Monday, Dec 28, 2009

Commentary from the Financial Times

FT: Corporate optimism highest in six years

Britain’s business leaders are more optimistic about the UK economy improving than at any point in the past six years, according to an annual survey of captains of industry.

Posted by devo @ 01:14 AM (1757 views)
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1. devo said...

as cynicus econimicus would say...

i just don't buy it

do you?

Monday, December 28, 2009 01:21AM Report Comment

2. novice pete said...

capums of indstry,HAR HAR ME Hearty's, Let ol one eye Tell eee th truuth!

Monday, December 28, 2009 02:17AM Report Comment

3. taffee said...

well that makes no sense at all.........

Monday, December 28, 2009 08:09AM Report Comment

4. techieman said...

taffee i think it does make sense. They are optimistic from where we are. I am sure secretly most were thinking there would be a recession at some point in time - regardless of what they were saying publicly.

The mentality is that we have now had a severe pull-back (i.e. it bottomed out) and now we have become leaner and can respond more quickly to the upturn. Those that have remained in business are well placed to cope with aggregate demand increases.

What's interesting is that now maybe they have discounted the double dip. They have probably based their assessment on (relatively) recent history. The jury really is still out.

Monday, December 28, 2009 10:02AM Report Comment

5. devo said...

techieman, we are in the longest recession in post-war history and they have 'based their assessment on (relatively) recent history.'

Does that make sense to you?

Monday, December 28, 2009 10:37AM Report Comment

6. rumble said...

If everything that's happened was while they weren't as optimistic as they are now, should we be getting worried? Optimism = less perceived risk, more risk taking, but what's changed?

Monday, December 28, 2009 10:55AM Report Comment

7. rumble said...

Surely something like RBS buying ABN AMRO was quite optimistic?

Monday, December 28, 2009 11:03AM Report Comment

8. techieman said...

devo - you miss my point.

They base their assessment on the business cycle. To keep it simple : That is an economic theory that business reacts to changes in aggregate demand throughout a "cycle". during the cycle they increase capacity to keep pace with demand but at some point in time they over react, creating excess capacity. How long the cycle is, or if one Long Term (K-wave) cycle consists of many smaller cycles is open to debate.

The business cycle states that we must have periods of economic contraction - sort of 2 steps forward one step back. So my point was that they were waiting for a recession to take hold (the more astute people). Now they believe the recession is over. Of course that is because "on relatively recent history" - i.e. say the last 50 years, there has always been a business cycle.

So they ignored Gordy and were always ready to batten down hatches. [i dont believe that a recession has been induced by "the powers that be"]. Now they think the recession is over and that they should gear up, since the contraction in demand is (in their view) probably ending. A bit like property people not wanting to "miss the boat".

So in summary it all depends on what your definition of "relatively recent" is.

Sorry if i were unclear but i am often criticised for a lack of brevity.

Monday, December 28, 2009 11:04AM Report Comment

9. techieman said...

"Surely something like RBS buying ABN AMRO was quite optimistic?" Well Rumble thats because you give kids small toys they want to play with the bigger toys.

I think you are being a little kind re "optimistic". Thats why i mentioned the "more astute". That doesnt include Andy and Fred!! They are more correctly put in the greedy b*str*ds category.

Monday, December 28, 2009 11:07AM Report Comment

10. devo said...

techieman, I was surprised you didn't comment on the Greg Pytel article posted yesterday.

What did you think of it?

Monday, December 28, 2009 11:29AM Report Comment

11. techieman said...

oh devo sorry i was busy most of yesterday. i will take a quick look but have to go out soon.

Monday, December 28, 2009 11:34AM Report Comment

12. techieman said...

ok commenting on the article as opposed to the comments (and inevitable you tube links). I would say that its irrelevant whether its a double dip (i.e. GDP falls and then rises only to fall again) or a continued recession (GDP just continues to fall) perhaps leading to depression. I think its clear we have lived beyond our means at the public and private level for far too long.

whether we need more of a shakeout (my view) or not is the question. At the very least i think next year we will have the scare that the recession will re-ignite, and that will cause falls in the main indices (which is what i am interested in) . Perhaps it wil get so bad that social unrest will develop and hopelessness will abound.

