Comments on: The Impending Crisis pt.2 http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/ How to start a clothing line or run the one you have, better. Fri, 19 Mar 2010 22:23:51 -0700 http://wordpress.org/?v=2.8.4 hourly 1 By: Kathleen http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/comment-page-1/#comment-9501 Kathleen Tue, 26 Feb 2008 15:58:05 +0000 http://www.fashion-incubator.com/2008/02/the_impending_crisis_pt2/#comment-9501 Apologies for the cross posting of my comment but I wanted this reference here where it also belongs (and in part, to make it easier for me to find later). There's a very interesting post called <a href="http://productglobal.typepad.com/gss/2008/02/is-china-beginn.html" rel="nofollow">China's First Steps Away From Low-Cost Manufacturing and What it Means For Your Company</a>. Kindred with Birnbaum, he outlines internal reasons why China is going to become more expensive. This is a good blog to keep on your radar if you're interested in outsourcing. Apologies for the cross posting of my comment but I wanted this reference here where it also belongs (and in part, to make it easier for me to find later).

There’s a very interesting post called China’s First Steps Away From Low-Cost Manufacturing and What it Means For Your Company. Kindred with Birnbaum, he outlines internal reasons why China is going to become more expensive. This is a good blog to keep on your radar if you’re interested in outsourcing.

]]> By: Jasmin http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/comment-page-1/#comment-9500 Jasmin Thu, 07 Feb 2008 21:56:36 +0000 http://www.fashion-incubator.com/2008/02/the_impending_crisis_pt2/#comment-9500 And I forgot to say ... if the primary customers for the outsourced mills and manufacturers are the companies catering to the new middle classes in Asia ... and say they prefer to be paid in Euros ... how will this impact American DEs? Local capacity may become a necessity :-). New Zealand has lost a lot of value add manufacturing capacity due to offshoring as well, and in the long run (and with travel miles/carbon footprint questions) this may not be sustainable. If you can't cook yourself, you are dependent on a restaurant being open, and willing to serve you, it isn't very pleasant for you if they decide you aren't a valued customer anymore and have to come at off peak hours, or take the leftovers if you want anything ..... and I think this is the risk in losing inshore capacity, there is no longer any competitive lever, and people/industries are vulnerable. Clothing can be ugly and badly made now, because of the same thing at an individual level - most people 'outsource' their clothing to retailers, and don't have 'at-home' design and manufacturing capacity, hence, they don't have a choice if they need an item of clothing, they have to take what retailers provide in their price bracket. If all retailers provide a similar supply ... well, that's the way it is :-) And I forgot to say … if the primary customers for the outsourced mills and manufacturers are the companies catering to the new middle classes in Asia … and say they prefer to be paid in Euros … how will this impact American DEs? Local capacity may become a necessity :-) . New Zealand has lost a lot of value add manufacturing capacity due to offshoring as well, and in the long run (and with travel miles/carbon footprint questions) this may not be sustainable. If you can’t cook yourself, you are dependent on a restaurant being open, and willing to serve you, it isn’t very pleasant for you if they decide you aren’t a valued customer anymore and have to come at off peak hours, or take the leftovers if you want anything ….. and I think this is the risk in losing inshore capacity, there is no longer any competitive lever, and people/industries are vulnerable.
Clothing can be ugly and badly made now, because of the same thing at an individual level – most people ‘outsource’ their clothing to retailers, and don’t have ‘at-home’ design and manufacturing capacity, hence, they don’t have a choice if they need an item of clothing, they have to take what retailers provide in their price bracket. If all retailers provide a similar supply … well, that’s the way it is :-)

