Are we in the middle of a financial meltdown?

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In other words, it's over when it's over. When the shit has hit the fan and the flecks have landed where they will. When the fat lady has sung and the horse has bolted.

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Thanks for that , allowed me to narrow down the fact that you are wrong. Just went through my posts in late August to early September.

Sorry, I guess I got you confused with another poster ...

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hmm, while the loss of jobs is tragic, will anyone really miss such retail dinosaurs as MFI and Woolworths?

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there is always a shakedown in recessions and companies like MFI and Woolworths that have not adapted over the years can and do go to the wall. However, both will likely be asset stripped and a good few of the old workforce will be cherrypicked for the operations that acquire subsidiary units of these retail behemoths.

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You may not like to read it, but if you have NA oils here it is:

Project Cutbacks

Here are some very abbreviated highlights of energy project delays announced in the last month alone:

 

Shell, Suncor, Petro-Canada, Nexen, Teck Cominco, UTS Energy and Opti Canada have all announced delays in their planned investments in the tar sands projects of Alberta. Suncor, for example, cuts its capex budget from $10 billion to $6 billion (Can.) Companies with joint-venture tar sands interests in production, refining and pipelines also announced delays, including EnCana, StatoilHydro ASA, Value Creations, Imperial, and Enbridge. Hundreds of billions of dollars in commitments have been withdrawn or delayed.

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Some analysts have predicted a 10-15% drop in capital spending in western Canadian oil projects next year, while the Canadian Association of Petroleum Producers cut its spending forecast by 20%.

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The Saudi Aramco executive director of affairs said the Saudi oil company is reassessing all of its projects in light of skyrocketing costs and tight credit, and was uncertain about the future of global oil demand. Several planned field expansions have been put on hold which would have sustained the country's oil flows after 2012.

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The state-run Nigerian oil company NNPC is having difficulty guaranteeing funding for its share of joint ventures with Royal Dutch Shell and Exxon Mobil, and development progress has halted. Nigeria is one of the few remaining countries in the world where oil production may yet be significantly expanded.

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A director at Oil & Gas UK reported that 60 of 170 new oil and gas exploration projects in the North Sea could be delayed indefinitely due to poor economics. The chief executive of Venture Production PLC, a company which specializes in producing the final dregs of depleted North Sea fields, says the production cost of the field's remaining oil will be in the $100/bbl range. Consequently, the chief executive of Edinburgh-based Melrose Resources says, "I think there will be an abrupt cessation of activity in the North Sea. It's not just the oil price but the access to finance." Oil and gas juniors looking to exploit the dregs from old fields are finding it difficult to round up financing to move their projects forward.

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Petrobras, the world's hero of new oil production from Brazil, delayed release of its investment plan due to market "uncertainty." The hardest-to-produce barrels from its offshore subsalt fields might have a production cost of $50 or more, and will require hundreds of billions of dollars, much of it from credit, to produce. The company has delayed the construction of 28 deepwater drilling rigs until next year.

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According to an analyst with Pritchard Capital in Houston, about a fifth of the deepwater rigs planned for construction by 2012 have been delayed or cancelled. Such rigs can cost up to $800 million each.

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A Wood Mackenzie report concluded that four out of five refinery construction projects announced worldwide since 2005 would be cancelled.

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A lack of foreign investment and domestic credit has indefinitely postponed $30 to $40 billion worth of planned expansion in new biofuel projects in Brazil.

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A planned $800 million coal-to-liquid fuels plant in West Virginia has been shelved due to "the current state of U.S. credit markets."

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In the US, 66 of 262 approved wind farms have been cancelled or postponed due to poor economics and a lack of credit.

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A key backer of a major offshore wind project in the UK was unable to raise its share of the project's financing and has pulled out, leaving Norwegian oil company Statoil looking for a new partner to help build the project.

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What is the deal with the UK cutting VAT by 2.5%? Is this the most stupid idea ever or what? Honestly, if they are trying to encourage people to go to the shops to buy more, could they not think of a better way to do it? Is someone really going to buy more cause something costs $1.95 rather than $1.99?

 

The cost of shops having to change their prices and the cost of software changes to do this surely outweighs any benefit at all (although I see no benefit).

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its a psychological thing Hutcho. Do you remember the gloom in Germany when VAT was put up? This is intended to induce the opposite effect.

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What is the deal with the UK cutting VAT by 2.5%? Is this the most stupid idea ever or what?...

