Deepening reccession for UK, China, and Japan
By Daniel at 28 November, 2008, 6:01 am
Japan goes deeper into recession, profit forecasts slashed in leading companies, firstly Sony now Panasonic slash profit forecast by up to 97%, along with all leading Japanese companies slashing profits by similar amounts:
http://news.bbc.co.uk/1/hi/business/7751815.stm
http://www.marketwatch.com/news/story/Panasonic-slashes-09
China situation may be worse than recently thought as leaders concerned about civil unrest in any economic slowdown as unemployment increases and even Chinese economy starts to falter:
http://news.bbc.co.uk/1/hi/business/7753020.stm
In UK, a year ago Woolworths was making a profit, then when economy started to fall, they borrowed from banks, two days ago the banks called in all their loans for immediate payment and trashed a business that’s been going for over 100 years with a result of closing 815 stores and around 30,000 job losses, mostly low paid shop workers, but people who depend on this income to make ends meet and mostly only just making ends meet if that. The business wasn’t in the best shape and needed modernising and improving. A consortium of businessmen almost had enough money to pay the loan but not enough and the banks demanded immediate payment in full and even though the banks themselves have been bailed out by the British taxpayer to the tune of £Billions, they still turned down their request for more time and put the company into receivership and bankruptcy proceedings.
In fact to add insult to injury just as Woolworth’s like many retailers will have had to borrow to pay for goods ready for Christmas holiday season sales and would have recovered much of that even at a time of lower than normal Christmas sales, well maybe much lower than normal, but all the same it still should be the busiest time for the next twelve months as economic situation deteriorates further and people have one last spend before the January hangover in spending and debt. The banks could have at least waited for Woolworths to sell their Christmas stock at Christmas or in sales following immediately to clear shelves as much as possible before calling in the loans, but they didn’t and instead called in the loans just a few shopping days before Christmas and ending one of the most famous high street companies in the UK overnight;
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/11/weep_for_woolies.html
http://www.marketwatch.com/news/story/Woolworths-calls-administrators-after-deal/story.aspx?guid=%7B986E9C13%2D1DBD%2D49E8%2DAEF6%2D28FD9D607F17%7D
This is also seen as a much wider problem with banks calling in loans from many businesses, large and small and even Christmas doesn’t stop them behaving like ‘scrooge’.
http://news.bbc.co.uk/1/hi/business/7751714.stm
The Japanese companies appear to be giving honest forecasts are at least much more honest than many western business that seem to still be overinflating forecasts.
Panasonic are a brilliant company, top quality products and amongst the best available at a competitive cost. Sony too is good and they both have their products that they both excel in.
Of course in a recession or depression even top companies are affected. They will still be winners, but during a depression profits and sales will fall. Many lesser companies won’t be able to compete in such environments. Panasonic and Sony will come out of the battle winning, but it’s a warning to all those that think boom times are here again amidst record soaring stock markets of the last few days. The depression is only just beginning.
UK government has stressed it wont bailout private companies, even though it’s bailed out the bankers. Banks have been bailed out but today simply pulled the plug on two of UKs biggest retail companies with the immediate loss of thousands of jobs.
815 Woolworth’s stores to close:
http://news.bbc.co.uk/1/hi/business/7751064.stm
110 MFI stores likely to close:
http://news.bbc.co.uk/1/hi/business/7750250.stm
Robert Peston, BBC Business editor’s comments on the shock retail news for UK. He also remarks the Uk government won’t bailout these companies as “government policy is not to prop up lame ducks”:
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/11/woolworth_into_administration.html
In UK, a year ago Woolworths was making a profit, then when economy started to fall, they borrowed from banks, two days ago the banks called in all their loans for immediate payment and trashed a business that’s been going for over 100 years with a result of closing 815 stores and around 30,000 job losses, mostly low paid shop workers, but people who depend on this income to make ends meet and mostly only just making ends meet if that. The business wasn’t in the best shape and needed modernising and improving. A consortium of businessmen almost had enough money to pay the loan but not enough and the banks demanded immediate payment in full and even though the banks themselves have been bailed out by the British taxpayer to the tune of £Billions, they still turned down their request for more time and put the company into receivership and bankruptcy proceedings.
In fact to add insult to injury just as Woolworth’s like many retailers will have had to borrow to pay for goods ready for Christmas holiday season sales and would have recovered much of that even at a time of lower than normal Christmas sales, well maybe much lower than normal, but all the same it still should be the busiest time for the next twelve months as economic situation deteriorates further and people have one last spend before the January hangover in spending and debt. The banks could have at least waited for Woolworths to sell their Christmas stock at Christmas or in sales following immediately to clear shelves as much as possible before calling in the loans, but they didn’t and instead called in the loans just a few shopping days before Christmas and ending one of the most famous high street companies in the UK overnight;
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/11/weep_for_woolies.html
http://www.marketwatch.com/news/story/Woolworths-calls-administrators-after-deal/story.aspx?guid=%7B986E9C13%2D1DBD%2D49E8%2DAEF6%2D28FD9D607F17%7D
This is also seen as a much wider problem with banks calling in loans from many businesses, large and small and even Christmas doesn’t stop them behaving like ‘scrooge’.
http://news.bbc.co.uk/1/hi/business/7751714.stm
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