Until when should we wait to buy our Christmas presents?

The financial crisis is clearer than ever. Even though retailers are giving their best efforts to attract people to their shops, the outcome has not been successful at all. The 50 per cent discounts, the free breakfasts and goodie bags have not been enough to catch the attention of the people. Retail sales already dropped at their fastest pace in November, it will be no surprise if the trend continues for December. Hopefully the government’s intervention of cutting 2.5 per cent off the VAT will increase the confidence of consumers and retailers will not have such a depressing Christmas.

Unfortunately it is not only the English retailers who are suffering; French stores have seen the same trend throughout their empty stores. Even though there are less than 4 weeks to go before Christmas, people have not yet begun buying their gifts. Consumers are waiting until the last minute to see if they can get the best offers in the market. Not only they are waiting, but also they prefer buying their gifts online as they will save on petrol costs and have the hope to find cheaper prices.

Something that the English retailers should be glad of is that at least their consumers are not the most pessimists in Europe concerning the economy. It is the French retailers who should start thinking about exceptional strategies to be able to attract consumers into their stores as it is the French who are the most pessimists out of all the Europeans regarding their economy.

With the confidence of the people dropping and their pockets emptier and emptier, what is the future of the retail business?

Does coffee have a promising future?

Colombia has always been very well known for its good quality coffee. Being the second largest producer in the world after Brazil, Colombia’s economy depends very much on this crop. Even though it is a source of income to the country, this crop is also seen as a representation of the country’s culture.

Coffee has been lucky enough to have been barely affected by the credit crunch unlike other crops like cotton, maize, and cacao between many others. Unfortunately, climate change has not had the same effect on coffee. Due to increased rains caused by the climate change, coffee production in Colombia decreased. Fortunately, the international market for coffee is so strong that the prices have not varied too much which has helped producing countries. Another favourable point that coffee has is that consumption has steadily increased therefore production has to increase as well. Does this mean the world’s next major crisis will be climate related?

Another dirty business in Colombia?

Colombia has been going through a period where pyramids are a common business to invest in. Some people invested all of their life savings in the hope that they would get high profits. As some of them did, and the return was so high, they reinvested their earnings. This worked until the day the business decided to close its doors and steal all the money from their clients. A number of these businesses were illegal; therefore it was very easy to close them down if intercepted. But in the case of the company DMG and a couple other ones, they were legitimate companies that apparently were operating legally, some for almost 6 years. The doubt began when an investigation started and it was found out that many people investing in this company were not able to justify where all this money came from. This is when the government decided to intervene as it was thought that there were connections with illicit money originating from drug trafficking.

51 DMG offices were closed all over the country and in total it has been estimated that the 300 pyramids are in possession of around 2 trillion pesos, almost 850 million US dollars. This situation is very worrying as it has caused a huge social problem in the country. The consequences are so negative that there have been 3 suicides in only 2 days. People feel so stupid for having investing their life savings in these types of business that they believe there is no reason to keep on living. The question is, should they feel this way? It is incredible to see how people keep on investing in these businesses after the government has emphasised that they are illegal and that at the end of the day, they will not earn anything. What does this tell us about the Colombian society? Once again giving the image of lazy people that want to earn money in an easy way? Clearly it was not enough with the easy making drug dealing business, Colombians still want to give an even more negative image to the country.

The financial crisis is even showing its effect in the sky

In the first semester of this year, a total of 1.083 aeroplanes were left unused on the ground as traffic growth slowed down due to the current financial crisis as well as other important factors. This accounts for 5 percent of the total fleet in the world. 75 percent of these unused aeroplanes are owned by North American airlines, where airlines have been forced to reduce their capacities by 10 percent already.

The director of the Ascend Aviation Consultancy predicts that there will not only be cuts in North American airlines, but European and Asian ones will also see a decrease of 3 percent and 2 percent respectively. We have already started seeing theses effects in the Irish low cost carrier Ryanair whose profits seriously fell in the first semester of this year. However they believe that by next march, they will be able to break even. Other European airlines have not had the same luck as Ryanair, which even though with decreasing profits, can still stay in the market. This is the case of the Danish airline Sterling which was declared bankrupt on 29th of October, 2008 as it did not find any buyer for its 24 aeroplane fleet. Sterling has not been the only airline to cease its flights, around the world, over two dozen airlines have stopped operating this year and there could be more to follow this trend.

The financial crisis has most likely been one of the main factors for the decrease in demand in the aerial sector. Business executives and tourists now fly less due to their personal economic situation or the overall economic situation of the business which they are working in. Businesses that are already under budget constraints might see travelling as an unnecessary expense at the moment. As evidence of this, we can look at Morgan Stanley who announced this week that they would not hold any extravagant Christmas party’s this year in order to cut down on spending. However, there is yet another important reason that has promoted this aerial crisis. The rise of petrol which rose up to $148 USD in July this year has decreased the possibilities for these companies to generate profits. In order to surpass this crisis, airlines are taking serious measures like eliminating flights, cutting down on employees, stop offering extra services like food, extra baggage etc. The question is now for how long will the airlines be able to cut down on costs before sending their customers in a chair less aeroplane?