]]> By: Jasmin http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/comment-page-1/#comment-9499 Jasmin Thu, 07 Feb 2008 21:36:26 +0000 http://www.fashion-incubator.com/2008/02/the_impending_crisis_pt2/#comment-9499 When retailers in manhattan are now taking Euros ... well, you know the value of the dollar and its place in the world have changed. The sub-prime market issues will, I believe, come out further over the next 12-18 months, and losses so far are probably about half of what will eventually be lost. In New Zealand and Australia the losses will (I think) keep our housing markets flat or falling somewhat for the next few years (already underway), and credit criteria will tighten, interest rates will increase... but we probably won't feel the same level of effects as the USA, although 'mortgage stress' is starting to set in. I guess it depends to some extent how Asia and especially China feel, and how they manage the enormous amount of US Treasury bonds they hold. I hope you can work it out. The infrastructure fixes required in the US (highways, power grid etc) are going to become more critical too over the next decade. I think the APAC region and Europe will potentially become the new global leaders through this period, particularly Asian regions. When China and India progress further towards becoming significant consumer market(s), will they be buying US goods and services? Maybe, if the providers in the US can understand different cultural norms and modes of interaction, respect them, and offer value from that perspective. It is sure going to be interesting .... And yes - fashion at the moment is ugly! So was a lot of the seventies and eighties, lets be honest, and we had recessions then ... any alignment there? When retailers in manhattan are now taking Euros … well, you know the value of the dollar and its place in the world have changed.
The sub-prime market issues will, I believe, come out further over the next 12-18 months, and losses so far are probably about half of what will eventually be lost. In New Zealand and Australia the losses will (I think) keep our housing markets flat or falling somewhat for the next few years (already underway), and credit criteria will tighten, interest rates will increase… but we probably won’t feel the same level of effects as the USA, although ‘mortgage stress’ is starting to set in.
I guess it depends to some extent how Asia and especially China feel, and how they manage the enormous amount of US Treasury bonds they hold. I hope you can work it out. The infrastructure fixes required in the US (highways, power grid etc) are going to become more critical too over the next decade. I think the APAC region and Europe will potentially become the new global leaders through this period, particularly Asian regions. When China and India progress further towards becoming significant consumer market(s), will they be buying US goods and services? Maybe, if the providers in the US can understand different cultural norms and modes of interaction, respect them, and offer value from that perspective. It is sure going to be interesting ….
And yes – fashion at the moment is ugly! So was a lot of the seventies and eighties, lets be honest, and we had recessions then … any alignment there?

]]> By: Tiffany http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/comment-page-1/#comment-9498 Tiffany Thu, 07 Feb 2008 21:02:04 +0000 http://www.fashion-incubator.com/2008/02/the_impending_crisis_pt2/#comment-9498 Posted by: Kathleen at February 6, 2008 5:14 PM I think the money from foreign investors is definitely a short term solution. I think most American’s would be sickened if they knew how much of our country is already owned by foreign investors. We are in bed with so many different countries that it’s to their disadvantage to see us do poorly. I just don’t think we are headed into a huge recession in the near future. Some major catastrophic event would have to occur for this to happen. Truly, the American economy is dependent on us changing our core beliefs. We are consumers, and we like to consume by any means necessary. I agree that the average American carries way too much debt with very little savings. We really need redefine what a necessity is. In a third world country, being poor means you might not eat or have a home. In America it usually means you can’t afford cable TV. As a country we definitely need tighter lending policies. Poor lending policies are what got the housing market into the mess it’s in. When I bought my house I was being offered mortgages that were 4 times the amount that I could afford. It was up to me to tell the lenders what I could reasonably afford. I feel sorry for the people who took those loans. For the first time in my life this election means so much to me. I am disturbed by the reasons some people are voting for their chosen candidate. I think people really need to analyze some of the policies these candidates want to enact. They are promising us the world with tax cutes. That’s just not possible. And by the way I like skinny jeans. They tuck into my boots easier. Posted by: Kathleen at February 6, 2008 5:14 PM
I think the money from foreign investors is definitely a short term solution. I think most American’s would be sickened if they knew how much of our country is already owned by foreign investors. We are in bed with so many different countries that it’s to their disadvantage to see us do poorly. I just don’t think we are headed into a huge recession in the near future. Some major catastrophic event would have to occur for this to happen. Truly, the American economy is dependent on us changing our core beliefs. We are consumers, and we like to consume by any means necessary. I agree that the average American carries way too much debt with very little savings. We really need redefine what a necessity is. In a third world country, being poor means you might not eat or have a home. In America it usually means you can’t afford cable TV. As a country we definitely need tighter lending policies. Poor lending policies are what got the housing market into the mess it’s in. When I bought my house I was being offered mortgages that were 4 times the amount that I could afford. It was up to me to tell the lenders what I could reasonably afford. I feel sorry for the people who took those loans.

