135 replies to this topic
Posted 2009-02-12 18:56:53
 JimsKnight, on 2009-02-12 16:56:27, said:
russianrobert, on 2009-02-11 17:09:35, said: Could be that a sterling crisis is going to be the only way out for the beleaguered British economy. With interest rates reaching zero and (probably) plenty more bad economic news to come the BOE has very little room to manoeuvre.
A weaker pound will make British products and services cheaper. It's inflationary but with weaker domestic demand the effect might be muted.
That's all well and good if we've got plenty of resources to export, but we've fck all compared with other countries like Japan, the US etc.
Factor in that oil is rock-bottom as well and we've got few, if any bargaining chips...
We are not an exporting nation along the lines of Japan and the US but that doesn't mean we don't have exports and industry wont respond to a vastly weaker sterling and step in and capitalise on it.
It is a possible scenario for the eventual recovery of the UK economy.
Posted 2009-02-12 19:53:42
UK to print more money. Get ready for hyperinflation.
The Bank of England’s Governor admitted yesterday that Britain is now in “deep recession” and signalled that it is ready to start “printing money” as soon as next month in aggressive, last-ditch moves to limit the slump.
Mervyn King indicated that the Bank is poised to move beyond relying on further interest rate cuts to combat recession. It will give a green light within weeks to a strategy of “quantitative easing”, the modern equivalent of printing money, he made clear.
http://business.time...icle5708039.ece
Posted 2009-02-12 19:59:48
russianrobert, on 2009-02-12 18:56:53, said: JimsKnight, on 2009-02-12 16:56:27, said: russianrobert, on 2009-02-11 17:09:35, said: Could be that a sterling crisis is going to be the only way out for the beleaguered British economy. With interest rates reaching zero and (probably) plenty more bad economic news to come the BOE has very little room to manoeuvre.
A weaker pound will make British products and services cheaper. It's inflationary but with weaker domestic demand the effect might be muted.
That's all well and good if we've got plenty of resources to export, but we've fck all compared with other countries like Japan, the US etc.
Factor in that oil is rock-bottom as well and we've got few, if any bargaining chips...
We are not an exporting nation along the lines of Japan and the US but that doesn't mean we don't have exports and industry wont respond to a vastly weaker sterling and step in and capitalise on it.
It is a possible scenario for the eventual recovery of the UK economy.
Didn't think that the US was a net exporter. We already have a vastly devalued GBP. How much more "vastly" is needed or indeed will be achieved by Brown?
There is a tsunami of import fuelled price increases in basic consumable heading towards the UK. As we have no more natural resources apart from maybe coal, everything required for production and manufacture is dependent on imports. This will feed through into the factory gate prices, so our exports will possibly not be that much cheaper than the competitors abroad.
For the last decade or so, a substantial part of UK based production capacity has been shipped abroad. Unless the regulations in the UK are eliminated, and the labour force is prepared to compete with Asian wages, how can you expect any big surge in manufactured "made in the UK" goods? Now we could talk about services. Well, what do we have? Ah yes, the financial services, which have contributed substantially to both the GDP over the last decade, but unfortunately very substantially to the massive problems we are having. We could very easily see the banks being nationalised and all the intricate and opaque "investment banking" disappearing.
And then we have the "educational services", which are still surprisingly popular. Unfortunately the best of the teachers are being attracted to working abroad.
I suppose there is also the tourist industry. Which might have a small upward movement until we have 3,000,000 unemployed, rampant crime and inflation has brought prices back to European levels, even though for Brits the GBP has sunk to its lowest level since the world began, somewhere around parity with the USD, leaving us all in penury for the next decade.
Maybe the biggest hope is that global warming will take off, leaving the UK as a tropical paradise 
Posted 2009-02-12 20:50:53
A net exporter of manufactured goods perhaps.
Posted 2009-02-12 23:02:34
12DrinkMore. you need to Drink less methinks.
This constant OTT reaction to the economy and the state of the country itself makes me wonder if you have an ulterior motive.
I realise you probably do not have any motive as such but that is how it seems to a spectator.
Yes things are not good but people are not dying from starvation and cold.
Europe is yet to face the economic slowdown ( hel_l i would truly be worried if i were German ) in full and other countries are probably less well placed than the UK to ride the storm out. Asia is only just beginning to feel the brunt of the trouble and the likes of Thailand is in a very false position of strength that cannot be sustained indefinitely. Of all the powerful currencies in Asia, the Baht is probably the most overvalued and as a high volume exporter this is already biting. Give it a few months.
The US Dollar is temporarily strong and this exacerbates the figures from the BOE but in real terms the lack of exports from the UK historically will in to some extent cushion the coming world trade problems.
I still believe that once the global economic correction takes place ( it may happen in one month or 6 but it will happen eventually) the greatly undervalued £ will increase in value against both the Dollar and the euro and the Thai Baht will drop a bit too.
Expect in the short term some more pain but long term the average Englishman will still be relatively affluent on the world stage.
Posted 2009-02-12 23:25:34
I hear that the UK financial services authority is changing the warnings given to investors before they sign on the dotted line....Financial Health Warning. Investments will only go down ... invest what you want to lose.
