Credit crunch crisis

Will the Australian and Asian markets get a case of US-flu? We will certainly know by 24 November.

Yesterday I had a call from a Manila-based call centre on behalf of a US financial credit institution advising me that my account was now $2 over the limit after they had posted the latest interest rate.

Anyone who fails to see this as a sign that the US financial institutions are in a credit crunch crisis will believe that we have never had it so good and the tooth fairy will be placing gold sovereigns under our kids’ pillows.

Home business owners with a domestic market and small business owners with an international market should learn to trust the Treasurer, even if they disregard what is being said by the two party leaders. In the next week we can expect to see a worldwide shift in household consumption patterns due to a potential $US100 barrel of oil.

By the middle of next week expect every major retailer to be shifting their forward stock orders for Christmas, rethinking the number of casual staff they will be taking on before the massive New Year sales. Expect outbound tourism agencies to be hiring and inbound tourism facilities begin to put advertising dollars into “now is the time to rediscover your own country” themed campaigns.

Watch for falls in the stocks of financial companies, airlines and the major auto companies as retail investors reconstruct their household budgets. Watch for significant slowdown in the major Chinese stocks that have been boosting confidence that the boom will never end. It is particularly important to watch the changes in the priorities of the new Chinese mandarins.

Another early sign that Peter Costello has been doing his job in warning the business community to expect a reconstruction of the entire Australian economic edifice, once he gets his turn at the wheel, will come with the patterns of reporting of the high tech and in particular the computer stocks that serve the major financial and housing industries suggesting that the tsunami warning should always be treated seriously.

Assuming that the election is as close as this column has been predicting, on 24 November watch the results in the mortgage belts for signs of a big swing to Rudd. If this happens it means that these consumers have accepted his proposition that we must now begin to plan for the post-boom collapse in consumer confidence. Again I suggest having a look at my global consumer monitor to check on what is happening to markets around the world.

Watch this space from 13 November in the US, and 10 days before our date with destiny. Regardless of which team wins, prepare now for a major RBA statement in December calling for fiscal restraint and deferral of expenditures and a series of rate rises that will take the household mortgage into double figures again.

Assume that we will see the Australian and Asian markets get a bad case of US flu, and those without liquidity finding that the global credit crunch facing the world’s financial institutions will have very personal impacts.

For those small and medium businesses that have been following this blog, may I strongly suggest that you check with your suppliers to lock in your place in their value chain, as they will be prepared to offer real deals to get your business.

For those who are doing the right thing for the longer term, lock in your export supply agreements, even if it means extending your terms of trade a little and increasing your own visits to their establishments to consolidate your personal relationship management and local market appreciation.