Changing Consumer Buying Behaviour
It looks like many brands are going to struggle with pricing power in this next round. The NYtimes has an article about recession pricing. Consumers are changing their behaviour in response to increasing costs, "more pasta and less red meat, more video rentals and fewer movie tickets."
Reading the story, I don't feel sorry for $4 gallon milk, I get half that (2 liters) for $4 and I watched a neighbour put a whopping $130 in his gas tank yesterday, 90 liters, about 24 gallons. That's about $45 more here then it would be in the US.
Brands and corporate logos are considered extremely valuable to businesses but I'm willing to guess their value is plummeting -- goodwill write-offs coming? I grew up in a single parent household and there wasn't a lot of value put on brand names. It looks like that way of thinking is spreading.
Mish has another great post, on bank financing. They are paying in the 8-13% range, which means huge increases to costs. Citibank is paying more than 3% more to raise new equity and then they are still paying the dividend, really dumb.
Personally, I question whether people will actually get their principal back with these deals. I wouldn't touch them.
This credit mess has to be paid for from somewhere and I am glad to see people stepping up to the plate to do this.
On another point, I went for a walk today, doing my best to avoid bison dung, which is everywhere now that the snow has melted. I posted this picture in the fall of a couple that used to hang around town until three of herd ended up as dinner. The bison haven't been hanging around town since, but their dung is still everywhere... It was really cool to later that day see kids chasing them down the street...
But, one thing about my walk, I had no idea how many of the locals have out houses and the degree of substandard housing around here. It got to -58 here with the wind chill this winter. That's one cold seat I'd not like to be putting my butt on at all. Count your blessing everyone.
I wonder if my reading list will show up here...