But when the bottom comes, whenever that will be, and certainly not any time soon, fortunes will be made.
Posted 2009-02-12 23:28:53
Merangue, on 2009-02-13 00:02:34, said: 12DrinkMore. you need to Drink less methinks.
This constant OTT reaction to the economy and the state of the country itself makes me wonder if you have an ulterior motive.
I realise you probably do not have any motive as such but that is how it seems to a spectator.
Yes things are not good but people are not dying from starvation and cold.
Europe is yet to face the economic slowdown ( hel_l i would truly be worried if i were German ) in full and other countries are probably less well placed than the UK to ride the storm out. Asia is only just beginning to feel the brunt of the trouble and the likes of Thailand is in a very false position of strength that cannot be sustained indefinitely. Of all the powerful currencies in Asia, the Baht is probably the most overvalued and as a high volume exporter this is already biting. Give it a few months.
The US Dollar is temporarily strong and this exacerbates the figures from the BOE but in real terms the lack of exports from the UK historically will in to some extent cushion the coming world trade problems.
I still believe that once the global economic correction takes place ( it may happen in one month or 6 but it will happen eventually) the greatly undervalued £ will increase in value against both the Dollar and the euro and the Thai Baht will drop a bit too.
Expect in the short term some more pain but long term the average Englishman will still be relatively affluent on the world stage.
I agree.
I also think that 12DrinkMore is causing more harm/panic than good with his continual OTT comments. People are not dying in the streets, life goes on and the economic cycle will go round. I believe that we are somewhere near the bottom and things in 2010 will be better than 2009.
Posted 2009-02-13 13:02:51
12DrinkMore, on 2009-02-12 08:54:49, said: With 3,000,000 unemployed there will be little pressure on employers to raise wages to compensate for the higher prices. There is currently no incentive to rebuild the lost manufacturing industry, finance is impossible to raise, UK regulations strangle any startups, and who is going to take the optimistic view that it will get better and invest rather than save?
In my view, as you have observed, things are looking very dire for the UK. There will be a lot of suffering before this depression is over. I cannot see any reason why the GBP will not hit parity with the Euro (one of the real reserve currencies) and then move towards the USD.
We're probably a year into this mess already, since the Bear Sterns last March 08, which is therefore one year less to go before things improve.
Whilst we're in this mess, its hard to see if we're going into it, at the middle or coming out of it. But one things for sure we got one year less to go!!
Here goes little bit of humour....
...
How for can one run into a forest? Half way! Cause after half way your running out of the forest.
...
To the man on the ground though, he can't tell cause all he can see is one tree after another, only when it ends can he know where half way was and when he was reaching the end.
However sometimes it can be a stressfull time financially, and not just for the likes of you and me but also for the people who have the power to change things, if you catch my drift....
We don't know exactly when all this will end, but each day is one day less. The USD won't be strong forever.
Edited by ArranP, 2009-02-13 13:15:30.
Posted 2009-02-13 13:18:27
Posted 2009-02-13 16:26:31
Naam, on 2009-02-10 16:57:27, said: Chivas, on 2009-02-10 11:15:48, said: Naam, on 2009-02-09 18:25:41, said: lo and behold! as so often the prophets have spoken. unfortunately until today most prophets who posted on TV were wrong, no matter what references they used for their conclusions. let's check in a year again who was right and who was wrong 
Quite happy to put my money where my mouth is Naam (no offence intended).
Lay the stakes at where you think the baht/dollar and sterling/baht ratios will be in a years time ??
Chivas, as an investor with an experience of more than three decades i wouldn't dare to lay any stakes what the markets will do tomorrow, especially not the currency markets and no effing way i'd try to forecast what will happen in one year from now.
Well as an investor with three decades of experience than I find your claim of not knowing where the markets will be the following day let alone one years time a little short sighted at best ??
Ive never seen such profitable trading positions re Sterling/Dollar as they are currently.
No point in stating how much profit Ive personally made as anyone could pluck figures out of the air but if you need direction dont hesitate to ask 
Posted 2009-02-13 17:21:36
Chivas, on 2009-02-13 16:26:31, said: Ive never seen such profitable trading positions re Sterling/Dollar as they are currently. No point in stating how much profit Ive personally made as anyone could pluck figures out of the air but if you need direction dont hesitate to ask
i don't deny that but i focus and trade once in a while USD/EUR. as for needed directions... thank you, but no thank you 
Posted 2009-02-13 20:59:23
Chaimai, on 2009-02-12 23:28:53, said: Expect in the short term some more pain but long term the average Englishman will still be relatively affluent on the world stage. Quote I agree.
I also think that 12DrinkMore is causing more harm/panic than good with his continual OTT comments. People are not dying in the streets, life goes on and the economic cycle will go round. I believe that we are somewhere near the bottom and things in 2010 will be better than 2009.
Oh come on. My little voice isn't affecting anybody, but try the VASTLY MORE INFLUENTIAL GOB of Mervyn King speaking yesterday.
http://www.telegraph...ce-the-war.html
Quote Mervyn King said Britain would face its deepest and most painful economic slide in the post-war era, as he unveiled a stark assessment of the nation’s fate this year.
