Why have we got into this mess? An old-style banker explained to me that up until as recently as seven years ago, banks funded lending almost entirely from their deposits, but all this has changed and they started funding from the wholesale money markets. At the start of this year there was a ‘funding gap' of £740 billion, an incredible amount of money, owed by the banks. This money has funded a lot of irresponsible lending.

2008 has been a challenging year for the whole industry, but so far there does not seem to have been many visible signs of distress within the industry, to the best of my knowledge anyway. A significant number of operators, ourselves included, have benefited from the VAT refunds on food and zero rated snacks, back for some of us to 1973. This has helped to improve cash flow during a time of lower sales and profits, but the availability of credit for the financing of vending machines has become more difficult.

The year also saw unprecedented increases in the prices operators have had to pay for ingredients and cups. Add in the rising cost of fuel and it has been a challenging year. Most seem to have been successful in passing these increases on. I think overall operators have shown great resilience and have come out of it with a great deal of credit. I think it is a case of ‘well done everybody'. The machine manufacturers might not agree with my view of the year, as they have no doubt experienced a tough time. Cup sales unfortunately continue to decline and this is a major worry.

We cannot be immune to the inevitable downturn that will happen and the fate of all operators is in the hands of their customers. Some will be luckier than others in this respect. It is a matter of ‘riding the storm out', keeping our operations as efficient as possible and then surveying the wreckage remaining after the storm. For sure there will be opportunities in 2009 and 2010 could be the start of the next ‘golden period'.

This is my wish list for 2009.

1. Interest rates should be cut to 1 per cent.
2. An income tax holiday for everybody for six months. This would put the money into the hands of the taxpayer, who would spend it far more wisely than Brown and co. It would have an immediate impact.
3. AVEX to be a great success. It will find itself under scrutiny as never before, but it is the shop window of the industry and a wonderful opportunity for everybody to meet up and see all the latest developments under one roof. The shorter format will reduce costs for everybody and is timely.
4. The ingredient suppliers show some restraint and pass on the benefit of lower prices, as the commodity prices come down, at a similar rate to the one that they pass them on at.

Much has been written about ‘short selling', which has been blamed for the demise of our banking system. It was around in the 1930s and many ‘old stagers' see uncomfortable parallels with the happenings of that period and the current situation with our banking and economy, and so when anybody says we cannot be going back to those times, reflect on the story of the exotically-named Piggly Wiggly Stores owned by a gentleman by the name of Clarence Saunders and traded on Wall Street.

Short sellers drove the share price down and Saunders borrowed sufficient money to buy all he could sell. He finished up owning more than 100 per cent of the shares. The share price soared as short sellers tried to buy sufficient shares to cover their short positions. They could not, because Saunders was the only source of supply. On Wall Street they say ‘he who sells what isn't his, must buy it back or go to prison'.

You would imagine that this story ends with the short sellers routed and the entrepreneur triumphant, but there is a sting in the tail. Trading was suspended in Piggly Wiggly shares and the need to settle trades was delayed and then declared at a lower price. It is said on Wall Street - who always looks after their own - ‘if you cannot rule the waves, then wave the rules'

The outcome of all of this was that the delay in setting the trades and then at a much lower mandated price was ruinous for Saunders. He went bankrupt and lost control of Piggly Wiggly. The combination of borrowed money and a delay in settlement together with a mandated settlement price was ruinous for Saunders.

This story has a strong resemblance to the current goings-on with VW and Porsche. The hedge funds have been duped by a modern day Saunders and already there are signs that a mandated price will be fixed.

There are many sayings about history, but it's for sure that it pays to be a good student of the subject. So let us hope 2009 will not see us going back to the 1930s.

Hold on to your hat on as our rollercoaster ride continues.