Credit crunch

[Nigel]

My business has been affected by the economic downturn. Not directly, as such, but two of my suppliers have gone out of business in the last few weeks.

The first, unfortunately, was my main Hasbro supplier. I haven't actually been able to confirm that they've gone under, but I haven't been able to contact them for a few weeks. Aside from Transformers, I'm no longer able to get Gundam, which I've found to be a steady seller, nor some lines that I'd been planning to start selling, particularly some lines that would have been good for Christmas. As far as Transformers are concerned, for the time being I will have to make do with a couple of general toy suppliers with limited range and no certainty of waves, plus a specialist action figure supplier that has a good range but is more costly than all the other suppliers.

Last week, PopCo went into administration. (Some background may be appropriate here. Early last year, Corgi International bought Cards Inc, which both produced its own collectables products and was a distributor of trading cards and other products. Earlier this year, Corgi International restructured, selling the Corgi brand and die cast business to Hornby and selling the Cards Inc name and card distribution business to another card supplier. The remaining business was essentially the Cards Inc toy/collectables section, now trading as PopCo Entertainment.) PopCo's licences included Harry Potter (my second best seller after Transformers in summer 2007), The Golden Compass, Star Trek, the upcoming Igor and James Bond. I daresay that the postponement of the next Harry Potter and Star Trek films until next summer had a hand in the company's fall. The Golden Compass toys last year were late, only just making it to the shops before Christmas, so I don't suppose that helped. The most unfortunate thing, product-wise, is that they were planning on releasing 007 action figures this year.

On a personal note, I got on well with my account managers for both these companies, so I hope they're able to get new jobs soon. I didn't even get the chance to wish them well and thank them for their work the last couple of years.


Has my business been directly affected by the economy? Well, certainly sales are down on last year, but I think that's as much or even more to do with the lack of a big summer film compared to last year - Transformers in particular - as with the economy. The first half of the year was relatively slow, but sales have been good and steady since August.

[The Doctor]

This is worth watching:
www.bbc.co.uk/iplayer/episode/b00gtljy/The_City_Uncovered_with_Evan_Davis_Banks_and_How_to_Break_Them/

-Ralph

[kayevcee]

A very informative programme. Thanks for the link!

I didn't notice you mentioning Popco before, Nigel. I can see why they went under. Their movie licensed toys did what a lot of movie licensed toys do- roaring trade while the film is in cinemas followed by crashing decline and frantic clearance-ing as soon as it's gone. The Golden Compass didn't really do all that well while the film was out, though, which as you say is likely down to the line being late out of the box. A pity, but their business model couldn't have lasted forever.

-Nick

[The Doctor]

RBS, despite being mostly owned by, well, us and posting record losses tries to pay out bonuses:
news.bbc.co.uk/1/hi/business/7877161.stm

Hmmmm.

-Ralph

[The Doctor]

On a tangent, there's some weirdness going on at ASDA. In the last month a large number of their goods have shot up 30-50p. Now price rises are not unknown but they are enormous rises! Just yesterday, I noticed that hankies were the latest item to jump by 50p. I wonder how ASDA are doing, profit wise.

Farmfoods and Poundland get a heck of a lot more business from me now.

-Ralph

[grahamthomson]

This is what happens when companies artificially lower their prices temporarily to screw over the competition.

Sure, it's all very clever to have a run of television adverts boasting they're the cheapest right after Christmas, and they probably make a small loss on certain items (or gouge their suppliers) at that time. But, rest assured, the prices soon creep back up once the advertising campaign is over.

They get you in the door first, and then they make their money.

[The Doctor]

What a king-size twat:
news.bbc.co.uk/1/hi/business/7911532.stm

It still amazes me that some of the heavy hitters in the financial world have still not figured out that times have changed. The old game doesn't work anymore. I do hope some proper reform of the banking system comes of this.

I will say, though, that I've always had an excellent service from front-line RBS staffers. I'm not happy to read a lot of them may lose their jobs.

-Ralph

[The Doctor]

Fred Goodwin says, no, I'm keeping my pension:
news.bbc.co.uk/1/hi/uk_politics/7912651.stm

What an umitigated buffon. I would much rather the money was used to retain front-line staff instead of sacking them. You could buy a lot of them for that.

Hello, reality to Fred Goodwin: largest corporate loss in UK history. Show some humility.

GAH!

-Ralph

[Andy Turnbull]

The man is a cunt.

Andy

[mewshkin]

One of the uglier consequences of the recession so far has been the "British Jobs for British Workers" shit. Striking workers shouting "Foreigners out!" and only the principled minority of trade union leaders (yep, thats a minority alright) raising their voices against it.

[Andy Turnbull]

It is disgusting to see that happening.

Andy

[Grand Moff Muffin]

I agree that the top bankers are out of touch, and that if Fred Goodwin had any decency and was in touch with reality, he would give back part of his pension.

However, I also agree with those who have said that the baying for his blood (demanding that the government refuse him his pension and make him sue for it in court, when everyone knows the law is on his side and he will win, but just want to make him fight for it), and making this one man the top headline for the week, has a lot in common with the old-fashioned lynch mob.