In the most pessimistic assessment of Britain’s prospects in the modern era, Mr King said:
The economy faces its deepest recession since the post-war years of 1945 and 1946, and its worst peace time decline since 1931.
The Bank is likely to reduce interest rates further, perhaps to as low as zero, in an attempt to prevent the downturn becoming worse than the depression in the 1930s.
It will resort to new drastic measures to pump extra cash into the economy as soon as this week.
Unemployment – which hit 1.97 million yesterday – will rise further and house prices will continue to fall in the coming months.
Mr King also warned that unless the Government, and politicians around the world, succeeded in bringing the banking crisis to an end, the consequences for the economy could be even more severe.
Now THAT will influence MILLIONS of people and create EVEN more pessimism and continue the downward spiral.
King's words make all my postings look like utter optimism.
Quote the average Englishman will still be relatively affluent on the world stage
Wealth in the UK simply does not exists anymore, there are only debts left, it was all an illusion. Try and sell your house. Try and get a loan to buy a house, there is no money available. Everything abroad is now 35% more expensive, try talking to a few pensioners living in Thailand. They do NOT feel affluent AT ALL. Wait for imported inflation to hit the supermarket shelves.
Presumably you mean affluent relative to the average Zimbabwean?
Posted 2009-02-13 22:06:50
12DrinkMore, on 2009-02-13 21:59:23, said: Chaimai, on 2009-02-12 23:28:53, said: Expect in the short term some more pain but long term the average Englishman will still be relatively affluent on the world stage. Quote I agree.
I also think that 12DrinkMore is causing more harm/panic than good with his continual OTT comments. People are not dying in the streets, life goes on and the economic cycle will go round. I believe that we are somewhere near the bottom and things in 2010 will be better than 2009.
Oh come on. My little voice isn't affecting anybody, but try the VASTLY MORE INFLUENTIAL GOB of Mervyn King speaking yesterday.
http://www.telegraph...ce-the-war.html
Quote Mervyn King said Britain would face its deepest and most painful economic slide in the post-war era, as he unveiled a stark assessment of the nation's fate this year.
In the most pessimistic assessment of Britain's prospects in the modern era, Mr King said:
The economy faces its deepest recession since the post-war years of 1945 and 1946, and its worst peace time decline since 1931.
The Bank is likely to reduce interest rates further, perhaps to as low as zero, in an attempt to prevent the downturn becoming worse than the depression in the 1930s.
It will resort to new drastic measures to pump extra cash into the economy as soon as this week.
Unemployment – which hit 1.97 million yesterday – will rise further and house prices will continue to fall in the coming months.
Mr King also warned that unless the Government, and politicians around the world, succeeded in bringing the banking crisis to an end, the consequences for the economy could be even more severe.
Now THAT will influence MILLIONS of people and create EVEN more pessimism and continue the downward spiral.
Once again you are taking a sensationalist view. What King has said is not news, it is stating the blindingly obvious - it also true of almost every country in the world.
One of the pies in which I have a finger is mortgage broking. Yes, mortgage broking - in about as much demand as selling ice in Alaska. However, I can report a number of things:-
Buyers are drifting back to the market and we have seen greater activity in the last 4 weeks.
This was probably partly on the back of Nationwide reporting a 1.9% increase in prices.
We can now get 90% Loan to Value products for some customers.
Fixed rates are just about getting low enough to be an attractive option vs the contrived low Base/Standard Variable rates.
Property investors are starting to come out of the woodwork - necessary components in the buying chain at the lower end.
Locally, prices have not dropped more than 15% and estate agents are reporting increased sales. Realistic asking prices will eventually find a buyer.
Very small green shoots which will no doubt result in the usual false start - however, these sort of signs are an integral part of the recovery stage, albeit the early stages. That is what has happened in previous recessions and that is what will happen in this one.
The banks will continue to sit on their ar5es and I have personal examples that show that they are taking no notice of Brown's call to support the business community. They will take the opportunity to be exceedingly selective in the supply of credit and they will seek to increase pricing, on a take it or leave it basis, to try and recover their losses asap - deja vue - it happened in the early 1990's as well. Give it a couple of years and the lemming principle will ensure that the banks will return to fighting for market share. Couple this with the previous inherent demand for housing returning and you could see the biggest boom in property prices for a decade - admittedly from a lower base.
The last 2 sentences are as optimstic as 12Drinkmore's are negative - however, you cannot argue that the picture is at least as plausible as 12D's Armageddon scenario.
Edited by Chaimai, 2009-02-13 22:15:59.
