“Full ahead both, skipper….”
But as the news deteriorates everywhere, bankers and politicians remain steadfast
The Greek sideshow (and compared to our global economic problems, it is a seriously off-Broadway production) has allowed too many of us recently to be distracted from the great big canvas of Slump. But more evidence of it emerged last night GMT when a General Motors official announced that sales of the Opel/Vauxhall sub-brand in the UK and Germany were horrendous. He demanded deep cuts in both pay and headcount in both operations. He went on to add that the carmaker’s patience with the money-losing operation is running out.
“There is increasing frustration with Opel and a feeling that the cuts two years ago did not go nearly deep enough,”the anonymous official said. “If Opel is going to get fixed, it is going to get fixed now and cuts are going to be deep.” So there.
The signs everywhere in Europe are bad, in every sector. The Government last week trumpeted the UK retail sales increase of 2.3%, but this was a Sale period: prices actually went down by 5.2% – ergo, a massive cut in margins. Some retailers barely broke even on the period. The swathe that cometh to that sector is reflected by the increasingly low confidence ratings being reported among small businesses – many of whom are now directly complaining that bank lending rates are exorbitant. This is backed up by the banking sector’s own figures, which show that the rate charged on a £1m loan is DOUBLE that for loans in excess of £20m.
Despite the near-indefensibility of their behaviour, the banks continue to tough it out with risible pr about the huge contribution they make to UKplc….and manage to get support from the Daily Telegraph, still holding a flame for the reptiles despite the now clear evidence of its massive unpopularity across a broad spectrum of the population.
But today’s news about the Hester Bank of Toxicland ‘reorganisation’ that made Stephen himself worthy of a bonus, only to have it voluntarily snatched from his iron grip, does make one wonder what on Earth these people take in the way of recreational drugs. Admitting that he’d considered resignation over the row, but decided that would’ve been “self-indulgent”, Hester yesterday sent a memo to all RBS staff announcing in triumph that the re-engineering of the bank had cost £38billion. Insiders this morning are suggesting that when further ‘liabilities’ are taken into account (not a nice way to talk about Fred, or indeed his pension) the figure will exceed the amount the taxpayer coughed up for RBS – £45 billion – three years ago. How Brown and Darling failed to put in a codicil to the purchase about future bonuses continues to baffle me. It must have been because they have the commercial instincts of a socialist Buddhist wind-turbine fan.
Anyone for a rant about how taking Fred’s knighthood away shows the UK is anti-business?
Last month, German exports recorded the steepest decline in memory….and even Japan’s current account surplus hit an all-time low. The EU economy is grinding to a halt, a trend that’s been spotted by Goldman Sachs implant Italian Prime Minister Mario Monti. For a week or more now he has been banging on about the need for growth, and stimulation thereof. He’s right of course, but the Belles of St Trillions prefer to keep chucking our money at unsalvageable Greece and insolvent French banks, so that the will of the Berlin-Washington-Brussels axis can be seen to be done. (An outcome that looks increasingly likely bearing in mind the latest news from Athens).
“Growth slowdown in China is clearly coming in the intermediate term, which means some time in the next five years,” economist Barry Eichengreen told a Mining conference in Cape Town yesterday. There’s one economist prepared to stick his neck out. A whole host of other folks think his timespan to be eccentrically long: the CPR’s shipping indicators are very badly down, and while other so-called experts blather on about QE in China, they forget that 85% of the Chinese people exist below the UN definition of poverty. Over-leveraged banks remain a big problem for Beijing, so a whopping bout of QE would be a good move….but business stimulation can’t make export growth happen, nor indeed increase domestic retail consumption when the real Chinese home market is so small, relatively speaking.
Our world is grinding to a halt. I have no idea how long the US Labor Dept can keep up the Wile E. Coyote act of standing on thin air, but I’d imagine that once the Presidential election is behind us, a dose of reality will kick into middle America. For all our sakes, I hope so.
The Slog 