The French aristocracy were out of touch in hoarding their wealth, and got guillotined for it. I suppose Fred Goodwin should feel thankful he is only being crucified in the press, but it's fundamentally the same human phenomenon. Those who are suffering financially want a victim to make them feel better. That's not something to be proud of, whether you're rich or poor.

Martin

[The Doctor]

I don't want the man to suffer. I just feel it is reprehensible that such collossal failure is rewarded by a payout of a pension vastly inflated above the level of front-line employees pension rates: workers who carried out work that contributed to him getting to where he got. Especially when such money is being paid from the public purse: we do own most of the RBS! It may be legally ok, but it feels morally wrong to me. It goes against my fundamental ideas of 'right' and 'wrong'. Fred Goodwin made a lot of money out of banking during times when his style of management essentially worked and he was very successful and fair enough. I don't begrudge him a penny of that: he was paid the going rate for his type of job, but the world has changed and those times are in the past. I just wish he would show some humility and say: "You know what, I made a fortune already from this business. I'm going to be ok. I'm young enough and well connected enough that I'll continue to be ok. I'll return the pension money because I contributed to the downfall of the RBS and the Government bailout." Such funds could be used to retain good staff rather than sacking them.

It is indeed the case though that Goodwin is being made Public Enemy Number One when indeed many other top bankers have been awarded similarly high pensions and/or payouts (so I read today while perusing the papers in the library) with much less public attention. There's probably nothing that can be done about this.

I think it's ok to get our moans about it out of our system then constructively move on. Hopefully this style of behaviour (and contracts) will become a thing of the past and the country moves towards tighter regulation of such matters.

-Ralph

[Grand Moff Muffin]

Oh yes, everyone should have a right to moan. But if we got back his entire pension and shared it out between us, we'd all be something like 1p a year better off. If cutting VAT has had little effect on the credit crisis, pushing a Fred Goodwin Bill through Parliament or giving him further space on the front pages is surely an unproductive use of government and media resources.

Another niggle I have, is that everyone feels so justified in demanding he return the unfair level of wealth which he got through screwing up our financial system. But those same people are unlikely to see it the same way if they are put on the other side of the equation - say, if the poor nations of the world demand we share out equally with them the wealth we in the richer nations have got by screwing up their countries and the planet in general. We have a high standard of living at poorer countries' expense.

If the Government proposed to claw back Fred Goodwin's pension and redistribute it to the British taxpayer, and at the same time tax the UK taxpayer and give the revenue to poorer nations because we don't deserve to be obscenely rich at their expense (exploiting their resources, changing the global climate with our emissions, etc.) - if it was a both or nothing deal - which way would people vote?

Andy says "The man is a thingy." If so, so am I, because I'd vote no. I give to charities, but not so much that it impacts on my western lifestyle, which is as obscenely decadent relative to poor nations as Goodwin's is to mine - and at their expense. Goodwin may well give the same proportion of his income to charity as western nations give of theirs, I don't know.

Martin

[dyrl]

For my part - I would like to take high pensions for CEOs and bankers and other executives into defense:

The reason they are given these perks is to try and attract competent, experienced and reliable people to these positions. If - as is now happening in the USA - you introduce a cap on executive pay and say that executuves/CEos can't make more than X amount of money - then the best executives will be unavailable for the job and go work in countries where no such cap exists.

Another way of putting things:

During boom times when your stocks and portfolios are growing, when workers and laypeople are getting wealthy WITHOUT DOING ANY WORK but only by virtue of owning stocks, shares or just by virtue of being part of a productive company... should be therefore apply this misty "fairness" idea and - say - propose that during economic booms regular people should have their pensions cut and executives should get the difference?

Most of us regular folks who benefited during boom times from cheap credit, easy access to credit, pay raises and general prosperity did so through ABSOLUTELY NO REAL ADDITIONAL WORK on our part. We didn't come up with business plans that expanded industries, we didn't play the stock market just right, we didn't manage funds very well.

It all trickled down on us. We just did exactly what we are still doing now - got up and went to our 9 to 5 job and did just enough to get by.

But - let the economy go south - and suddenly it's "these CEOs shouldn't be making so much money."

Well - put yourself in their shoes.

First of all - if a CEO gets millions - you have to remember that he is responsible for BILLIONS. If you were given a job where your responsibility was to manage sums of money in the range of a few hundred billion pounds or Euro - how would you feel knowing that your share of it was a couple million?

How would you feel if you worked 12 to 15 hour days in order to try and make the company 80 billion Euro - out of which you as a CEO got only...1 million Euro because that's you annual pay check.

It's even "worse" for professionals who are not CEOs/partners/top management but say just lawyers or insurance agents or what not.

You make your paltry 100 or 200 thousand pounds a year and - thanks to your work - the company makes millions.

You send bills to your clients for a few million pounds and you then get your monthly wage of 10 thousand or 20 thousand pounds.

I think that it's hypocritical when folks start grumbling about CEOs getting too much money- even when they fail.

Look at politicians - they get pensions and perks - heck - they even get to run for re-election EVEN if they failed in their jobs.