Posted 2009-02-13 22:23:02
When the sensationalism of the British Press combines with new increasingly scary financial stories daily, it's easy to lose sight of the fact that there are large parts of the British population that are totally unaffected by the current recession. Some 45% of UK homeowners have no mortgage and own their homes outright, that same group is likely to have savings and/or be in secure employment. The people who are or will be affected by the recession are those that sit on the other end of the spectrum - folks who over extended and loaded up their credit cards, people who dabbled in buy to let "investments" and those without secure long term employment. Dare I say, there will even be a large group of people who reckon that this whole business of recession is just background noise and don't believe it is real and it will not affect them in any negative way. During the recession of the early 1990's I was in such a group and I had my head down, working hard and making money. I bought and sold houses during that time and I never spent more than five minutes in total thinking about the economy. Those people out there today are real so when someone says, "wealth in the UK doesn't exist anymore", I say rubbish, simply not true at all. As for pensioners in Thailand not feeling affluent: sorry, but that's just not true either. There will be those expats who are getting hurt by a low exchange rate and a lack of interest income but frankly, many of those people are probably from the same UK group described above and are probably the ones who thought that the Pound would always be worth at least 70 Baht.
Posted 2009-02-13 22:34:32
chiang mai, on 2009-02-13 23:23:02, said: When the sensationalism of the British Press combines with new increasingly scary financial stories daily, it's easy to lose sight of the fact that there are large parts of the British population that are totally unaffected by the current recession. Some 45% of UK homeowners have no mortgage and own their homes outright, that same group is likely to have savings and/or be in secure employment. The people who are or will be affected by the recession are those that sit on the other end of the spectrum - folks who over extended and loaded up their credit cards, people who dabbled in buy to let "investments" and those without secure long term employment. Dare I say, there will even be a large group of people who reckon that this whole business of recession is just background noise and don't believe it is real and it will not affect them in any negative way. During the recession of the early 1990's I was in such a group and I had my head down, working hard and making money. I bought and sold houses during that time and I never spent more than five minutes in total thinking about the economy. Those people out there today are real so when someone says, "wealth in the UK doesn't exist anymore", I say rubbish, simply not true at all. As for pensioners in Thailand not feeling affluent: sorry, but that's just not true either. There will be those expats who are getting hurt by a low exchange rate and a lack of interest income but frankly, many of those people are probably from the same UK group described above and are probably the ones who thought that the Pound would always be worth at least 70 Baht.
Hurrah ! - a voice in the wilderness, a beacon 
Thank you Chiang Mai for balancing the argument. There are a number of mitigating factors against the serity of this recession:-
Interest rates - virtually zero in the UK. This will be the salvation of those, like me, who are in debt - my mortgage payments have reduced from £870 to £190. I was a banker in the 1990's when interest rates were in double digits and went to 15%.
Inflation - dropping like a stone. was also in double digits in the last recession
CMai - I don't even want to start about the British press but they have done NOTHING to help.
Posted 2009-02-13 22:38:40
[quote name='Chaimai' post='2530835' date='2009-02-13 22:06:50'][quote name='12DrinkMore' post='2530699' date='2009-02-13 21:59:23'][quote name='Chaimai' post='2528675' date='2009-02-12 23:28:53']Expect in the short term some more pain but long term the average Englishman will still be relatively affluent on the world stage.[/quote]
[quote]I agree.
I also think that 12DrinkMore is causing more harm/panic than good with his continual OTT comments. People are not dying in the streets, life goes on and the economic cycle will go round. I believe that we are somewhere near the bottom and things in 2010 will be better than 2009.[/quote]
Oh come on. My little voice isn't affecting anybody, but try the VASTLY MORE INFLUENTIAL GOB of Mervyn King speaking yesterday.
[url="http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4596137/Mervyn-King-Economic-slump-is-worse-since-the-war.html"]http://www.telegraph.co.uk/finance/finance...ce-the-war.html[/url]
[quote]Mervyn King said Britain would face its deepest and most painful economic slide in the post-war era, as he unveiled a stark assessment of the nation's fate this year.
In the most pessimistic assessment of Britain's prospects in the modern era, Mr King said:
The economy faces its deepest recession since the post-war years of 1945 and 1946, and its worst peace time decline since 1931.
The Bank is likely to reduce interest rates further, perhaps to as low as zero, in an attempt to prevent the downturn becoming worse than the depression in the 1930s.
It will resort to new drastic measures to pump extra cash into the economy as soon as this week.
Unemployment – which hit 1.97 million yesterday – will rise further and house prices will continue to fall in the coming months.
Mr King also warned that unless the Government, and politicians around the world, succeeded in bringing the banking crisis to an end, the consequences for the economy could be even more severe.[/quote]
Now THAT will influence MILLIONS of people and create EVEN more pessimism and continue the downward spiral.
[/quote]
Once again you are taking a sensationalist view. What King has said is not news, it is stating the blindingly obvious - it also true of almost every country in the world.
One of the pies in which I have a finger is mortgage broking. Yes, mortgage broking - in about as much demand as selling ice in Alaska. However, I can report a number of things:-
Buyers are drifting back to the market and we have seen greater activity in the last 4 weeks.
This was probably partly on the back of Nationwide reporting a 1.9% increase in prices.
We can now get 90% Loan to Value products for some customers.
Fixed rates are just about getting low enough to be an attractive option vs the contrived low Base/Standard Variable rates.
Property investors are starting to come out of the woodwork - necessary components in the buying chain at the lower end.
Locally, prices have not dropped more than 15% and estate agents are reporting increased sales. Realistic asking prices will eventually find a buyer.
