{"id":22939,"date":"2009-02-24T00:01:00","date_gmt":"2009-02-24T00:01:00","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=396"},"modified":"2009-02-24T00:01:00","modified_gmt":"2009-02-24T00:01:00","slug":"darwin-credito-y-keynes","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/darwin-credito-y-keynes\/","title":{"rendered":"Darwin, Credit and Keynes"},"content":{"rendered":"
\"\"<\/a>Charles Darwin<\/a> He discovered, back in the years 1831\u201336, that the unusual beak of a species of bird he found on the Gal\u00e1pagos Islands was not a capricious whim of chance. It was the result of generations of adaptation to the environment, and only the fittest, most capable, best-adapted and most versatile survived. Under this theory, everything fell into place. The world as a whole operates according to the principle that only the fittest survive long enough to reproduce in their own image and likeness, thereby automatically generating evolution\u2014slowly but surely.<\/p>\n

The human world is no exception, although it is true that our brains have altered the concept of adaptability to the environment, and today technological processes have largely overcome physical limitations. Even so, natural selection and the way the world evolves today remain true to the concept that only those capable of evolving in the right direction have a future.<\/p>\n

That inexorable universal law has always made all the difference in the business world. Well-managed corporations survive and even swallow up their weaker competitors. Others simply die and disappear, even leaving their founders in a difficult financial situation that prevents or hinders future business ventures. In other words<\/span> a process that is perfectly comparable to nature\u2019s most efficient form of genetic selection<\/span>, where the least capable die out without any possibility of continuation<\/span>. Naturally, when the environment suddenly becomes hostile, the carnage is immense, and only a select few will overcome the challenge.<\/p>\n

\"\"<\/a>Today we find ourselves in one of those periods when the business world is facing a very hostile and relatively sudden situation: A sharp fall in sales and a lack of credit<\/span>. In this scenario, very few companies will survive if the situation does not improve in the medium term. A recession or depression is a process characterised by significant inertia, with few solutions capable of swiftly altering its course. But the worst part is that simply cutting costs or expenditure is not enough, because for most companies, eliminating debt overnight is simply not feasible. Thus, \u00abgood business deals<\/span>\u00bbThey are closing down because the inability to renew their loans is driving them into situations of irremediable insolvency. The question we must ask is: Can we consider \u00ab\"good business deals<\/span>\u00bbThose whose survival depends on external funding? Not in this New World.\u201d.<\/p>\n

\"\"<\/a>Many people are calling for the banks to resume providing sufficient credit so that those companies which were making a profit and appeared stable can stay afloat. It seems as though the banks are to blame for many companies closing down, with the resulting redundancies and social hardship. It may be unfair, but the reality is that the business environment has become very hostile. <\/span>The outcome is, and will continue to be, devastating, but as businesspeople, perhaps we should lament less and adapt more to the hostile environment in which we find ourselves. <\/span>Among other reasons, because it is highly likely that credit flows will never return to previous levels, and also because, even if they do recover to a moderate extent, this will lead to a very significant deterioration in the macroeconomic situation, which in turn will create a very hostile environment for the majority of businesses.<\/p>\n

\"\"<\/a>For all these reasons, the political and widely accepted call for the banking sector to increase the supply of credit is debatable, even if it may be justified. The bad-debt trap into which the banking sector (not just in Spain) has got itself, by lending recklessly in exchange for overvalued property and fragile creditworthiness, is set to be exacerbated by the effects of the economic downturn itself in the short term.<\/span> Today, the banking sector is lending sparingly, and it is doing so for two reasons: firstly, because the excesses of the past have caused alarm and the lesson learnt is palpable; but also because balance sheets are in freefall due to the disappearance of profits and, far worse still, because of their foreseeable technical failure, which will require public aid of all kinds. In practical terms, the banks simply cannot afford to lend at a faster rate, even if they wanted to. Their efforts are focused on their own survival, and they are facing a host of problems in the form of non-performing loans, an inability to manage property portfolios, a fall in operating profits, record-high provisions, and so on.<\/p>\n

For all these reasons, it seems that Darwin<\/a> will be more prevalent than ever in the mass business closures. In this new, bleak world, a \u00aba good deal<\/span>\u00bb\u2026 is incompatible with even moderate levels of debt, unless the shareholders themselves finance the company, as is happening in many cases.\". These owner-funded companies will be the ones to survive the hostile environment we face, alongside the privileged few who do not need to take on debt. The future belongs to them. Perhaps we should stop demonising the banking sector as if it were under an obligation to pump vast amounts of money (our money) into keeping giants with feet of clay afloat. <\/span><\/p>\n

\"\"<\/a>That model of business growth based on external financing has worked for decades, and growth has been sustained and spectacular, with much theorising on the subject. But it seems clear that it is now a thing of the past, despite our reluctance to believe it. The present and the future will belong to a privileged few who will have to grow and expand at a slower pace, with very moderate levels of leverage and much stronger balance sheets<\/span>. At least until we are able to envisage higher rates of growth that are not based on credit leverage \u2013 which, let us hope, will be more sustainable this time round. <\/span>Darwin<\/a> It will be ruthless towards all companies, including financial institutions, although it will give the latter a helping hand <\/span>Keynes<\/a>.<\/span><\/div>","protected":false},"excerpt":{"rendered":"

Charles Darwin descubri\u00f3, all\u00e1 por los a\u00f1os 1831-36 que el pico extravagante de una especie de ave que encontr\u00f3 en la islas Gal\u00e1pagos, no era una casualidad caprichosa del azar. Era el resultado de generaciones de adaptaci\u00f3n al medio, y s\u00f3lo los m\u00e1s aptos, capaces, adaptados y vers\u00e1tiles sobreviv\u00edan. Bajo esta teor\u00eda todo encajaba. El […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":["post-22939","post","type-post","status-publish","format-standard","hentry","category-sin-categorizar"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/22939","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/comments?post=22939"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/22939\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=22939"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=22939"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=22939"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}