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Or maybe not. I am not sure how could anybody not see the disaster…
“Peter Spencer, economic adviser to the Ernst & Young Item Club said: “I’m afraid this is now tending towards the apocalyptic scale. This is really the second stage in the credit crisis.
We are already seeing the effects with a vengeance now. House prices are falling, mortgage approvals have dropped and we’re in a situation where even those with good credit ratings who can borrow are having to do so more expensively.”http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/14/nbearsplash114.xml&page=2
Also
“Albert Edwards, global strategist at Societe Generale, said the toppling banks are merely a symptom of a deeper rot. “The banks are not the problem. Nor even the grotesquely leveraged funds. The problem is that an economic bubble financed by ridiculously loose monetary policy is unravelling,” he said.”
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/15/ccom115.xml
God help us all and forgive our sins.
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Look, I am old enough to have been around at a time when we had a major economic catastrophe and mass unemployment every ten years or so.
Anyone under about 40 has not really experienced a gut wrenching recession as the last one was in 1990-1992. That’s why there is so much apocolyptic pontificating at the moment. Too young and too inexperienced to know what to do.
Us old lags know that we’ll have a truckload of problems for about 2 years, culminating in a series of large companies collapsing – the usual way capitalism purges itself of stupid excess.
Be ready to splash the cash in a year or so on some very tasty assets at once in a lifetime prices.
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Agreed ashtondav,
Recessions are just a necessary part of the economic cycle and are essential with respect to getting rid of wastage and excess.
For the majority, the effect is barely noticed. For some, particularly those used to making big profits whilst not actually involved in the production of tangible goods, they get hit hard. That’s the risk of ‘flipping’ properties, or in fact any other product. You take a cut, whilst not involved in the actual production of that building or product and rely on expanding demand. For these individuals it is essential to safe-guard their assets. For the rest of us; just wait for the storm to blow over.
Does it really matter if properties fall in value? Your next purchase will cost you less even if you have sold your own for less. And first-time buyers are back on the scene again, hence the cycle will start to pick up.
Like you, I have seen this all before. Money seems to just disappear and takes a while to return. But it always does come back again.
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Agree also.
Its all about where you are when the roundabout stops.
The problem is that when it stops properties in most cases wont pay the bills .
Get through the next couple of years then hope on hope some sort of light will start to shine.
One thing the last time this happen has taught me not to panic and while many will loose there will be opportunities to win.Frank 8)
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I would be extremely happy if this crash would be exactly similar to the one of 20 year ago.
There has been more abuse of cheap credit this time and banks might fall harder.
As I said before, in 6 months we will know better better this is an usual recession with 2-3 year of pains for some people or a disaster of bigger proportion.
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No it’s no different to any other of capitalism’s occasional hiccups. Remember back to the good old days:
BCCI bank, taking with it many councils’ total savings
Barings bank, trashed by the twerp from Watford
Enron
Worldcom
And this time around
Northern Rock
Bear Sterns
and probably a few others over the next few months.
No different this time. Lick yer lips, count your cash and get ready for the bargains…
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I think it is extremely different from any other of capitalism’s occasional hiccups…
Never have house prices triple in 10 years. Never have people taken so much money as MEW to fund purchasing stupid plasma TVs and cars.
Also, oil has never been so expensive and the cost of petrol cuts a huge chunck from people alaries.
Never have people had so little savings.
The amount of equity in property in USA is less than ever after 1945.
Also, never before has California property fall by 20% in 1 year.
Should I continue?
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You are wrong. It has happened before. Lets look at a few disasters of the 20th century:
First world war.
Bolshevik revolution in Russia and 100% bond default.
Weimar republic hyper inflation
Great depression
Second world war
Communists confiscate assets in half of europe
British devaluation
Britain having to go begging to the IMF
Hyper inflation of the 70s
Chronic impact of vietnam war
Asian crisis
Russian default (again).
Hey, get a bit of perspective. This is definitely a “hiccup”.
Google “savings and loans crisis” in the 1980s/1990s to read about “hundreds of US savings institutions collapsing”.
Just look at the stats for house price reductions in UK and US during last recession.
“THIS TIME ITS DIFFERENT” is the liturgy of losers. Get ready to fill yer boots over the next year or so.
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ashtondav wrote:Weimar republic hyper inflation
Great depression
“THIS TIME ITS DIFFERENT” is the liturgy of losers. Get ready to fill yer boots over the next year or so.
I am not sure if you know the actual figures.
Look at the decrease of prices in California between 1990-1997. The result is 20%.
The decrease between 2007 and 2008=20%.
Things fell 7 times faster.
I do not care about UK as I have a house here and do not plan to buy more.
If you think that a Great Depression 2 is something trivial, then I am not sure what would impress you.
It is different this time. Fortunately for me, I won’t suffer whatever happens in the next years.
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I think the world is a very different place today, even from the recession of the late 80’s so I am not sure comparisons are valid. Today it really is a global world with business, labour and individuals moving around it. That alone is what will limit recessionary factors.
Just look around and see what people lives consist of today. Go back to the 70’s in the UK. Probably 50% of households DID NOT have a car, 1 black & white TV, shared GPO line with neighbour. Holiday in Scarborough once a year. Held the same job for 30 years in the same town. The world changed at a slow pace, so any recession would likely do so as well, since the normal driving factors of life were pretty static.
Today, eveyrbody has a car/mobile/personal phone/digital camera/PC etc and it’s the rapid change in technology (increasing exponentially) that drives these items to be replaced not when they are broken, but considered obsolete.
I work in the UK and I reckon probably 30% of staff originate from 50 different countries. The modern world is definitely in a state of flux and peoples expectations out of life are only going to increase not decrease.
Yes, we are probably in a downward cycle, but it will be small and shortlived, the world is not going to stand-still.
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Hi ralita,
The connection is that the aftermath of any recession due to the credit crunch or other economic factors will I think be much shorter lived than in the past. The point was that the world is not as static as in the past and I think this will be a factor that stimulates growth or puts a bound on the depth on the recession.
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jp1 wrote:Hi ralita,
The connection is that the aftermath of any recession due to the credit crunch or other economic factors will I think be much shorter lived than in the past. The point was that the world is not as static as in the past and I think this will be a factor that stimulates growth or puts a bound on the depth on the recession.
I agree that the recessions would be shorter. BUt, in order to be shorter, the pain should also be greater in the shorter time. In USA this applies to the current situations, house prices are falling like a rock.
In Europe this has’t occured yet, prices barely moved.
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