Very small green shoots which will no doubt result in the usual false start - however, these sort of signs are an integral part of the recovery stage, albeit the early stages. That is what has happened in previous recessions and that is what will happen in this one.
The banks will continue to sit on their ar5es and I have personal examples that show that they are taking no notice of Brown's call to support the business community. They will take the opportunity to be exceedingly selective in the supply of credit and they will seek to increase pricing, on a take it or leave it basis, to try and recover their losses asap - deja vue - it happened in the early 1990's as well. Give it a couple of years and the lemming principle will ensure that the banks will return to fighting for market share. Couple this with the previous inherent demand for housing returning and you could see the biggest boom in property prices for a decade - admittedly from a lower base.
The last 2 sentences are as optimstic as 12Drinkmore's are negative - however, you cannot argue that the picture is at least as plausible as 12D's Armageddon scenario.
[/quote]
Whilst I agree with the spirit of the things you wrote, just a couple of points on the detail.
I think that anyone who believes that the UK housing market is starting to recover at this point is either serving a vested interest in that they are a builder, estate agent or similar, else they are very short sighted. The housing downturn has at least another year to run and more probably, eighteen months. Thereafter the market will remain flat for a couple of years and future growth is much more likely to be limited to sensible levels.
Posted 2009-02-13 23:03:06
[quote name='Chaimai' post='2530835' date='2009-02-13 22:06:50']Once again you are taking a sensationalist view. What King has said is not news, it is stating the blindingly obvious - it also true of almost every country in the world.
One of the pies in which I have a finger is mortgage broking. Yes, mortgage broking - in about as much demand as selling ice in Alaska. However, I can report a number of things:-
Buyers are drifting back to the market and we have seen greater activity in the last 4 weeks.
This was probably partly on the back of Nationwide reporting a 1.9% increase in prices.
We can now get 90% Loan to Value products for some customers.
Fixed rates are just about getting low enough to be an attractive option vs the contrived low Base/Standard Variable rates.
Property investors are starting to come out of the woodwork - necessary components in the buying chain at the lower end.
Locally, prices have not dropped more than 15% and estate agents are reporting increased sales. Realistic asking prices will eventually find a buyer.[/quote]
go on, give us a link, just like I do. Or is it just your hope, which as our Alex points out, will kill you.
[quote]Very small green shoots which will no doubt result in the usual false start - however, these sort of signs are an integral part of the recovery stage, albeit the early stages. That is what has happened in previous recessions and that is what will happen in this one.[/quote]
How can you be talking about recovery when out man Merv, the man who should know exactly how bad it is, even if he doesn't know how bad it will get, is still stating that it will get worse?
[quote]The banks will continue to sit on their ar5es and I have personal examples that show that they are taking no notice of Brown's call to support the business community. They will take the opportunity to be exceedingly selective in the supply of credit and they will seek to increase pricing, on a take it or leave it basis, to try and recover their losses asap - deja vue - it happened in the early 1990's as well. Give it a couple of years and the lemming principle will ensure that the banks will return to fighting for market share. Couple this with the previous inherent demand for housing returning and you could see the biggest boom in property prices for a decade - admittedly from a lower base.[/quote]
Oh God, another BOOM! You are in dreamland, my man, there will never be such a thing again. Lessons have been learned, never again will we see self-certified mortgages at 5 times a fantasy salary. The depression is here, property prices will return to 1997 levels.
How about the commercial property market crash which is now on the way? All those vacant high street shops that nobody will rent or buy? All this cr4p has yet to hit the banks.
[quote]The last 2 sentences are as optimstic as 12Drinkmore's are negative - however, you cannot argue that the picture is at least as plausible as 12D's Armageddon scenario.[/quote]
I am only relating to what I see, hear and read from the politicians, analysts and newspapers.
Hey and get this, you want to save for a mortgage and get the at least 20% deposit required?
[url="http://www.telegraph.co.uk/finance/personalfinance/savings/4592271/Mervyn-King-suggests-savers-will-be-sacrificed-as-rates-fall.html"]http://www.telegraph.co.uk/finance/persona...rates-fall.html[/url]
[quote]Mr King expressed sympathy for savers, but indicated that they will be sacrificed as interest rates are cut further in a bid to revive the economy.[/quote]
Maybe you have not personally lost money already? And you have also stated that you have a vested interest in getting the property market booming again.
But to get back to your point that the housing market is back on a boom, just give me a single fundamental reason why.
And its not
- a current booming market
- a vibrant and optimistic economy
- available and cheap credit
- decreasing unemployment
- a general optimistic mood that things will get better
Armageddon? Maybe not, but massive reduction in living standards certainly.
Posted 2009-02-13 23:20:46
On the housing recovery (or lack of) issues, we can agree.
Posted 2009-02-13 23:21:04
[quote name='Chaimai' post='2530835' date='2009-02-13 23:06:50'][quote name='12DrinkMore' post='2530699' date='2009-02-13 21:59:23'][quote name='Chaimai' post='2528675' date='2009-02-12 23:28:53']Expect in the short term some more pain but long term the average Englishman will still be relatively affluent on the world stage.[/quote]
[quote]I agree.
