Today I want to take you on a whistle-stop tour of recent events, from global to local, and then consider how we as a community of brokers fit into the bigger picture.
In macro terms, many of us are asking whether recent events on the world stage indicate that we are heading for another global downturn.
In the few weeks since my last article, America’s credit rating has been downgraded from AAA to AA-plus. When the announcement was made by Standard & Poor’s, the President immediately refuted it, claiming that the move smacked of political skulduggery and manoeuvring, rather than of fact. This sent shockwaves through the other Credit Rating Agencies, unsure of whether they should keep their heads down or stick them above the parapet and risk a broadside from the President.
As usually happens “self-correction” came into play, and the US downgrading was probably a reflection of what had already happened in the market rather than a prediction of future trends. However, the story was rather puzzling to us lesser mortals. When Credit Rating Agencies, economists and heads of government cannot decide on the direction of the world’s largest economy, what are the rest of us supposed to think?
Juxtapose this with the conversation currently going on in Europe about the collectivisation of euro-zone governments’ debt and the potential creation of common euro government bonds. It sounds like an egalitarian and Utopian idea, with all countries pitching in together to solve their problems, but the issue is that some countries will undoubtedly be called upon to pitch in more than others. This unfortunately has the Germans running for cover as they would inevitably be called on to provide much of the support in case of any defaults.
Without a doubt things in the medium term are going to be rather shaky and unpredictable. The world in front of our eyes is becoming a very different place in which to work, live and trade. The United States in the past felt able to take the moral high ground as the world’s policeman, lecturing that human rights abuses in foreign countries such as China should not be tolerated. How long will they be able to carry on doing this with China now holding between 8 per cent and 10 per cent of the $14 trillion of American debt? And don’t forget that there are still orange jumpsuits at Guantanamo Bay.
The uncertainties of global economics have led to a rush on precious metals as people buy gold. The Swiss franc has also become very popular, with Switzerland hailed as a safe haven from the debt crisis. In fact, the Swiss franc has risen 18 per cent against the euro in recent months.
Focusing on events in the UK, things have been no more predictable here as we have been shaken by events as surprising as the shopping riots and as absurd as the government’s reining in of defence expenditure, whilst massively overspending on the air war in Libya. Closer to our own area of business, we are told that the brokers’ share of the domestic market has fallen to a mere 50 per cent, and we listen to the ongoing debate on the muddled RDR rules. Add to all this the Treasury’s approach to the break up of our own domestic banks’ operations into individual companies so that one area of activity cannot bring about the downfall of the whole institution. It appears that this may well be modified into a firewall system as the banks complain that they are trying aggressively to rebuild balance sheets to fight off any contagion that they may get from loans and investments in weaker economies.
Then there is Northern Rock. We were promised that the Board of Northern Rock would show the nation a profit, but it has still not managed to do this. Unless the government puts its hand in its pocket to cover the losses it seems that Northern Rock might be in state ownership for a while longer.
So how do all these global and national shenanigans affect us as a community of brokers and are there any glimmers of hope and sanity out there?
On a brighter and more optimistic note, a few lenders are re-entering the domestic market offering higher loan to values. Bridging lenders are reporting an upturn in business. Some UK commercial lenders, of which Lloyds TSB is perhaps the most noteworthy, seem to be making headway in terms of new lending figures.
In a recent article I exhorted us as a community to do more about promoting ourselves to clients, lenders and competitors alike. It seems that the baton has been admirably picked up by the NACFB who have decided to run a page in their magazine on the charitable works that members currently undertake outside their normal working activities.
But there is much more to be done. We can lobby our representative bodies, AMI, the AOBP and the NACFB about raising awareness of the contribution that we make as brokers and promoting our businesses through awards categories or ceremonies.
I was talking recently with a marketing professional who expressed the opinion that the broking community is very poor at bigging itself up and is perceived from outside as almost a cottage industry. I suppose he was bound to say that as he wanted to promote his services!
Remember, don’t be a couch potato and don’t think that it’s someone else’s duty to lobby the trade bodies and trade press to get industry-wide recognised awards that will tell the public about what we can do to help them through the uncertain times.
In a recent survey, a large proportion of business people were unsure about where to seek external advice after that of their bank or accountants. This is a statistic we must improve upon.
Let us tell them who we are and what we can do for them. To rephrase a World War II slogan with a bit of hip hop, “Keep calm and carry on bigging yourself up!”