April 19th, 2008
By Charles Wyndham.
I was adding another name to my internet address book when I noticed that, if I so chose, that I could add a nick name for the person.
What struck me is that some peoples’ names are a nick name anyway, a thought that had struck me about the word ‘recession’ on my current round trip which involves 6 international flights.
The current recession is so severe that I have had the most extraordinary difficulty getting seats on planes.
At the airports, apart from Heathrow which clearly every sane person has decided to avoid if at all possible, I was met with monsoons of people where, forget about sitting room there was not any standing room available.
On one flight I met an English lady who was on her third holiday this year and I had to listen to all the other sun blistering paradises of joy that she had lined up for the rest of the year.
I was only surprised after the droning on about her plans that there were enough days or empty seats in this year.
I contrast this against the news in the International Herald Tribune about just how many retail chains were being forced into liquidation in the States.
The rise in the cost of fuel and food is really putting the squeeze on other expenditure in America, even for such ‘basics’ as beds and fridges (I suppose there are plenty spare in all those empty houses).
Then there is the news about the future auction of a blue stone where the expected price is between $6 and $12 million which seems to leave enough margin for error.
The one lesson that we should all bear in mind is that no recession is a simple mirror image of the previous one or ones.
Recessions are not bad news for everyone.
Going back over the previous hard times in the diamond business that I have experienced it was, particularly in the worst of the recessions in the early 80’s, the better end of goods that hit a brick wall.
I use that expression advisedly as I still recall going off for the Easter break in 1980 and all seemed alright if a bit twitchy and coming back to a dead business a few days later.
Another point of course is that the press treatment of news is ever more cavalier to any real research and distant from reality as selling newspapers has meant leaving analysis behind and pandering to the fears and titillations of the moment.
Some bad news is whipped up in a way that often I find totally irrational if not obscene; this when other news is coated in political correctness to give a ‘balanced picture’, such as the appalling events in Zimbabwe which should, in my opinion, have and should be being given far greater prominence to the fascist / Stalinist behaviour of that murdering thug toxic Bob and the whimpering appeasement being offered to him by his supine neighbours.
The only thing balanced about Zimbabwe is just how unbalanced Heil Bob is.
It may be that that the only common factor in recessions is that they arrive like a Tsunami engulfing the unsuspecting, even though by some fluke there may have been a warning.
There again maybe we are not going to have the recession that all the experts are predicting, they do have a great knack of getting things about as wrong as weather forecasters.
Perhaps a slow down is being whipped up into a recession?
Common sense dictates that it would be surprising if the diamond industry really escapes the current woes of America, just as much as it would be almost inconceivable that those same woes are not going to hit other economies.
On the other hand, as mentioned by PolishedPrices before, there are concerns that the severity of the slowdown in America is certainly resulting in firstly falling orders and secondly stock being put back onto the market, a double ripple effect in my book.
But that does not mean that all will be hit the same or as I have said that previous patterns are to be repeated.
This time around it is the better goods that are carrying our industry as the cheap goods face a precipitous collapse, the very area of rough that did well in previous recessions.
As the better goods keep breaking records it is easy to be lulled into thinking that there is only a one way ticket up.
Given the long term imbalance of supply and demand, the falling dollar, shortage of supply and no substantial rough stocks lying around is certainly helpful in dampening any impact.
This shortage is going to be exacerbated in the short term by the power cuts in Southern Africa, a most timely help in the immediate future but hardly something to crow about given what the long term impact could be.
So what is the conclusion?
Apart from knowing it will not be like before, I do not have one except to see just how the affective the anti indigestion medicine is going to be to cope with the excessive consumption which has caused all this in the first place.
What is certain is that recessions or significant slowdowns offer huge opportunities.
In the early 80’s it really saw the emergence of the Indians as major players and also a company like Steinmetz. In the early 90’s trauma it was Leviev who seized his opportunity.
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