I also think that 12DrinkMore is causing more harm/panic than good with his continual OTT comments. People are not dying in the streets, life goes on and the economic cycle will go round. I believe that we are somewhere near the bottom and things in 2010 will be better than 2009.[/quote]
Oh come on. My little voice isn't affecting anybody, but try the VASTLY MORE INFLUENTIAL GOB of Mervyn King speaking yesterday.
[url="http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4596137/Mervyn-King-Economic-slump-is-worse-since-the-war.html"]http://www.telegraph.co.uk/finance/finance...ce-the-war.html[/url]
[quote]Mervyn King said Britain would face its deepest and most painful economic slide in the post-war era, as he unveiled a stark assessment of the nation's fate this year.
In the most pessimistic assessment of Britain's prospects in the modern era, Mr King said:
The economy faces its deepest recession since the post-war years of 1945 and 1946, and its worst peace time decline since 1931.
The Bank is likely to reduce interest rates further, perhaps to as low as zero, in an attempt to prevent the downturn becoming worse than the depression in the 1930s.
It will resort to new drastic measures to pump extra cash into the economy as soon as this week.
Unemployment – which hit 1.97 million yesterday – will rise further and house prices will continue to fall in the coming months.
Mr King also warned that unless the Government, and politicians around the world, succeeded in bringing the banking crisis to an end, the consequences for the economy could be even more severe.[/quote]
Now THAT will influence MILLIONS of people and create EVEN more pessimism and continue the downward spiral.
[/quote]
Once again you are taking a sensationalist view. What King has said is not news, it is stating the blindingly obvious - it also true of almost every country in the world.
One of the pies in which I have a finger is mortgage broking. Yes, mortgage broking - in about as much demand as selling ice in Alaska. However, I can report a number of things:-
Buyers are drifting back to the market and we have seen greater activity in the last 4 weeks.
This was probably partly on the back of Nationwide reporting a 1.9% increase in prices.
We can now get 90% Loan to Value products for some customers.
Fixed rates are just about getting low enough to be an attractive option vs the contrived low Base/Standard Variable rates.
Property investors are starting to come out of the woodwork - necessary components in the buying chain at the lower end.
Locally, prices have not dropped more than 15% and estate agents are reporting increased sales. Realistic asking prices will eventually find a buyer.
Very small green shoots which will no doubt result in the usual false start - however, these sort of signs are an integral part of the recovery stage, albeit the early stages. That is what has happened in previous recessions and that is what will happen in this one.
The banks will continue to sit on their ar5es and I have personal examples that show that they are taking no notice of Brown's call to support the business community. They will take the opportunity to be exceedingly selective in the supply of credit and they will seek to increase pricing, on a take it or leave it basis, to try and recover their losses asap - deja vue - it happened in the early 1990's as well. Give it a couple of years and the lemming principle will ensure that the banks will return to fighting for market share. Couple this with the previous inherent demand for housing returning and you could see the biggest boom in property prices for a decade - admittedly from a lower base.
The last 2 sentences are as optimstic as 12Drinkmore's are negative - however, you cannot argue that the picture is at least as plausible as 12D's Armageddon scenario.
[/quote]
dear sir
with regard to your green shoots and the rise in house prices,can i have some of what your smoking,i was a property developer in the 90s and indeed made money that is not happening now ,my ex, a conveyancer has no clients my friends ,estate agents are selling zilch and prices have a long way to fall yet .
ps your name isnt Alister orGordon is it?
Posted 2009-02-13 23:28:12
chiang mai, on 2009-02-13 22:23:02, said: When the sensationalism of the British Press combines with new increasingly scary financial stories daily, it's easy to lose sight of the fact that there are large parts of the British population that are totally unaffected by the current recession. Some 45% of UK homeowners have no mortgage and own their homes outright, that same group is likely to have savings and/or be in secure employment. The people who are or will be affected by the recession are those that sit on the other end of the spectrum - folks who over extended and loaded up their credit cards, people who dabbled in buy to let "investments" and those without secure long term employment. Dare I say, there will even be a large group of people who reckon that this whole business of recession is just background noise and don't believe it is real and it will not affect them in any negative way. During the recession of the early 1990's I was in such a group and I had my head down, working hard and making money. I bought and sold houses during that time and I never spent more than five minutes in total thinking about the economy. Those people out there today are real so when someone says, "wealth in the UK doesn't exist anymore", I say rubbish, simply not true at all. As for pensioners in Thailand not feeling affluent: sorry, but that's just not true either. There will be those expats who are getting hurt by a low exchange rate and a lack of interest income but frankly, many of those people are probably from the same UK group described above and are probably the ones who thought that the Pound would always be worth at least 70 Baht.
Good on yer! But maybe we can review this in a year?
There are massive differences between the last recession and this depression.
- the overall level of debt is much much bigger
- the creators of wealth, the manufacturers, who could help a recovery, have substantially relocated to cheaper countries. Look at the most recent example, Dell.
- the word "globalisation" was unknown
And to address a few specific points
- I doubt whether you will be dabbling in the property market and making money. The "buy to lets" lot are now in the "buy and lose it" group.
