The double blow of John Carlini
From the accounts of entrepreneurs that I follow daily and others with whom I constantly compare the first week of October indicates the opening of a new economic phase that can be summarized in "double blow". In practice there is a sudden scarcity of orders.
This reduction of the workload should not be news. It was anticipated many months ago even if not believed.
Let's see the facts. The crisis erupted in early 2008 but already two years earlier by some economists, like all the events has a human form. It was discussed whether unfolds like an L (loss rapid stabilization and long) or a U (equally rapid fall and subsequent recovery) or a W (fall, recovery, second fall, one more shot).
46% of researchers in the U.S. this summer, has taken for granted a second shot of the crisis in the United States in the fall. Today everyone agrees with this approach because it is now reality on the American side of the Atlantic. More or less unanimous on all sides of the ocean, agreed that this would not have affected the dynamic Europe.
On this point I was not and I still disagree.
Proof that I get from the first week of October, confirms the other hand (and not at all satisfied with this, but it shows how superficial the analysis to be carried out so far by the press) that consequences of the crisis expressed by a W are also valid in Europe. Why
others are wrong? It's simple.
The crisis, I'll never stop saying it is not economic but social. We are not entering the tunnel because someone has stopped paying the mortgage payments!
We are in a deep period of stagnation because we wanted too and so little time. It follows that the consumer is in crisis and not his wallet.
This conclusion is obvious but on closer inspection, all governments take care of a social crisis with economic measures. If the wrong treatment, the disease may heal but on a very long time. That's why now we are talking about 2015 or 2016.
not considering the social side the crisis is clear that the predictions are incorrect or incomplete.
Basically what is happening? The people, then families, we all fear for the future and this is in Europe and the USA.
When people are "afraid", normally contract spending by raising the share of savings. It 'exactly what happened in the USA and in Europe in August and September.
A maneuver of this type subtracts money to domestic demand which leads to decrease in consumption. Whenever we speak of an increase in the amount saved by 3% we have mathematical models (on which, however, has proved unreliable because they failed to understand the signals that would have shown then the crisis) that this effect translates into a decrease of 30% of production and subsequent marketing of goods. If we consider the reduction of the mechanics of the steel industry with 60% and 30% less in the spring of 2009 as examples of experiences, the second part of W during that late 2010 is confirmed. Here is the root of the reasoning that leads us to consider the "second shot" today for Europe. This trend now appears in October, with strong data indicating a 22% failures between April and June 2010.
Now that the scenarios have opened up what I said months ago, but little thought, and especially those who do will remain on the market when it's finished? It is not difficult to anticipate that the number of operators who act now will not be the same in a year. Reasons just on the measures to be taken.
- bringing together small businesses;
- release from the bank lending and put "his own pocket" money in the company (basically the same ones that were taken when things were going well);
- immediately seek alternative markets because those non-traditional will be more able to ensure even break even!
- possibly not only marketing but also produce private label, at a bid price that is significantly lower than the European competition (the Chinese would be wiped out if there was an alternative to Italian good quality at acceptable price)
- if only to keep the relocation function to guard foreign markets, but return to nationalize the production for the domestic market. The real secret contract today is not spending, but better organized and pushed up the most sales, such as advertising, to convince the consumer that we're the best. Then look at new storage system in the warehouse, transportation and management of the human factor;
- the new business spending is very strict with the luxury cars and representation, but focuses on research, innovation, and the inclusion of new figures (including apprentices) who devote themselves to business contacts to be developed;
- Those who remain on the market are not traditional entrepreneurs, but set to "variable geometry" acting in synergy with several other rooms adjacent to their production, mixing production and trade.
Let us hope good luck.
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