Archive for May, 2012

Lucky football


Why are football clubs exempt from the usual rules of administration? And quite why does the “footballers rule” exist?

It’s not often we have sympathy for HMRC but surely their stance is correct?

Essentially the players and (worse) other clubs are preferential preferential creditors. How can this be so? I cannot see anything in the ruling that justifies this at all. Can someone please explain?<a

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Eurozone. An analysis

This is an excellent analysis of the eurozone crisis. I think it should be understood that the intention of this is not to absolve the PIGS of blame but to seek to redress the balance. I am never sure about copyright rules on the net and whether i should credit this or not, but here goes…

Low interest rates and booming property prices are down to southern pain, not hard work
he Greek general election on June 17 is, according to Alexis Tsipras and his anti-austerity Syriza party, a vote on whether or not Athens should continue with painful spending cuts and tax increases. Angela Merkel and her German colleagues have a rather different view.
To them, the election is a referendum on Greek membership of the euro. Should the Greeks reject the demands of their northern European creditors, Athens would have to head towards the door marked “euro exit”. The remaining eurozone nations could then breathe a sigh of relief and return to business as usual.
Greece has become a convenient scapegoat. Yet to blame Greece alone for the eurozone’s woes is absurd. Plenty of other nations have broken the fiscal rules. And there has been no shortage of sins of omission.
One of the biggest such sinners is Germany. Its politicians have yet to realise that its economic success — exports of BMWs, Miele dishwashers and swanky kitchen cabinets alongside seemingly robust domestic demand — has been fuelled in part by the crisis. By not acting sufficiently to stabilise the eurozone, Germany is contributing to the worsening crisis yet reaping serious short-term benefits along the way.
With more and more people fearing the euro’s demise, they’ve taken their funds north. They’re assuming that, in the event of a break-up, the German bit of the euro would appreciate against the southern bits. Unwittingly, however, they are contributing to a creeping geographical bank run. In 2007 it was Northern Rock. In 2012 it’s southern crocks. Southern Europe’s pain is Germany’s gain.
German long-term interest rates have plunged to a ridiculously low 1.46 per cent, below the two “safe havens” of the US and the UK. This has spurred domestic credit growth, even as the rest of the eurozone has had to live with a credit crunch. And with easy credit, German property prices are rising, a phenomenon not seen in more than a generation.
Pre-euro, this capital flight would have led to rapid appreciation of the German mark, the investor’s way of wiping the smile off the typical German exporter’s face. The single currency, however, doesn’t allow for such a sudden reduction in competitiveness. Today, capital flight is a virtually costless windfall gain for Germany.
To fix the eurozone’s problems, Germany demands that southern Europeans put their financial houses in order, as if it has no responsibilities itself. The prescription is austerity, the financial equivalent of medieval leeching. Austerity is supposed to deliver smaller budget deficits, lower government debt and, through cuts in prices and wages, a big improvement in competitiveness. Price and wage cuts, however, make it more difficult for debtors to repay their creditors, increasing the risk of default. And the solution to this? More austerity . . .
Austerity is not the answer. As investors lose faith in the eurozone’s future, the capital flight simply intensifies. This must be reversed. And that means Germany will have to accept its share of the burden, whether it likes it or not. Either the euro stays intact, in which case German interest rates will have to end up a lot higher than they are now, or the euro falls apart, leading to a huge appreciation of the German currency and a significant loss of competitiveness. Whatever the outcome, Germany will ultimately be confronted with a bill.
Successful monetary unions are, in one form or another, successful fiscal unions too — which means national sovereignty is sacrificed for the greater good. Eurozone nations don’t have to go as far as full union but they could go further in the direction of pooled sovereignty. They could agree on issuing common eurozone bonds, reducing borrowing costs for countries in the periphery while, rightly, increasing German borrowing costs.
Berlin objects on grounds of moral hazard, worrying that fiscal discipline would then head straight out of the window. But, if the euro is to survive, Germany will have to stop pretending that its success is solely the result of good domestic management and hard work. It isn’t. Germany has lucked out as a result of the crisis. Berlin must share its good fortune with its eurozone partners, unequivocally and without moral judgment.
The alternative is to head back to economic conditions last seen before the industrial revolution. Then countries got richer only at the expense of others. War, colonisation and slavery were all neat ways of expropriating wealth from other parts of the world. None of that is now taking place in the eurozone, thank goodness, but capital flight is delivering a similar outcome. Countries in southern Europe will find themselves for ever shut off from global capital while Germany is up to its eyeballs in the stuff.
This is unsustainable. Germany must declare whether it is prepared to make the necessary sacrifices to save the euro. Otherwise, when the history is written, Germany’s sins of omission will surely be seen as one of the key reasons for the euro’s eventual collapse.

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Some of you may not be aware…

But theres a couple of articles that I have had published on the Download Articles tab at the top of the page

One was in accountancy magazine which was nice exposure

Any comments welcome…

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They “protect” your “cashflow” ?

Aside from credit management and invoice brokering and article writing and so on and so forth, I have been writing marketing copy for a couple of firms. One often overlooked aspect of credit management is the requirement for strong and professional communication skills. the skills involved are closer to marketing and sales than is often appreciated

So when a so called credit control outsourcing business (which is high profile but I know offers a dismal service) sends this out….

This means more time and effort concentrated on sales and if you have had to cut staff it inevitably means that those remaining have more to do and less time for payment chasing as nobody likes doing it and it is the first thing to get left and if you’re a sole trading it means stretching your day to spend more time selling and less doing the paper work.


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SME’s in the eurozone… beware

It would appear that across the eurozone the perhaps inevitable trickle down has been the increasing unavailability of credit in the struggling economies.

No surprises there

But this is clearly a time for another look at balance sheets in ireland, Portugal and Spain (let alone the basket case Greece)

Simply put, if your debtor is clearly reliant on credit from institutions, then its very much a case of `”creditor beware”

And how can you tell whether this is the case?

Drop me a line and ill tell you…

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Another retail failure

Am I at risk of posting the same story over and over again? Clinton cards are the latest high profile retailer to head for administration. There already appears to be something of a blame game going on between the business and the lenders and I suspect we will be hearing more very soon

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Suitable news for the weather

As the grey skies refuse to clear we here that Insolvencies are up 10% this quarter. I am far from being a glass half full person, but this is testing our patience isnt it?

David Birne, an insolvency partner at the accountants HW Fisher said the second wave of recession in the UK was showing through with more companies going under due to their debts.

“As output falls, the company insolvency rate in England and Wales is creeping up stubbornly.”

“But there are still thousands of ‘zombie’ companies which are stumbling on, as banks are reluctant to push all but the basket cases into insolvency.

“Banks are showing remarkable levels of forbearance, sometimes even with the firms that are dead from the neck up – and with little prospect of clearing all their debts,” he added.

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