Thursday, November 20, 2008

The financial crisis: who is next?

IBs, banks, insurers... next has to be
Hedge funds: They hold around a third of credit protection in form of credit default swaps yani they were seller of insurance against credit default by variuos bond providers. And next yr with recession proper, defaults will be high. Luckily for them, most will be able to fold in the privacy of their well polished offices.
Periphery credit financiers: I.e. companies that finance their trade via credit. As unemployment rises, so will default on payments... GM, Ford are already at the front of the queue
Credit card providers: Many had already foreseen the looming crunch, but wierdly were busy weeding out those who do pay on-time a while back. Still limits will be cut.
Airlines: Have survived higher fuel prices, but will they survive downturn in passenger numbers? Tricky, and me thinks a few will succumb.
Supporting suppliers into these industries mostly commission dependant: Already in the last few weeks, I know of:
Estate agents: Closing down. During the peak of the property market some estate agents in our area closed out 2/3 deals per day. Of late they've been lucky to do one per month. Cue redundancies and closures.
Travel agents: Airlines are cost cutting by moving to the net and selling etickets. Travel agents are closing as travel drops off.
Recruitment agencies; Last yr, they were opening at the rate of 1 a month in London. This month they are closing at a similar rate per week.
And who will benefit?
Low-price retailers
Loan sharks such as this one. 442% APR!


Ssembonge said...

In the US we have 'banks' that go by the name Pay Day loans. I think they offer credit on future wages plus cash checks instatantaneously.

They are popular with the underbanked cause there is no relationship between the 'bank' and the customer. All you need is a DL to be served.

Owing to their predatory nature you will mostly find them in the hood.

MainaT said...

This particular one seems to be doing very well and has opened around 7 outlets in 2yrs!