- if 45% are financially OK, how about the other 55% of profligate bsatrds now requiring YOU to pay their debts? How much of your "secure stash" will remain after Brown has introduced hyperinflation? And don't forget, all these bankrupt gits can no longer afford to buy goods other than the basics, so how many of the 45% jobs are secure?
- and now add in all the underfunded pension schemes, and the national pension, and the civil service pensions which are all to be funded by YOUR tax money.
- and then add in the bailouts to keep the banks running. This is all YOUR money heading down the pan.
- and then add in the 25% of the workforce employed in the civil service. You have 1/4 of a civil servant on your back for the rest of your life.
This is now a totally different situation. It is a GLOBAL crisis, not some itsy bitsy UK recession of the 70's. You only have to look at the figures being bandied around, we are now up to trillions.
And all those who reckon that it is some "background noise" are in for a HUGE awakening, as 150 decibels of FINANCIAL CRISIS hits them.
Posted 2009-02-13 23:34:02
Here's an article today in the Telegraph that supports what i posted earlier about a weaker pound being an advantage to the UK. So much so the other finance ministers of Europe are complaining the pound is too low and likely to take business away from them.
http://www.telegraph...ings-slide.html
Posted 2009-02-13 23:50:16
russianrobert, on 2009-02-13 23:34:02, said: Here's an article today in the Telegraph that supports what i posted earlier about a weaker pound being an advantage to the UK. So much so the other finance ministers of Europe are complaining the pound is too low and likely to take business away from them.
http://www.telegraph...ings-slide.html
Sorry to carry on.
What does this really mean? I suggest
- it will lessen the chances of the UK being able to raise finance on the international markets. The Europeans are pi55ed off by Brown's "fukc you lot, I will go it alone"
- it will reduce the chance of joining the Euro, which could save further devaluation of the GBP and stabilise things a bit.
- the UK does not really have any substantial manufactured exports that, in a world depression, will be bought anyway. Luxury goods are not going to be in demand.
- ALL UK manufactured goods rely on imports for basic materials, due to the devaluation of the GBP, these are all now 35% more expensive, which will filter through to the final factory gate price.
Globalisation has negated the possibility of a nation devaluing its currency to maintain exports. It is now down to efficiency and producing a product at a price that is globally competitive. Give me an example of a UK product that meets that requirement.
We will now see a surge of protectionism, "buy British", "employ Britains". But in the end, to pay the import bills, we have to compete with everybody else in the world, unless some huge sponsor can be found to fund the UK. Who will that be? With Brown's zero interest rate policy and the increasing possibility of hyperinflation, there is NOBODY ON THIS PLANET who will buy UK government bonds.
Edited by 12DrinkMore, 2009-02-13 23:51:37.
Posted 2009-02-14 02:07:57
12DrinkMore, on 2009-02-13 23:50:16, said: russianrobert, on 2009-02-13 23:34:02, said: Here's an article today in the Telegraph that supports what i posted earlier about a weaker pound being an advantage to the UK. So much so the other finance ministers of Europe are complaining the pound is too low and likely to take business away from them.
http://www.telegraph...ings-slide.html
Sorry to carry on.
What does this really mean? I suggest
- it will lessen the chances of the UK being able to raise finance on the international markets. The Europeans are pi55ed off by Brown's "fukc you lot, I will go it alone"
- it will reduce the chance of joining the Euro, which could save further devaluation of the GBP and stabilise things a bit.
- the UK does not really have any substantial manufactured exports that, in a world depression, will be bought anyway. Luxury goods are not going to be in demand.
- ALL UK manufactured goods rely on imports for basic materials, due to the devaluation of the GBP, these are all now 35% more expensive, which will filter through to the final factory gate price.
Globalisation has negated the possibility of a nation devaluing its currency to maintain exports. It is now down to efficiency and producing a product at a price that is globally competitive. Give me an example of a UK product that meets that requirement.
We will now see a surge of protectionism, "buy British", "employ Britains". But in the end, to pay the import bills, we have to compete with everybody else in the world, unless some huge sponsor can be found to fund the UK. Who will that be? With Brown's zero interest rate policy and the increasing possibility of hyperinflation, there is NOBODY ON THIS PLANET who will buy UK government bonds.
A low pound can be a plus for UK so could be easier for UK to raise funds on int. markets.
It wasn't the UK that sold the pound and drove it down.
The rest of Europe would never agree to Uk joining the Euro at these low exchange rates. Too much of an advantage for us.
If the UK is such a basket case what the hel_l are the finance ministers of Europe worried about?
Like everyone else the UK will be shopping around for the cheapest imports and be in a position to negotiate price.
Globalisation and efficiency? Give me ONE example of Indian efficiency.
A cheaper pound will help UK to compete. Uk is not alone in this financial crisis. Who's going to fund Europe and the US for example?
Posted 2009-02-14 02:36:04
russianrobert, on 2009-02-13 19:07:57, said: 12DrinkMore, on 2009-02-13 23:50:16, said: russianrobert, on 2009-02-13 23:34:02, said: Here's an article today in the Telegraph that supports what i posted earlier about a weaker pound being an advantage to the UK. So much so the other finance ministers of Europe are complaining the pound is too low and likely to take business away from them.
http://www.telegraph...ings-slide.html
Sorry to carry on.
