Fool’s gold

As we head into the festive season, the current affairs media declares news is over until next year, Julian gets his get out of jail card and expert leakers are hauled in for insider trading across the US, smart companies that have failed to plan may find that they will fail in the emerging market.

Unless you are Julia and Wayne, it is too early to panic, but the collapse in support for the Federal Government across the Eastern seaboard and the austerity drives of State and Territory governments require close attention by smart companies to slow order books and the risk that next year will see a return of pressure on businesses that cannot prove up their optimistic projections.

Around the world customers and retail investors have been betting on gold, diamonds and bonds to deliver returns rather than placing their trust in the big bankers desperately seeking any loose cash. Now that there are signs that the US manufacturing industry is hiring staff in the new year and inflation remains under control according to the top 20 CEOs who met with Obama this week, there is likely to be a return to equities and the start of investment in small and medium business expansion.

The problem is that gains remained capped amid concerns over the euro-zone’s debt problems at the same time as most US firms have been making their money in off-shore emerging markets. The euphoria of the post GFC environment and the boom for the commodities market has encouraged the big banks and our RBA to suggest that the illusion of increased lending to small business next year is likely to be fool’s gold as the price of the yellow commodity is brought back to the field with covered bonds, etc.

The cautionary tone emerges from the reality that consumer confidence is now down for the third straight week and down by 12% since this column. Only 30% of consumers believe that their family is better off financially than a year ago and a further 30% say that the family is worse off than a year ago.
Gary Morgan says, “Consumer confidence has fallen slightly this week led by a fall in Australians saying ‘now is a good time to buy major household items. This will be a worry for retailers as we’re in the middle of the Christmas retailing season — traditionally the best time of the year for the nation’s retailers”.

We can only hope that the post-season sales and central bank belief that the economy is going to surge will lift all boats and that households follow Gary’s report that “a rising number of Australians (41%, up 5%) now say Australia as a whole will have ‘good times’ financially during the next 12 months — a good sign as we head into 2011.” 

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.

Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 9640 0099