It all makes perfect cents — PERSONAL FINANCE

WORDS: JILL KERBY

“I think 2009 is the year that we all rebuild our balance sheets,” says a friend optimistically... ‘He says he’s quite hopeful that the worst of the credit crisis is over (he was able to renegotiate a loan back recently) and that his business — he’s a craft butcher with strong cash flow — is as recession-proof as it will ever be.

He hasn’t had to let any of his staff go — yet, I think pessimistically to myself — but they’ve been with him for years and would accept pay cuts if necessary. He doesn’t regret expanding his premises a couple of years ago.

And while he still stocks a fantastic selection of fine cuts of meat, Sheridan cheeses and the trays of stuffed olives and artichokes and semi-prepared meals that we all agree taste way better than anything Marks and Spencer’s can do — he also now sells great lumpy vac pacs of inexpensive cuts of beef, lamb and pork that many of us haven’t got a clue how to cook.
“I’ve got that sorted too,” he says enthusiastically. “I’m adding interesting marinades to help tenderise the meat, and passing on some hints on how to cook it.” I suggest he collect loads of great recipes for soups and stews, braised dishes and hot-pots, print them up and hand them out to customers… maybe with a free stock cube and a little bunch of herbs.

He’s always been open to suggestions — hence the lovely (but expensive) range of fresh herbs and spices, veg, marinades and pasta, artisan yoghurts and ice-cream that he also stocks. But these items are now luxuries; cookbooks and baking pans that have been tucked away in sideboard cupboards and at the bottom of kitchen drawers for years are being dug out again as home cooking is rediscovered.

The great Irish butcher — the ones who as apprentices get A+ scores in their ‘how to flirt with your women customer’ classes — will always get my custom over the soulless drones that work behind the meat counters in the major grocery chains. But I also admire my butcher’s determination to do whatever it takes to survive by cutting his costs to the bone (no pun intended), by extending his opening hours, rethinking the product he sells so that it’s affordable enough to stop his customers from shopping exclusively in the discount grocery chains and by keeping up the all-important delivery of friendly, efficient service.

A PERTINENT OBSERVATION

His balance sheet observation is a pertinent one for all of us. I don’t share my butcher’s optimism that the worst is over, however. My guess is that fearful consumers everywhere will drive price deflation further and it will devastate all but the most resilient industries and service providers in the coming months. Those that do hang on will then be hit by the second wave of destruction: the consequence of all the re-inflating of the global financial sector and all the other bail-outs that have taken place since last autumn.

Once the central banks and governments have brought interest rates to zero (i.e. ‘free’ money), have no more government bonds or debt to issue or exchange for the toxic sludge held by credit institutions, and have sent out the extra hundreds of billions of dollar (and equivalent currency) stimulus cheques to ordinary consumers to get us all spending again, the real end-game will probably emerge.

Read more about Personal Finance in the March 2009 issue of WMB, on newstands now.