But i am quite happy to be proved wrong - even HP inflation continuing would be better than large scale social unrest in my view. But i do think things are on a knife edge.

Monday, December 28, 2009 11:43AM Report Comment

13. devo said...

There was only youtube link out of 32 comments.

I found this one particularly interesting, what do you think?

18. ant said...

If we look at prosecutions we have to search for a meaningful example. I think looking at mass trials of war criminals after WW2 is a good starting point. Almost all Germans (or massive majority) were guilty in that war. In Wehrmacht army, working in ammunition factories, etc. Yet after the war, quite rightly, it was the elite that got a chop.

Similarly here, common sense is needed. Some ordinary people (like banks’ secretaries) benefited from financial scams organised by bankers. Yet a lot of these ordinary people are paying for that as the crisis hit. So saying (like even Vince Cable says) that we ALL are somehow behind this crisis is true but misleading.

So taking an example from war trials we should go for the guys on the top. Ultimately being on the top brings fame and wealth but also responsibility. And if people on the top commit crimes their payback must be even greater.

Monday, December 28, 2009 11:49AM Report Comment

14. devo said...

Would you agree with the following from Pytel?:

In a nutshell, in 2007 the global pyramid scheme which is the root of the current crisis started collapsing reaching its peak at the end of 2008. The governments stepped in and pumped in trillions of dollars of taxpayers' money, so-called stimulus packages, into the financial system and stopped the collapse. It appears to have been a temporary reprieve and indeed a massive waste of taxpayers' money. The size of the financial pyramid is so massive that as soon as these stimuli are exhausted, the inevitable financial pyramid collapse will resume.

Monday, December 28, 2009 11:52AM Report Comment

15. techieman said...

devo you are dragging me towards somewhere i have no wish to go. I basically think that there is no conspiracy of stupidity or enslaving individuals etc. I just think that the credit became like a drug and was expanded ad infinitum.

I wouldnt call it a financial pryamid (i havent looked at the website other than the specific article - so maybe its just a definition thing ) - i would just say we overdosed on credit because it felt so good, and it was always inevitable that this would blow up at some stage. As for the bankers i know a few of them and can tell you 100% that they did what they did to maximise gains thats all. Once they had the CDOs etc making money they were encouraged to expand their books.

For example they used models to look at what would happen if there was a HPC in various states in the US but NOT countrywide because that had not happened (in the relatively recent past). A few of the people i know said that they could see "something" happening, but there didn't tell me what they thought exactly.

As for the youtube item - that was basically why i didnt post - when i looked at it briefly. I wasnt in the mood for a twilight zone confrontation.

Where some see conspiracy others just see c0ck up.

Monday, December 28, 2009 12:10PM Report Comment

16. devo said...

"As for the bankers i know a few of them"

Could a charge of gross negligence be made against them, do you think?

Monday, December 28, 2009 12:20PM Report Comment

17. techieman said...

i agree with everyone else here that failure should not be rewarded. The fact is there was pressure to keep us with peers. What you have to remember is that its worse to underperform everybody else than it is to go against the majority and make less (because none of them would have timed it perfectly - perhaps excluding GS), even though at some time it was sure to blow up. They all knew it would blow up but they didnt know when.

The banks became overexposed because they were pushing the limits. Remember for example that for AIG rates on CDS were cut because there had never been a loss.

I think at the end of the day there should have been a penalty against them. And completely understand this bonus issue. BUT the ones that now get the bonuses probably didnt cause the loss. If they did then i would go further than you allude to and suggest they should be jailed and have their cash confiscated.

Remember i play against these guys, no-one would offer to bail me out of i lost twice my net worth on a trade, that would be my responsibility and by the same token i dont expect to have to pay stupid amounts of tax... if its going toward bailing them out.

Monday, December 28, 2009 12:32PM Report Comment

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