For the first time in my life this election means so much to me. I am disturbed by the reasons some people are voting for their chosen candidate. I think people really need to analyze some of the policies these candidates want to enact. They are promising us the world with tax cutes. That’s just not possible.

And by the way I like skinny jeans. They tuck into my boots easier.

]]> By: Lisa Bloodgood in Portland http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/comment-page-1/#comment-9497 Lisa Bloodgood in Portland Thu, 07 Feb 2008 19:44:03 +0000 http://www.fashion-incubator.com/2008/02/the_impending_crisis_pt2/#comment-9497 I heard or read somewhere that some countries who don't like the US have millions, perhaps billions, of dollars of our currency stockpiled and could just release it to totally screw up our economy. Which would suck, since its value isn't as high anymore. I agree, skinny jeans and those tops--t. curtains--only look good on, oh, wait, nobody! I'm a size 8 and will be 36 next week. The way I shop is I buy all my pants and most of my blouses in the misses section and my long- and short-sleeved t shirts and all my sweaters in the juniors section. This is because I'm too curvy below the waist to fit into juniors pants and I'm small enough above the waist to fit into junior t shirts and sweaters. Besides, all the sweaters in the misses section are either too square, too old for me, or to short in the torso, thanks to my long torso. So I buy junior sweaters a size bigger. I have found classic ones as well as the trendy ones. I tend to buy classic and basic more than trendy but I only buy trendy if I actually like it. And I go to the thrift stores a lot. I heard or read somewhere that some countries who don’t like the US have millions, perhaps billions, of dollars of our currency stockpiled and could just release it to totally screw up our economy. Which would suck, since its value isn’t as high anymore.

I agree, skinny jeans and those tops–t. curtains–only look good on, oh, wait, nobody! I’m a size 8 and will be 36 next week. The way I shop is I buy all my pants and most of my blouses in the misses section and my long- and short-sleeved t shirts and all my sweaters in the juniors section. This is because I’m too curvy below the waist to fit into juniors pants and I’m small enough above the waist to fit into junior t shirts and sweaters. Besides, all the sweaters in the misses section are either too square, too old for me, or to short in the torso, thanks to my long torso. So I buy junior sweaters a size bigger. I have found classic ones as well as the trendy ones. I tend to buy classic and basic more than trendy but I only buy trendy if I actually like it. And I go to the thrift stores a lot.

]]> By: Eric H http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/comment-page-1/#comment-9496 Eric H Thu, 07 Feb 2008 18:43:54 +0000 http://www.fashion-incubator.com/2008/02/the_impending_crisis_pt2/#comment-9496 Nobody will know we are in an "official" recession until we are at least a few months into one. The NBER is the go-to arbitrator of when recessions start and stop; their definition is something like "several months of decline" (negative growth), but in practice I think this has turned out to be 2 or more consecutive quarters. We could very well be in the middle of one right now, but won't know it until the summer. At present, it seems very likely. Manufacturing output, home sales, employment, retail sales, stocks, and consumer sentiment are all pointing down. I try to keep up with James Hamilton's excellent econbrowser blog; predicting recessions is one of his research areas. He seems to be saying that a recession is probable in 2008. <a href="http://www.econbrowser.com/archives/2008/02/predicting_rece.html" rel="nofollow">http://www.econbrowser.com/archives/2008/02/predicting_rece.html</a> But we have to keep in mind what Paul Samuelson said: "Economists have correctly predicted nine of the last five recessions." In Paul Krugman's case, this has been upped to nine of the last zero recessions. Nobody will know we are in an “official” recession until we are at least a few months into one. The NBER is the go-to arbitrator of when recessions start and stop; their definition is something like “several months of decline” (negative growth), but in practice I think this has turned out to be 2 or more consecutive quarters. We could very well be in the middle of one right now, but won’t know it until the summer. At present, it seems very likely. Manufacturing output, home sales, employment, retail sales, stocks, and consumer sentiment are all pointing down.

I try to keep up with James Hamilton’s excellent econbrowser blog; predicting recessions is one of his research areas. He seems to be saying that a recession is probable in 2008.

http://www.econbrowser.com/archives/2008/02/predicting_rece.html

But we have to keep in mind what Paul Samuelson said: “Economists have correctly predicted nine of the last five recessions.” In Paul Krugman’s case, this has been upped to nine of the last zero recessions.

