Roddy Graham's Blog: 25 September 2008 - Economic thin ice
25 September 2008
Business life is currently a bit like walking on sheet ice. You don't know when you're going to hear the next crack, get an icy dowsing, go under, or make it slowly but gingerly to the far shore.
Those best equipped for the conditions stand the best chance.
The ice analogy has other relevance, which I'll come on to later. Last Thursday, it was very much all doom and gloom until the white knight in shining armour, US Treasury Secretary Henry Paulson announced the Bush administration was working on a major rescue package, a $700bn bail-out of the financial markets, all at the expense of the US taxpayer. Friday saw the biggest single day rise in the FTSE 100 and dramatic rises across global financial markets. Was it all too good to be true?
This week, after digesting some of the consequences, markets have been notably shaky and the FTSE has seen steady drops. Meanwhile, Paulson faces a major backlash from lawmakers on Capitol Hill. The distant shore across the lake seems to be receding. At least UK used cars values only fell 1.7% last month!
Naturally, the HBOS/Lloyds TSB proposed merger has got tongues wagging about a super lease group. Lots has to happen before that takes place so I shall refrain from comment other than to repeat my long-held belief that further consolidation within the industry is inevitable.
Away from our troubled economic times, news came this week of potentially longer-term concern. Large amounts of methane are rising to the surface from the sea bed north of Russia. The cause is the gradual melting of the permafrost layer, allowing pockets of methane to escape. Scientists warn that this could accelerate global warming considerably. And at least the climate change cynics can hardly blame this on excessive farting from herds of cattle!
It seems we're skating on thin ice, both above and below the surface.