The Value Chain

The other day I bought a new TV. I didn't want to buy a new TV but events have forced my hand. Firstly, like Japan, NZ will change to digital transmission next year. That means my old glass CRT TV will be useless unless I spend $150 on a decode box thing. Seeing the TV's probably not even worth half that it's seems pointless to do this. Secondly, a local electronics store ran a special deal last week. I bought a brand new 47inch HD LCD which has the digital decoder inside it for ...NZ$499. Now it's a no-name Chinese brand but it has a full warranty and service backup. Five hundred bucks for a huge flat screen TV! It's not that long ago when these things were $5000. It's mind boggling how the prices of some highly engineered things can fall so steeply when at the same time the price of something as simple as a tomato can be heading for the stratosphere. I mentioned this to some friends at a gathering over some beers and it led to a rather interesting conversation. These guys range from a bit younger than me to quite a bit older. Some are employee's and some, like me, are self employed. One thing they all have in common is that they acknowledge the fact that the world has changed hugely in the last 3 years. 

 

Everybody thinks of September 2001 as a turning point of sorts. That's what the media have been trumpeting for years. But for most of us the only difference it made was that getting on an airplane became an even greater pain in the ass than it was before. 2008 is the year that matters to my group of mates. Before Lehman and sub prime and the credit crunch, most of these guys had plans for the future. These ranged from buying houses and building boats to cutting back on the amount of time they spent working and investing for their retirement. 2008 changed everything. All those plans have had to be modified due to plunging incomes, employment uncertainty and financial loss. We now tend to think in terms of before and after....as one friend put it "the world fell apart". It's taken 3 years for these guys to realise that the next 20 years are going to be nothing like the last 20. Everything has been turned on it's head. Things that were expensive luxury items have become cheap while basic staple food has risen significantly. Interest rates are at historic lows while our currency defies gravity. Tradespeople have jacked up their hourly labour rates but yet they all complain that they are not making any money. The rise in price of commodities like oil and milk and rice are squeezing people hard and making them nervous. There has been an enormous disconnect and uncoupling of things that were presumed to be set in stone.  All over the world, it's slowing dawning on people that things ain't what they used to be and will never be again. If you don't believe that think of it this way.... 10 years ago, what would you have said if someone told you that you would be able to buy a top of the line TV for the same price as 2 weeks worth of groceries.