John Linton .......if you have been reading the financial press in the USA, the UK and Australia recently.
Bank 'bail out' or not (in the USA, EU and even in Australia) there seems to be, for the first time I can recall, a consensus of doom and gloom from both sides plus the middle of the political and economic spectra that the world as we have known it for the past thirty years is rapidly collapsing and what will replace it, while no-one I have read offers any firm opinions, will be less pleasant (by how far depends on whose opinion you are reading) and far more onerous - as well as being duller. A summary of the aggregated views, as far as I can determine, includes:
Real estate prices will fall by an average of 20% across Australia over the next 18 months
Interest rates will increase by 50%+ for non mortgage transactions within 9 months
Business bankruptcies will treble over the coming six months
Personal bankruptcies will quintuple over the next nine months
Superannuation funds will decline in value (including new payments) by an average of 2% over each of the next three years
....and it goes on from there. No-one making these predictions seems, at least to me, to offer any real 'research/statistics' for the different views they propound (they do take 'snippets' from various sources to develop their grand theories of general disaster) but there is very definitely a consensus of total doom and gloom and dark forebodings of global financial change for the worse. A typical example from today's SMH is:
http://business.smh.com.au/business/brace-for-economic-misery-20081003-4szo.html
..but take your pick of any of today's articles in the WSJ, UK Financial Times or any of the Australian papers.
Right now, in terms of Exetel's business volumes which continue to grow month on month in an unbroken 'march' across the spread sheet for the past 57 months, I just don't get that impression but then I guess the people at Lehman Bros etc didn't see anything wrong with their figures either up to the time they went down the gurgler. So that's no comfort. Payment defaults were higher in the latest bill run than in previous months and there is a noticeable slowness in people making alternate arrangements to 'un-suspend' their services compared to previous months - so I guess that's a sign of something - but initial payment defaults still are less than 1% of all billing on first 'debit' and are reduced to less than 0.03% by the end of any month this year (admittedly up from an effective 0.0% in all 4 previous years). So you would think a combination of continually increasing monthly revenue and full payment of all bills (no bad debt) would not indicate anything wrong, or even about to be wrong, in the marketplaces in which Exetel operates.....and yet.......
....I can't get my head around all the financial 'experts' on three continents getting their predictions wrong so..........
I don't know what to make of the predictions. I certainly don't know what impact there will be on the marketplaces in which Exetel operates currently and is planning to move to in the future. I feel as though I should be planning for and then carrying out major changes to the current business but I don't see the areas or opportunities to do that - and I've been looking for a while now - since January this year. My instinct tells me to become very cautious and stop planning any more growth or new 'ventures' - and this surprises me as I've never been a cautious person; some unkind people might say I've always been reckless - there might even be those who would say extremely reckless.
There is no clear direction that I can see either for the broad Australian economy or the communications sector other than slowing growth and and less money. I can't see anything 'wonderful' happening in our corner of the world while the West's major economies are, apparently, teetering on the brink of a 'free fall' to who knows where?
Maybe it's time to 'consolidate' Exetel's operations generally and reduce whatever financial exposures we may have even further than we have already done? Probably the only sensible thing to do is to raise prices and carefully and slowly and scale down the size of the whole operation and generate as much cash as possible rather than continually investing back in to the business?.
I just don't know.
I think the best course of action is to stop reading the financial press for a week or so.
PS: The US Congress passed the 'bail out bill' but the result was an immediate 450 point fall on the NYSE:
http://online.wsj.com/article/SB122304922742602533.html