I agree with this, stupid idea, I was once told that most small/medium businesses in the UK don't have to charge the full VAT rate, they are free to impose between 2 and 12% but most charge the full rate and pocket the difference, thus if the rate is reduced they are going to be losing money, don't know how accurate that info was...

 

Whats the odds that shops etc do not reduce prices anyway and take the reduction as increased profits for themselves?

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I agree, this is the another stupid, not thought through dumb-arsed idea I've come to expect from Labour.

 

Reducing income tax would have had an immediate effect on the amount of disposable income. As it is, we have to wait and see how much of the VAT reduction is actually passed on to consumers (probably little) whilst the full cost will be born by the tax-payer in the future. This is the same problem we are facing with banks not passing on interest rate cuts to customers.

 

As an example, my company is already considering trying not to pass all of the VAT reduction onto customers. And since the UK is a major market for us, any pricing decisions have to be approved by the board which takes its time. There will be no official VAT benefit for customers for at least the rest of this year and when they do adjust prices, they will likely round a bit so as to squeeze some extra cash out of the deal. On the other side retailers of our products aren't bound by the official price list so could immediately reduce effective prices if they so wanted.

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Bah, just found out that a close friend of mine who held a Very Prominent place at Goldman Sachs lost his job along with 10% of the workforce. Why him? They chose those with disproportionate sickness leaves. He had cancer. They had to cut bits of him off to save his life. He also has a baby. So now he's seeking legal advice as GS want to give him some money and sign a form that he won't sue.

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Why him? They chose those with disproportionate sickness leaves.

i always found how companies choose to cost cut their resources a very interesting insight into the mentality that a company has at the top, the company i work for used the performance review but it specified to the managers that they must pick one employee for a good review only if it was balanced by one employee receiving a bad review and then they used the bad review to make that person redundant, sneaky and underhanded...

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Not just psychological. 2.5% off a VAT-subjectable spend of £1000 per month is enough for a meal out.

If they wanted to do it this way, then why not just give people a tax break? Then they would see the difference in their pay cheque and maybe even spend the difference. Reducing VAT 2.5% will not make a difference to anyone, except possibly the guy collecting bottles on the street to buy some cider.

 

On second though, maybe the idea is genius. No one is going to reduce their prices, but they have to pay the government 2.5% less, so this means that businesses make 2.5% more at the end of the month, which is good for them.

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Reducing income tax would have had an immediate effect on the amount of disposable income.

My theory, which is probably rubbish, is that the VAT reduction is aimed at business rather than consumers. After all, in these times people are more likely to save their pennies rather than spend them, so if you give people money they'll just stick it in the bank - no use. They tried this in Japan and the same thing happened.

If instead businesses fail to pass on the 2.5% they see a small boost to their profits, can afford to not sack people, even weather the storm a little better. Everybody happy.

 

 

I was once told that most small/medium businesses in the UK don't have to charge the full VAT rate, they are free to impose between 2 and 12% but most charge the full rate and pocket the difference, thus if the rate is reduced they are going to be losing money, don't know how accurate that info was...

If you're referring to flat-rate VAT it's optional for businesses with under £100k turnover and the rate depends on the industry they're in. As I understand the rules, they are supposed to continue charging customers the full rate but only pay the reduced rate on total revenue - at the same time they don't get to claim back VAT on their expenses. It's mainly an accounting simplification.

 

 

i always found how companies choose to cost cut their resources a very interesting insight into the mentality that a company has at the top, the company i work for used the performance review but it specified to the managers that they must pick one employee for a good review only if it was balanced by one employee receiving a bad review and then they used the bad review to make that person redundant, sneaky and underhanded...

I've heard legend of a company that would make performance reviews every year and automatically fire the bottom 10%, year in year out. It's a bit ruthless, but not a bad way of doing business - though it obviously wouldn't work here...

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On second though, maybe the idea is genius. No one is going to reduce their prices, but they have to pay the government 2.5% less, so this means that businesses make 2.5% more at the end of the month, which is good for them.

Damn, should've posted quicker. <_<

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My theory, which is probably rubbish, is that the VAT reduction is aimed at business rather than consumers. After all, in these times people are more likely to save their pennies rather than spend them, so if you give people money they'll just stick it in the bank - no use. They tried this in Japan and the same thing happened.

If instead businesses fail to pass on the 2.5% they see a small boost to their profits, can afford to not sack people, even weather the storm a little better. Everybody happy.

This theory only applies to the businesses at the end of the chain that retail to private customers. If you are a mainly business to business supplier you would see none of this benefit.

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