Saturday, August 16, 2008

 

Global Macro Economics

Global Macro Economics has never felt particularly relevant to me before. I knew eventually it was but now it feels a bit more like being on the frontline.

Now a significant proportion of our income is earned abroad we have become aware of exchange rates coming into play. Whether this has been a period of getting progressively more expensive for people looking to take us to the U.S.A. or us becoming increasingly good value across mainland Europe.

With the prospect of producing a show with 112 tonnes of rice we have suddenly become rather transfixed by commodity prices and the escalating cost of rice.

Now, in the language of BBC financial journalists, ‘the credit crunch is starting to bite’. Our 112 tonnes of rice is costing us in the region of £90,000. We buy it in September then sell it back in October and get a healthy portion of that money back, but in the mean time we need to hand over significantly more money that we have at our disposal. This is where you would expect your bank to step in to help.

The HSBC have spent four weeks saying “we can’t see there will be a problem with that” and have now said “no”. I can’t see where the risk is. We buy a commodity which we own and don’t intend to destroy. We have a signed contract that it will be bought back. We have cash in the bank to cover the difference in buying and selling prices. We have two more years guaranteed income from Arts Council England, the rice is insured and we have three directors standing personal liability on the loan. How much more security do they want? The threat to “move our account elsewhere” isn’t a hollow one and hopefully it will help them see sense.

James


Comments:
Also, if rice goes up in price steadily whilst the show is on, you could even make an profit.
 
How about the Cooperative bank for their top ethical credentials?
K
 
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