Today I received another newsletter from the bank detailing their forecast for the coming 6mths based on the NZ Reserve Banks report released last week.
It reminded me of a gem I received in my inbox last year around the time the respective Government's of the "Free" World decided that their economies needed stimulus packages to rescue an ailing financial system.

This tale may be over simplified, but I think the general intention of the story is how we choose to look at our current financial climate, and how we choose to place ourselves within it.

It is the month of June, a resort town sits next to the shores of the ocean.
It is raining, and the little town looks totally deserted.
It is tough times, nearly everybody is in debt, and nearly everybody lives on credit.

Suddenly, a tourist comes to town. He enters the only hotel, lays a 100 dollar bill on the reception counter, and goes to inspect the rooms upstairs in order to pick one.

The hotel manager takes the 100 dollar bill and runs to pay his debt to the butcher.
The Butcher takes the 100 dollar bill, and runs to pay his debt to the pig raiser.
The pig raiser takes the 100 dollar bill, and runs to pay his debt to the supplier of his feed and fuel.
The supplier of feed and fuel takes the 100 dollar bill and runs back to the hotel to pay his tab at the bar, which has been so generously provided on credit.

The hotel manager then lays the 100 dollar bill back on the counter so that the tourist will not suspect anything.

At that moment, the tourist comes down after inspecting the rooms, and after saying that he did not like any of the rooms, takes back his 100 dollar bill, and leaves town.

No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism.

And that, unfortunately, is how some Governments (and to that degree some companies) are doing business today.

I guess what is left out of the story is the charges for credit and overdraft facilities that the bank so graciously provides. The concept of credit is frightening, even more frightening is the realisation that we as a collective society have just accepted that this is an almost a necessary component of every day life.
If you ever have a free minute google the "net operating profits" of the large Banks for 1 year.  Last financial year Westpac (parent group) reported a Statutory net profit of $3,446 million, down 11%.

"Westpac Chief Executive Officer, Gail Kelly, said The Westpac Group had achieved asound financial performance in what has been a very challenging year for banks around the world."

Wow. A profit that size in a challanging year.
One way to stop this madness is to just stop spending on things that we don't really need. It might seem mad for me to be saying this - surely I would want to have more and more new business, more and more projects lined up?
The short answer to that is yes, the long answer is only if the clients can truly afford it. It has been our experience this past year that doing projects for those on a shoestring just leads to even more work our end. This is a self preservation action. Debt collection is not our business. It is ugly, negative and draining.

Last year we found ourselves exposed to more and more risk on big projects that began to run out of money, or clients that could no longer afford the upkeep or development of their websites because of overcommitment in other areas, or changes to the structure of their business in order to survive.
It is sad and frustrating that as a society, because of this addiction to credit, we have become so unstable. The slightest change in conditions sends a shockwave through the economy and related fiscal environment that sends some houses of cards tumbling to the ground. If we collectively are not so exposed to such high levels of credit then collectively we could all have greater buffers.
Is it a hole so deep know that it is almost impossible to get out of? Who knows. With more and more manufacturing disappearing overseas our reliance on a provided, disposable society becomes greater.

A couple of weeks back my weed-eater died. I am sure we all know that kind of frustration. What are my choices? It was only 2.5 years old and certainly not the top of the line. Just a cheapy from the chain store. In fact it was actually a free replacement for one that had only lasted under a year and was still covered by warranty. What to do now. Contemplate spending almost the same amount of money repairing a low quality machine for the cost of replacing it with a brand new low quality machine? Upgrade to a much more expensive machine manufactured in probably the same factory as the other machine but with a recognised brand and a marketing campaign attached to it to convince me of it's superiority? Bite the bullet and try to find a locally made version for probably 4 times the price but with a realistic warrenty? (do lifetime guarantees even exist anymore?).

I am thinking that I might just get a goat. They are cute and you can milk them. The kids will love it, but it is yet another pet to look after..............Swings and roundabouts as they say.