What does this really mean? I suggest
- it will lessen the chances of the UK being able to raise finance on the international markets. The Europeans are pi55ed off by Brown's "fukc you lot, I will go it alone"
- it will reduce the chance of joining the Euro, which could save further devaluation of the GBP and stabilise things a bit.
- the UK does not really have any substantial manufactured exports that, in a world depression, will be bought anyway. Luxury goods are not going to be in demand.
- ALL UK manufactured goods rely on imports for basic materials, due to the devaluation of the GBP, these are all now 35% more expensive, which will filter through to the final factory gate price.
Globalisation has negated the possibility of a nation devaluing its currency to maintain exports. It is now down to efficiency and producing a product at a price that is globally competitive. Give me an example of a UK product that meets that requirement.
We will now see a surge of protectionism, "buy British", "employ Britains". But in the end, to pay the import bills, we have to compete with everybody else in the world, unless some huge sponsor can be found to fund the UK. Who will that be? With Brown's zero interest rate policy and the increasing possibility of hyperinflation, there is NOBODY ON THIS PLANET who will buy UK government bonds.
A low pound can be a plus for UK so could be easier for UK to raise funds on int. markets.
It wasn't the UK that sold the pound and drove it down.
The rest of Europe would never agree to Uk joining the Euro at these low exchange rates. Too much of an advantage for us.
If the UK is such a basket case what the hel_l are the finance ministers of Europe worried about?
Like everyone else the UK will be shopping around for the cheapest imports and be in a position to negotiate price.
Globalisation and efficiency? Give me ONE example of Indian efficiency.
A cheaper pound will help UK to compete. Uk is not alone in this financial crisis. Who's going to fund Europe and the US for example?
Well said Russianrobert.
I have come to the conclusion that 12drinkmore's unstoppably negativity, he actually WANTS the £ to collapse. He actively seems to campaign for it and for the £ to crumble and i can only think he has an ulterior motive.
Posted 2009-02-14 06:40:30
12DrinkMore, on 2009-02-14 00:03:06, said: Locally, prices have not dropped more than 15% and estate agents are reporting increased sales. Realistic asking prices will eventually find a buyer
go on, give us a link, just like I do. Or is it just your hope, which as our Alex points out, will kill you.
I cannot give you a link for local knowledge/observation/fact. Providing to regurgitated press comment only puts you in the Bingobongo land
Very small green shoots which will no doubt result in the usual false start - however, these sort of signs are an integral part of the recovery stage, albeit the early stages. That is what has happened in previous recessions and that is what will happen in this one.
How can you be talking about recovery when out man Merv, the man who should know exactly how bad it is, even if he doesn't know how bad it will get, is still stating that it will get worse?
There is always a recovery and it usually starts a long way back (as did the recession). If Merv (and government leaders) was/were so smart they would have seen the Northern Rock debacle coming and handled it better, seen the economic crisis coming sooner and not persisted with an inflation driven interest rate strategy when what was needed was some stimulus.
Give it a couple of years and the lemming principle will ensure that the banks will return to fighting for market share. Couple this with the previous inherent demand for housing returning and you could see the biggest boom in property prices for a decade - admittedly from a lower base.
Oh God, another BOOM! You are in dreamland, my man, there will never be such a thing again. Lessons have been learned, never again will we see self-certified mortgages at 5 times a fantasy salary. The depression is here, property prices will return to 1997 levels.
A 'boom' in relative terms is part of all cycles. There WILL be one again because there has always been one. "Lessons have been learned" - bollox, lenders do not learn they follow the herd. I hope that we do not see self-cert 5x salary cases, certainly at some of the LTV's that were available. However, I would be happy with a 5x salary self cert mortgage at, say, 50/60% LTV for someone with a sound credit rating. It is common sense that such a person is less likely to default. Property prices WILL NOT return to 1997 levels. You are clearly a subscriber to housepricedrop.com - I wonder what angle they are coming in at ??
Properties in my area are moving at 15% below early 2008 values - the evidence will show up on Rightmove in due course.
How about the commercial property market crash which is now on the way? All those vacant high street shops that nobody will rent or buy? All this cr4p has yet to hit the banks.
The banks will have those positions covered and Provisions already allocated. Lloyds did not show a £9bn loss in HBOS without first clearing out all the crap.. The pendulum with these banks usually swings from £xx loss to £xx profit in the following year.
The last 2 sentences are as optimstic as 12Drinkmore's are negative - however, you cannot argue that the picture is at least as plausible as 12D's Armageddon scenario.
I am only relating to what I see, hear and read from the politicians, analysts and newspapers.
That is 100% credible then 
Maybe you have not personally lost money already? And you have also stated that you have a vested interest in getting the property market booming again.
But to get back to your point that the housing market is back on a boom, just give me a single fundamental reason why.
And its not
- a current booming market
- a vibrant and optimistic economy
- available and cheap credit
- decreasing unemployment
- a general optimistic mood that things will get better
Armageddon? Maybe not, but massive reduction in living standards certainly.
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