Bloody hell, the whole world seems to be falling apart, now we have had the first Japanese casualty, a big insurance firm, I don’t really know all the ins & outs of it all, but this ripple effect coming from America seems to have went from a ripple to a tsunami.
I’m not the brightest guy on the planet, and I am hoping the people employed by all the banks and governments are a great deal smarter than me, but even I could see the ease of credit to people was a bad idea, you could get 125% mortgages, you could take out credit cards and just bounce the balance round from card to card, borrowing money was so easy, the banks seemed overly keen to give money away.
Did no-one ever wonder what would happen when the lenders wanted their money back, what IF the borrower (you & me) could not pay it back, record number of bankruptcies, banks failing, companies collapsing, global meltdown, retailers collapsing.
How did not one of the bright sparks spot this before it came to be such a huge problem, now it seems to be the average person the street that will pay the price of bailing out the debt, for America to buy out $700 billion of bad debt is incredulous, I can see why it neds done, but cannot believe its being done, and why the average person is not shouting louder about it.
For example Bank A has $10 billion of bad debt, they swap it for $10 Billion in cash, there is no way they should get the debt value in cash, there should be percentage, ie yo get 60p in the pound, so you get $6 billion, and the government has a chance of turning the debt into a profit, and the profit goes back into the economy again.
As reported this week, Joy went tits up, but has been bought out by a management team, guess what?, they have only bought 12 stores, that’s cause the other 18 stores were in absolute shit locations like East Kilbride, Dundee & Inverness, the management need to be accountable, they seemed to have a pile of money and were opening stores willy nilly, with no regard to how good or bad (mostly this one applies) they were.
Anyone who has been to East Kilbride, Dundee and such will surely agree their unsuitability for any good retail sites, but to get 18 store openings in the wrong location is a big worry and you need to take a look at the management team for the company.
JJB Sports had Bailiffs turn up to 11 of their empty stores, apparently they have not been paying the rent on them, JJB reckon they are in the middle of negotiations to resolve it, but to have Bailiffs turn up at your door is a clear sign you have major problems around the corner.
This comes the week after JJB announce a £10 million loss in the first half of the year against an £8 million profit for the same period last year.
In the past fortnight, JJB's share price has plummeted to as low as 19p, this is a major freefall for the store group and me thinks the buying of Original Shoe & Cube will turn out to be big mistakes that drag the company down.
The results also revealed a dispute with HBOS, which had claimed the sports retailer had breached its banking covenants.
In its statement accompanying the results, JJB's auditors said: "There are material uncertainties that may cast significant doubt on the group's ability to continue as a going concern."
Last week it emerged that Coface, the UK's largest credit insurer, had pulled its cover for JJB suppliers.
Following the financial turmoil that engulfed the Icelandic banks, Icelandic investor Exista – which in partnership with chief executive Chris Ronnie holds a 29 per cent stake in JJB – downplayed speculation that it would bail out the retailer.
JJB has shut a load of stores down recently to try and become profitable, it seems they are not overly keen to pay rent on the stores that are sitting empty, and cause they are a big deal, they hope they will get away with it, when you start hearing that bailifs are getting sent in, you know end of the road is not far away, then when you argue with your bank so publicly, it seems JJB could fall as early as next week.