The Great Inventory Correction of 2008/9?

Its just a hunch, just a theory, but are we seeing the Great Inventory Correction of 2008/9 play out on the High Streets and shopping malls of Great Britain.

It had been oh so easy for oh so long.

Fill the shelves and ring the tills. Sell the real estate and lease it back. Spread the supply chain to a land far far away, on the other side of the planet. Keep it well stocked. Stock on the shelves, stock in the store room, stock on the road, stock in the warehouse in the RDC in the NDC. Stock at the docks waiting to clear, stock on a ship waiting to dock. Stock on the water stock on the oceans. Stock at the docks waiting to depart... stock in production ready to go.

You get the picture.

But, for too many the cash commitment on all this stock stock stock stock stock is up front. Paid for by Irrevocable Letter of Credit, provided by our chums the banks.

You can get one today if you need one. Just hand over the cash first.

And that is the corner of the problem.

While the sales were flowing and the river of demand ran on forever where was the problem. But when what was three months stock becomes six becomes twelve. The time it takes to clear the log jam that stretches to four corners of the Earth is just as long.

Hence the bankruptcies. Hence the 90% discounts. The whiff of panic in the air.

As cash stops flowing freely in at the tills having a mountain of cash tied up in a circumnavigational stock blocked pipeline is a life threatening disease.

And the game is not over yet. There are months still to run. It is too early yet to say whether the step down in consumer spending is simply indigestion after years of easy credit and imported deflation or a permanent change in mindset.

In the short term maybe people are focusing on debt reduction, maybe later they will focus on re-building neglected savings, maybe they just own as many cheap DVD players and self assembly bookshelves as they need for the time being. We will have to wait and see.

But if my hunch is right and the Great Inventory Correction is afoot, what hope for the VAT fiddling charge of the Keynesian Light Brigade?

Buy hey, what do I know? A simple captain of a simple small company trying to navigate its way through some choppy waters.

Fingers crossed?