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Altogether now

• Robert Peston
• 24 Dec 07, 08:46 AM

On the first day of Xmas, the chief executive of a leading store chain told me to ignore the pictures of crowds doing their last minute shopping – retailers have slashed their prices in early sales and promotions, so profit margins are being squeezed till the pips squeak.

On the second day of Xmas, the same chief executive said that trading conditions were worst in furniture and furnishings, followed by men’s clothes and then ladieswear. Only the food retailers are doing okay, he said – because they are massively discounting petrol on their forecourts and because many of us are eschewing restaurants, to save a few bob, and eating more at home.

On the third day of Xmas, retailers started to praise the farsightedness of investment analysts making the gloomiest forecasts – in the hope the market would cotton on, and they wouldn’t have to issue formal profit warnings.

On the fourth day of Xmas, the head of a restaurant chain complained that turnover was well down.

On the fifth day of Xmas, an investment analyst – Mark Brumby of Blue Oar Securities – pointed me towards statistics showing that the collapse in beer sales at pubs is getting worse. He said national figures showed that in November there was a 9.7 per cent fall in those sales (premium ale was down 6.9 per cent and stout dropped a staggering 10.6 per cent). The smoking ban surely can’t account for the entirety of that reduction.

On the sixth day of Xmas, the owner of several hundred pubs dotted around the country said that turnover in his pubs in the early weeks of December was even worse.

On the seventh day of Xmas, a private equity tycoon was rung up by advisers to a company having difficulty refinancing itself, asking him if he wanted to buy the company at a knockdown price.

On the eight day of Xmas, that private equity tycoon said no – and told me he thought the proffered company would be in administration under insolvency procedures before too long.

On the ninth day of Xmas, the head of a large bank told me that although evasive action by global central banks had eased the tightness of money markets, he thought all prudent banks would continue to hoard cash and charge more for loans – because of the risk that falls in commercial and residential property prices would lead to a sharp increase in loan losses.

On the tenth day of Xmas a distressed debt specialist reminded me that the debt of some well known companies, notably retailers and estate agents, is trading at less than a hundred pence in the pound – and therefore the equity in those business should in theory be worth nothing.

On the eleventh day of Xmas, the world’s canniest investment banks, hedge funds and private equity firms were raising many billions of dollars to buy distressed debt and assets at knockdown prices. They scent huge profits from the pricking of a bubble, which was inflated in the first place by their frenetic creation and trading of genetically re-engineered debt. They won on the way up, and they hope to win on the way down.

On the twelfth day of Xmas, I apologized to all readers of Peston’s Picks for being in a bah-humbug strop. But I feel compelled to sing as I find.

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