And the rate of failure amongst politicians is about 99.99% - they never really succeed in keeping their promises.

And yet they suffer no consequences.

CEOs suffer huge consequences - even if they get their "golden parachute." For starters - if you're a high-profile corporate failure - good luck getting a job in business any time soon. You'd best just start your own business (not at all easy), or retire. Second, these people probably have huge mortgages, debts, and lots of expenses which are easy to cover so long as you're employed as a CEO - but soon become overwhelming when you are unemployed.

That couple of million or whatever it is pounds dries up pretty quickly if you've been living a lavish life style which you can no longer afford. Look at Michael Jackson as an example of how someone with tons of money can teeter on the brink of personal bankrupcy.

In other words -CEOs, just like everyone else - have the same ups and downs. Nobody comes to a job WANTING to fail, or wanting to swindle folks. In general, the one thing that is worse than failure for your future in the job market is being a swindler.

I'm not defending this particular Goodwin chap - truth be told I don't know anything about him or what he did - but it seems we are often flooded with these sensationalist reports.

That's all they are in my opinion - cheap sensationalism and a way for newspapers and the print media to crank up sales/interest. It's a bit of a "vultures eating one of their own" scenario. And it does infuriate lots of people.

As to Martin's point about poorer nations - that's a very good observation. "poor" people in the developed world are usually richer than even relatively well off folks in the developing world. And yes, what if Europeans had to pay a "Colonialism Re-Imbursement Tax" that would go to former colonies?

In theory, every country has something to be less than proud of vis a vis another country and instead of trying to get along and work together for a better future we could all be pointing fingers and calling for people to pay back others for historical grievences.. which I am opposed to because I oppose the idea of collective guilt.

Besides - what? - Should I, as a German, pay myself as a Pole for what Germans did to Poles? And should I as a Pole be forced to pay Ukrainians for what Poles did to Ukraine (even though I wasn't even around then), and should I as an American have to ...you get the point: these schemes of collective repayment for grievences is ridiculous no matter which way you put it - because what it ultimately is is the government taking money from people who did nothing bad to one another in order to spend it on their friends in the name of "historical retribution" of some sort.

The best way to heal old wounds is for former enemies to become friends and do productive things together IMO.

Anyways - I think people who join the anti-CEO frenzy during hard economic times are letting themselves be manipulated by the real culprits: the politicians - who are just using public grievence at CEOs to sieze more power for themselves, and who are NEVER held to the same standards of accountability as they suddenly demand for executives of corporations.

Pete

[Grand Moff Muffin]

I agree with some of what you say, Pete, but not all, particularly about politicians. Politicians in the UK earn far less than people with similar talents in the private sector, and work similar hours. An MP's basic salary is just over £60,000, the Prime Minister's less than £200,000, and even adding in expenses it's orders of magnitude less than top people working in finance. And however they are portrayed in the media and however compromised they become late in their careers, they generally pick their profession for idealistic reasons, not power-grabbing ones. They are extremely accountable, not just for their own mistakes but also for the mistakes of their officials.

I'm the first to criticise politicians when I disagree with their policies, but they are generally _trying_ to do what they think is right, work long hours, take an immense amount of flak for stuff outside their control, and get savaged by the media on a daily basis. Plus they have to win elections. It's amazing they hold together as well as they do.

In the UK at the moment, the Government isn't trying to seize more power. On the contrary, it is being criticised by the media for not regulating the private sector heavily enough, so as to spot the problems ahead of time. They are trying to privatise things that the public doesn't want privatised (like the Post Office). They are trying to avoid fully nationalising the banks that have come to them for help, despite many commentators saying they should. They want to sign more treaties with Europe, which is also seen as giving away powers, and the people don't like it. They passed a Freedom of Information Act that results in them having to reveal stuff that executives of corporations don't.

What you've said really does not reflect the situation in this country at all.

The main thing people are resentful of right now is that the Government has part-nationalised some banks that would have collapsed otherwise, and used tax-payers' money to prop them up, and the executives still get paid their bonuses. The general feeling is that the executives wouldn't still have salaries, let alone bonuses, if the Government hadn't saved the bank with public money, and don't want the public money to be spent on bonuses. Big bonuses are fine so long as they are performance-related, but if the Government has to step in to save the bank, then the performance doesn't warrant bonuses. And with Fred Goodwin's pension, people only resent it because it doesn't appear to be performance-related as he mis-managed his bank. Trouble is, his contract doesn't say that he only gets a massive pension if he does a good job.

Martin

[The Doctor]

After today's events, I hope we're all looking forward to the economy crashing again!

-Ralph

[legios]

I wouldn't say "looking forward to" is entirely the correct way to describe it...perhaps "resigned to" might be more appropriate.

Karl

[Benn]

Can't wait.

[The Doctor]

I wonder if ordinary people will be blamed rather than the people in charge this time?

-Ralph

[Benn]

Well, we're running out all those nasty immigrants, we're taking back control... I bet it's gonna be those lazy workshy folks again, all pretending to be disabled and stuff. How dare they.

Man, I wish I was joking.

[Andy Turnbull]

Dark times ahead I fear.