post-crunch business is all about buying it when it’s at the bottom, not when it is just sitting on a shelf on the cliff and still has a long way to drop further. Beware false starts…
Theme 3 – Value. And, that other V… Vulture. If things are dropping off a cliff, they may end up a bit squished when they hit the bottom. Does that make them worthless? Or, does it mean that a keen-eyed vulture can pick them up for scrap value, dust them down, fix a few scratches (and massive internal bleeding)… only to emerge in a couple or three years time with something very fit for purpose in the 2010s? Charles Dunstone of Carphone Warehouse, who’s middle name is surely ‘canny’, has been telling anyone who would listen that in a boom, fortunes are made, but in a recession, empires…
(Must be a bit of a bitch for Rosso that he seems to have temporarily mislaid the share certificates of his empire as the crunch began to really bite – but his business partner is getting plaudits for canny-ness!?)
Vulture value requires patience… Go to that other East End Austerity shop… Labour and Wait.
Theme 4 – Displacement. Back to my earlier posts on Archimedes Principle… if you fill a bath full, then sit in it… the water has to go somewhere. The optimistic view is that we’ve all got to do something. Without big employers… and with one in ten Brits getting laid off… this is going to be a highly creative phase as people endeavour to maintain their livelihoods. It’s a global recession. Even my calls of 08 on emerging markets and BRIC economies isn’t necessarily the best place to ship out to… Dubai should be in meltdown. Russian liquidity has evaporated. India and China are pulling in their belts and slowing from 15% to 5% (but they’ll pull us thru!). The only place to go is, therefore…
Theme 5 – Digital.
Everyone hitherto swerved my dinner party chat about blogs, iPhones, Twitter, networking… now they seem to be making a beeline for me these days and asking for tutorials. Check out my mates doing restaurant recruitment fully via Gumtree. Or, the guys setting up consulting business online. Or the home workers organisation of Enterprise Nation. Very dynamic… which leads to…
Theme 6 – Optimism and inspiration
Happiness is a choice. Don’t get downbeat. Reinvent yourself and find a lot to like about yourself. Austerity and inner direction… create liberation for the soul. 2009 has great zodiac potential. It’s going to be positive. It’s going to be all right. It’s going to be great.
And if you don’t believe me… think about the number one wealth strategy of the very poor. Sharing. To conserve capital, don’t spend it. Borrow from someone. Hence two themes. 6. Collaboration and 7. Financial innovation. If you are scared… hold hands with someone. Go on, try it… yes, it feels better doesn’t it.
And, for financial innovation, look at Somaliland. Beyond Microfinance and Grameen Bank… this is a rogue state, unrecognised by world authorities and therefore unsupported by any official aid or monetary organisations. (Therefore also, no potential for ‘Third World Debt’). But, by all accounts… it prospers. There is a unique and evolving system of financial support which is under the microscope of several economics universities. It’s all about trust, networking, favours, knowing and actively getting involved in the wider struggles of the economy and commerce.
Themes 8 and 9. WebTV and Widgets.