]]> By: sfriedberg http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/comment-page-1/#comment-9495 sfriedberg Thu, 07 Feb 2008 05:39:10 +0000 http://www.fashion-incubator.com/2008/02/the_impending_crisis_pt2/#comment-9495 I think the US economy has some rather horrifying issues. The sub-prime mortgage mess is a symptom, not a cause. US domestic savings rates have gone negative (again). We are literally drawing down on savings for household spending. In contrast, other 1st world countries typically have savings rates of 8-12% (this is what gets put in the bank or in bonds after all taxes, expenditures, tithes, etc.) Both the federal government and the typical household are living desperately beyond their means. Corporations and states, in marked contrast, have more effective financial controls on them. Over the last 20 to 30 years, foreign commercial investors have effectively propped up the US federal government by buying US treasury bonds heavily. As national and household US finances have deteriorated (in particular, as our debt levels become so high that annual tax revenues and personal incomes can not service even the interest on our debts), US treasury bonds have become less attractive. I find it very significant that it was NOT commercial investors but sovereign wealth funds that rushed in to shore things up most recently. Frankly, I don't expect that to happen again without some serious geopolitical repercussions. I expect the US dollar to lose its unique status as the global reserve currency in my lifetime. It will probably remain a significant currency, but it will no longer have the preeminent place it has enjoyed for decades. This is not the forum for a full-blown economics rant, but aspects of our economy are perilously close to meltdown, and with today's financial wizardry a collapse in one area is likely to spread. Not a new problem, we have been digging ourselves a deeper and deeper hole for decades. I think the US economy has some rather horrifying issues. The sub-prime mortgage mess is a symptom, not a cause. US domestic savings rates have gone negative (again). We are literally drawing down on savings for household spending. In contrast, other 1st world countries typically have savings rates of 8-12% (this is what gets put in the bank or in bonds after all taxes, expenditures, tithes, etc.)

Both the federal government and the typical household are living desperately beyond their means. Corporations and states, in marked contrast, have more effective financial controls on them.

Over the last 20 to 30 years, foreign commercial investors have effectively propped up the US federal government by buying US treasury bonds heavily. As national and household US finances have deteriorated (in particular, as our debt levels become so high that annual tax revenues and personal incomes can not service even the interest on our debts), US treasury bonds have become less attractive. I find it very significant that it was NOT commercial investors but sovereign wealth funds that rushed in to shore things up most recently. Frankly, I don’t expect that to happen again without some serious geopolitical repercussions.

I expect the US dollar to lose its unique status as the global reserve currency in my lifetime. It will probably remain a significant currency, but it will no longer have the preeminent place it has enjoyed for decades.

This is not the forum for a full-blown economics rant, but aspects of our economy are perilously close to meltdown, and with today’s financial wizardry a collapse in one area is likely to spread. Not a new problem, we have been digging ourselves a deeper and deeper hole for decades.

]]> By: Harmony http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/comment-page-1/#comment-9494 Harmony Thu, 07 Feb 2008 01:48:24 +0000 http://www.fashion-incubator.com/2008/02/the_impending_crisis_pt2/#comment-9494 Let me know when you open that US mill... count me in! My goal for 2008 is to launch a line of 100% made in the USA organic printed fabrics. I really do think we are at the very beginning stages of a major consumer shift. The better living through more stuff mantra of the last 20 years hasn't delivered and as money (and waistbands) get tight and more information about the external costs we are all bearing for cheap goods comes out I think we will see a significant shift away from quantity towards quality both in terms of timeless (well, more classic) styles and sustainable production practices. I think fast fashion will mark an era whose time is slowly coming to an end. I can imagine people no longer bragging about the "deal" they got and instead bragging about how sustainable/local/organic/the story behind their clothes. Perhaps I am delusional... but that's where I think we are heading.... slowly. Let me know when you open that US mill… count me in! My goal for 2008 is to launch a line of 100% made in the USA organic printed fabrics.

