Cautious Optimism Greets 2010 (Emphasis on the Caution) - January 11, 2010

I would like to wish everyone a very successful business year ahead!

It’s heartening we’re starting on a positive note as news reports are forecasting an optimistic economic outlook for 2010.It appears the economy has taken a positive turn and consumers also have more financial confidence for the coming year.

However the largest credit insurance companies in the world are only forecasting a break even year, which means that they are still expecting a lot of negative repercussions (insolvencies) from the 2009 recession. We were surprised to find out that several household names like Amish Furniture Outlet, Dacks Shoes, and even Syd Silver Formals here is Canada unfortunately went bankrupt last month.

Other news dealing with the last year’s recession, it was announced the Canadian banks selling the ABCP securities to you and me, which turned out to be almost worthless, had to only pay small fines for their part in the financial crisis. No executives lost their jobs, no civil litigation, and no fraud charges were laid while all of the U.S. banks had to repay ABCP or TARP back to the public. It certainly appears to have been a gift to bank executives and their shareholders this past holiday season.

As for retailers, they reported a slower than expected holiday season as consumers opted not to incur more debt and are now paying for necessities in cash. We haven’t seen the retail sector recover yet from the recession and from a business perspective, care should still be taken.

Headlines in this week’s Toronto Star, “Tepid gains in employment, markets likely as cautious consumers determine speed of recovery,” sums it up best. Five top Canadian economists took part on a panel discussion at the Economic Club of Canada's Economic Outlook 2010 and warned us that we will have to get used to slower growth. An aging population, higher debt levels and reduced consumer demand are among the factors that will determine how quickly the economy expands in coming years.

Consider protecting one of your companies biggest assets – your account receivables – by insuring (guaranteeing) them against bad debt. IT’S THE SMART THING TO DO!

Ron Renwick