The New Boom: the recession they can’t wait to have

I’ve decided to start accentuating the positive and eliminating the negative from my analysis and opinion.

Forget liquidity, insolvency is the way the go now!

Let the bad times roll: the recession they can’t wait to have

IT WAS a night of largesse in the liquidation industry: the Insolvency Practitioners Association of Australia’s state conference, held in the largest room of the largest party venue in Sydney.
Almost 300 liquidators sat under the six chandeliers hanging over the zebra-print carpet of the Ivy Room on George Street.
As the champagne flowed, they could not help but smile: business was good – and expected to get better.
“In a downturn it’s relatively easy for us to look successful,” the association’s deputy president, Mark Robinson, said.
Figures for the appointment of external administrators were at a year-long high of 867 last September, when the insolvency practitioners held their dinner. There were 847 more in October and 1011 in November – up by more than a third since 2007.
A few streets up from the Ivy, on the 41st floor of the MLC Centre, Warwick Brazier started work as a senior analyst for the financial advisory firm PPB. He is part of a growing trend in insolvency – a finance worker who felt the winds of change and moved from his auditing job at PricewaterhouseCoopers to work in the booming field of corporate recovery.
Three months later his diary is at capacity and has been that way since he started.
“You could see it coming,” he said of his change in industries. “I wanted to work with a company that deals with corporate recovery – we try not to call it insolvency. I’m dealing with people, not just numbers. It gives such a different level of understanding about what’s happened.”
Insolvency is one of the few industries still hiring. Staff numbers at PPB have grown by 15 per cent in the past year.
Many are joining from the finance sector – investment bankers made redundant by the market collapse. But there are others from areas like property development, with the recovery industry gearing up to take over half-finished buildings or struggling investment funds.
“A lot of the talent in our industry has gone across to investment banking over the course of the boom we have had in the past 10 to 12 years,” Mr Robinson said. “If the opportunities are drying up in investment banking – as they are – they’re well placed to come back to our industry.”
The other aspects of receivership are booming, too: insolvency law is a growing business, and accountants are still in demand.

Solvency was always going to be a major, major problem, injecting more liquidity into the system is a fix that often fails.  We’d do well to keep the same lesson in the back of our minds, in my opinion.

It’s something of a perverse irony, don’t you think?

Over to you

JMc

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10 Responses

  1. John

    This reminds of the line in Grosse Point Blank where Martin meets his ex-girlfriends father. The father asks what Martin does, and he says “contract killer” and the father responds with: “good for you, growth industry”.

  2. Joni

    One day they’re selling the line that they can make you rich the next day they can’t wait tear your business down. These people really have all bases covered.

    What’s scary is they probably have the same level of motivation and passion on the ‘down side’ as they did on the so-called ‘upside’.

    Lol

    “You could see it coming,” he said of his change in industries. “I wanted to work with a company that deals with corporate recovery – we try not to call it insolvency. I’m dealing with people, not just numbers. It gives such a different level of understanding about what’s happened.”

  3. How can you tell when the economy is shrinking? supply exceeds demand in a large measure.

    Plunging prices ring recovery alarm bells
    http://www.smh.com.au/news/national/plunging-prices-ring-recovery-alarm-bells/2009/01/19/1232213541094.html
    “FALLING prices have sparked fresh concern about deflation – a period of prolonged consumer price falls that could destabilise the economy – as separate figures show business borrowers are continuing to tighten their belts.

    After dogging the economy for most of last year, the inflation threat disappeared in the final three months of last year, according to a monthly survey of consumer prices compiled by TD Securities and the Melbourne Institute.”

  4. This is what concerns me most of all about the crisis

    Financial crisis ‘bad for health’
    http://www.theaustralian.news.com.au/story/0,25197,24936461-12377,00.html
    Article from: Agence France-Presse

    THE World Health Organisation has warned that the global financial crisis may spark a rise in mental illness and health problems as people turn to alcohol, tobacco and drugs to get through the downturn.

    “This has happened in the past,” said the UN agency’s Director-General Margaret Chan at the launch of a conference on the financial crisis’ effects on health today.

    “In times of economic crisis, people tend to forego private care and make more use of publicly financed services,” she said, adding that many country’s public health systems are already “overstretched and underfunded”.

    Ms Chan also warned that periods of economic instability “increases the risk that people will neglect health care, with prevention falling by the wayside”.

    Richard Newfarmer, the World Bank’s special representative to the UN and World Trade Organisation, said nearly 60 million people will be gripped by poverty if economic growth in developing countries halves during 2009.

  5. Sorry, but couldn’t resist this

    <a href="http://au.youtube.com/watch?v=w09-cQfp60Q"youtube howards interest rates

    As they are saying, if you have a job, there is no recession (hang on, there IS NO recession). Interest rates are approaching record lows (whatever that means)

    It is getting pretty pathetic watching commentators blur the line about what is a recession. Things are definitely not going out there, but that does not mean it is a recession.

    I get at least 10 different jobs in my inbox every day, so things can’t be going THAT bad.

    One thing I have noticed. though, is the rise in contract work, coupled with a drop in hourly rates for that work.

    But we have had a huge influx of people in my vocation, due mainly to merger issues of major companies (eds and hp in this case), not necessarily GFC related. But this is impacting it big time.

    So, yea, things are bad, but no where near as bad as what is being made out.

    Media loves to dramatise.

  6. Tom R

    In the world of ‘I’ and my surroundings things are alright as well. Remember, however, the world doesn’t revolve around us two.

    Also, the pain is just beginning for many.

  7. God, that’s a dopey looking mug – shot – but I love it.

  8. Is this the recession that we had to have?

  9. Alastai

    What bloody recession? 🙂

  10. “…they probably have the same level of motivation and passion on the ‘down side’ as they did on the so-called ‘upside’.

    johnmcphilbin, on January 20th, 2009 at 8:11 am

    I’d be rather interested to know, since you seem to enjoy criticizing or being sarcastic about anyone in the financial services industry whether you actually work ?

    You said yourself that you are an ex business analyst. Now that is an extremely broad job description since I’ve heard accounts clerks describe themselves as such.

    What sort of degree(s) do you have that entitles you to judge each day’s articles and which ones are appropriate to cut and paste ? What do you base your judgement upon ?

    I ask this because your recent comments ( care of TD Securities’ economist and SMH) regarding deflation are rather naïve as the AUD has devalued significantly and consequently will prevent deflation.

    However all I have is a Masters Degree in Economics plus an LLB so I’m sure you are much better qualified than I to comment. So I’d be most interested in your argument as to why the AUD devaluation will not prevent deflation. You do understand the linkage I trust ?

    I do not claim to have the answers or accurate forecasts however I do have the skills to enable me to analyse each differing opinion without having to resort to the opinion of the “second finance minister” of some nation which I noted you quoted last week. Perhaps because he fed your appetite for negative news.

    On another thread you dismissed Nature 5 with
    “Perhaps the difference between you and I is, I actual review facts and work off a series of economic models….”

    Do you really as I see no evidence of original thought or the use of models in your postings. In fact all I see are great hunks of the Sydney Morning Herald. This is being reflected in the low number of comments for each of your posts.

    I would suggest that you might perhaps like to cast a more critical eye over all point of view and not just anything positive.

    Otherwise you might be accused of being a “bully”

    And we would not want that would we John ?

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