5 Nov 2012

Why the Government is the only client worth having now

- Advertising spends are a good indication of business confidence. WPP, the world's largest advertising network by far, has cut growth forecasts twice since August over fears that clients will be slashing budgets into 2013.

- Part-time are on the rise in India according to a World Development Report 2013 on Jobs. Mid-size businesses are not growing and are reducing overheads by hiring temps.

- Morgan Stanley is forecasting a slow-down in global demand for IT services. They are predicting "decelerating revenues in both consulting and outsourcing through Q2 2013 reflecting the weak discretionary spend environment".

Everywhere one looks there's monetary easing, fiscal stimuli, bank recapitalisations, international trade deregulations, flourishing stock markets and even debt bailouts for propping up corporate, public sector and sovereign entities who made bad financial decisions... the professional world NEVER had it this good!

At least theoretically, world markets should be awash in liquidity and easy credit - and the global economy should be booming right now.

Instead, we have serious financial crises looming across the world. Any little one 'black swan' event may tip-over the global financial dominoes.

Businesses in the traditional economic powerhouses - the US, the UK, the EU - and even the BRICS are gasping for air. Unemployment is a serious social issue because businesses are not investing in new projects. Professional incomes are stagnating because businesses are not competing to hire the best qualified people.

Spending is decelerating in every sector - but in government! So governments are now the 'spenders' of last resort.

The real economy - of market supply and demand - is over... And the only thing left standing is crony capitalism. Sometimes, it is disguised as Public-Private Partnership, which truth-be-told is just a euphemism for "privatised profits and socialised risks".

Look around you... How many mid-size businesses do you now that are NOT directly or indirectly working for the government?

I'll say this again... Businesses that do not have a client-base that's skewed heavily in favour of government contracts or sub-contracts could be in serious trouble very soon.

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