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.”
“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.”
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.
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.
Ashtondav, my husband said the same this morning as we were pontificating the state of the world (as one does on a Saturday morning 🙂 ) over our morning cuppa. As you say, we survived the last recession and then came the boom time. Everything in life is a cycle.
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.
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.
Ralita you are wrong in saying never has house prices tripled in ten years, in the late sixties early seventies they tripled in five years and kept on rising for for many years.
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.
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.
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.
This website uses cookies to improve your experience. If you continue to use the website you agree to our use of cookies. You can find out more here. Accept
Cookies
Privacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.