I really do think we are at the very beginning stages of a major consumer shift. The better living through more stuff mantra of the last 20 years hasn’t delivered and as money (and waistbands) get tight and more information about the external costs we are all bearing for cheap goods comes out I think we will see a significant shift away from quantity towards quality both in terms of timeless (well, more classic) styles and sustainable production practices. I think fast fashion will mark an era whose time is slowly coming to an end.

I can imagine people no longer bragging about the “deal” they got and instead bragging about how sustainable/local/organic/the story behind their clothes. Perhaps I am delusional… but that’s where I think we are heading…. slowly.

]]> By: Kathleen http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/comment-page-1/#comment-9493 Kathleen Thu, 07 Feb 2008 00:14:15 +0000 http://www.fashion-incubator.com/2008/02/the_impending_crisis_pt2/#comment-9493 <i>I also like Kathleen's point that one's style of dress does not change during a recession (e.g. classics v. fashion-forward). Spot on! It's the frequency with which one buys that changes, not the what. If a recession is imminent, consumers will simply buy less of what they already buy (i.e. conservation).</i> I didn't say this, maybe it wasn't clear. I *do* think styles change in a recession and according to political clime (we can blame 80's fashion on Reagan). I suspect people buy more conservatively in styling *and* quantity. If they know they can't buy as much stuff as before, they know something needs to last longer. As such, their buys can't be stylistically risky or as fashion forward because their disposable income is in fact, less disposable -like their clothes. <i>Foriegn investors will pump money into our economy to prevent a major recession. When the US market goes down so does the global market.</i> Tiffany, I admire your thinking and you don't post nearly enough for everyone to see it but I don't agree. Not anymore. Statistics don't continue to bear this out. The global market is in trouble too (the point of much of Birnbaum and it's not just him). Besides, (and I know you're not saying this) relying on foreign investors to bail us out is still relinquishing our base, they own us. With as much debt the average consumer is accumulating, what will happen when we're not such a good credit risk anymore? I think it's a problem for policy makers to continue to rely on this strategy as a solution to these problems. We need to assume responsibility and be proactive rather than waiting for someone else to bail us out -which is only in the short term, the piper must be paid. I also like Kathleen’s point that one’s style of dress does not change during a recession (e.g. classics v. fashion-forward). Spot on! It’s the frequency with which one buys that changes, not the what. If a recession is imminent, consumers will simply buy less of what they already buy (i.e. conservation).

I didn’t say this, maybe it wasn’t clear. I *do* think styles change in a recession and according to political clime (we can blame 80’s fashion on Reagan). I suspect people buy more conservatively in styling *and* quantity. If they know they can’t buy as much stuff as before, they know something needs to last longer. As such, their buys can’t be stylistically risky or as fashion forward because their disposable income is in fact, less disposable -like their clothes.

Foriegn investors will pump money into our economy to prevent a major recession. When the US market goes down so does the global market.

Tiffany, I admire your thinking and you don’t post nearly enough for everyone to see it but I don’t agree. Not anymore. Statistics don’t continue to bear this out. The global market is in trouble too (the point of much of Birnbaum and it’s not just him). Besides, (and I know you’re not saying this) relying on foreign investors to bail us out is still relinquishing our base, they own us. With as much debt the average consumer is accumulating, what will happen when we’re not such a good credit risk anymore? I think it’s a problem for policy makers to continue to rely on this strategy as a solution to these problems. We need to assume responsibility and be proactive rather than waiting for someone else to bail us out -which is only in the short term, the piper must be paid.

]]> By: Tiffany http://www.fashion-incubator.com/archive/the_impending_crisis_pt2/comment-page-1/#comment-9492 Tiffany Wed, 06 Feb 2008 21:55:32 +0000 http://www.fashion-incubator.com/2008/02/the_impending_crisis_pt2/#comment-9492 I disagree with a lot of what he wrote. Technically, we are not in a recession. GDP is still growing. We are in a downturn. I think if we enter a recession it will be mild. Foriegn investors will pump money into our economy to prevent a major recession. When the US market goes down so does the global market. I disagree with a lot of what he wrote. Technically, we are not in a recession. GDP is still growing. We are in a downturn. I think if we enter a recession it will be mild. Foriegn investors will pump money into our economy to prevent a major recession. When the US market goes down so does the global market.

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