Denseman on the Rattis

Formerly known as the Widmann Blog


The course of this recession

For most of December, I’ve been wondering how the shops could afford to reduce their products so much before Christmas, what with the falling currency and everything.

But then my mother came home from a shopping trip to town and said something that made it all click into place in my mind: “Clarks have got no new models, they’re just selling old stuff.”

So this is what’s happening:

(1) Because of the credit crunch, the shops can’t get credit to buy new stock.

(2) Because they’ve got no new stock, they have to sell whatever they’ve got in stock.

(3) In order to make people buy this old stock, and to get cash to buy new stock quickly, the shops have reduced prices vastly. Also, because this is old stock, the falling value of the pound has not affected anything yet.

(4) Once the stock has been sold, some shops will have got enough cash to buy new stock. All other shops will shut.

(5) The shops that will be able to restock in January will have to pay in devalued pounds, so prices are going to jump up a lot (I forecast 50-100% price rises, based on the difference between the same Sony lens in restocking Amazon [£335] and selling-old-stock Jessops [£145]).

This will makes sales collapse, and so more shops will close.

I don’t understand why the Bank of England don’t understand that letting the pound collapse will cause horrible disasters. It’s not like the old days when there were plenty of home-made products people could buy instead.

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