Credit Crunch Takes it's toll - yorkiebar
"I'm afraid I'm way to young to remember, all I've known is national prosperity. "

I understand the comment but I am amazed! IMO you have only seen declining national prosperity!

What you havent seen is actual proper growth of the economy (and of affordable lifestyle), ie national prosperity.

Credit Crunch Takes it's toll - Hector Brocklebank
"What you haven't seen is actual proper growth of the economy"

Hang on, is that not what's been happening for the past 16 years?

Credit Crunch Takes it's toll - yorkiebar
Increased debt (personally and as a country?)? if thats proper growth then thats maybe where we have been going wrong?

Proper growth is reducing debt and affording more ! But only comes from making money not moving money!
Credit Crunch Takes it's toll - Hector Brocklebank
I understand that national and consumer debt have been spiralling over the past 10 years. However, it is surely fair to say that our economy has been expanding at least until Q2 of this year where it failed to grow at all.

Perhaps it's the levels of national and consumer debt that have helped drive us into recession this early and this hard? Please excuse my ignorance!
Credit Crunch Takes it's toll - yorkiebar
Expanding economy or increased debt?

There is a difference but it may not seem so ! Increased debt may appear to be increasing the economy!

Put into personal terms? You take out loans to buy more stuff? You feel better off. Are you?

Or are you better off when you go without extra stuff until you can afford it without a loan?

Edited by yorkiebar on 26/10/2008 at 16:53

Credit Crunch Takes it's toll - Hector Brocklebank
I get you now, yorkiebar. So, in biblical terms, our national economy was built on sand, and now it has all come crashing down around us. I think there are 2 groups of people who's greed has caused this mess.

1. Bonus-chasing bankers in the US & UK who were reckless in who they were lending to.
2. Consumers who were determined to accept easy credit and live beyond their means.
Credit Crunch Takes it's toll - yorkiebar
Thats pretty much how I understand it!

I am not a financial wizard though, just a dodgy car repairer!

Was always taught by my elders that you can only afford what you can buy outright! Anything else is living beyond your means and that is just as true of a nation as it is of a person !

Hence, 2nd world country/economy here we come !

Credit Crunch Takes it's toll - qxman {p}
I understand that national and consumer debt have been spiralling over the past 10 years.


Public ('National') debt has not been 'spiralling' for the past ten years. If fact it has been fairly modest at less than 40% for most of the period. It was over 40% for most of the Thatcher/Major years and Brown paid down a lot around the start of the decade - but that fact doesn't suit the agenda of most newspaper reporters.
Current public debt as of September 2008 is 43.4% of GDP INCLUDING Northern Rock. If we EXCLUDE NR then its about 37.5%. Even adding in the much talked about PFI figures only adds a few £bn. These are favourable numbers compared with most of our major competitors. Of course this public debt will (and should) increase over the next few years.
Unfortunately certain corners of the press continually bash away about public debt 'spiralling out of control' and the less well informed don't question it.

Private debt is another matter and is massive. Much of it due to housing and the over-extended middle classes who should have known better.

A major problem for the UK is that for several decades there has been too much government genuflection toward the financial services industry and not enough support of our other industries. Now that particular bubble has popped we're in some deep trouble and we will have to re-evaluate the meaning of the phrase 'wealth creation'.

The recent big stock market swings, and Friday's big drop, are not down to rational share dealing. They are most likely the result of hedge fund activities - I wouldn't be surprised to see legislation (in US and EU) introduced to curb the excesses of hedge funds (and related entities, which are effectively just casinos).
Thankfully I sold out of shares in May and put the money into several of the remaining Mutual Building Societies. One of the best financial decisions I ever made (unlike buying new cars - which is ALWAYS a bad financial decision LOL!).
Credit Crunch Takes it's toll - Hector Brocklebank
Thanks for enlightening me 'qxman', my knowledge of the subject is somewhat vague.

Is it not also true that Public Debt was much higher in the 70's and that Thatcher & co helped greatly in reducing it with a series of privatisations?
Credit Crunch Takes it's toll - qxman {p}
Is it not also true that Public Debt was much higher in the 70's and
that Thatcher & co helped greatly in reducing it with a series of privatisations?


Public debt is actually pretty low at the moment. In 1950 it was about 250% of GDP!! Much of that associated with WWII of course. Debt was high and falling through the 1970's.
In the early 1980's Thatcher came to power and between 1979 and 1983 there was a very deep recession and the UK lost over 30% of its industrial capacity in those four years. With a massive rise in public spending (benefits claims) Privatisation was employed to keep a lid on public debt.
Debt kicked off again when Major took over and we had the recession of the early 1990's. It peaked at about 53% in 1996, that's about 10% higher than it is now (although less in 'pound notes', of course, because of the impact of inflation).
If you go to the Eurostat website there is plenty of info on public debt around the world.

What's really different now is the the level of consumer and corporate debt - which is huge.
Credit Crunch Takes it's toll - Screwloose
Public debt is actually pretty low at the moment.


The actual percentage figure isn't what's collapsing the pound.

If you have a huge mortgage - but a big, secure, income to maintain it; then that isn't going to be seen as a problem debt.

If, however, you have a country desperately borrowing just to get by - and with no visible means of keeping up the interest payments...
Credit Crunch Takes it's toll - b308
QXman, one thing that puzzles me is that the press are always refering to the growth in "public sector" job numbers under NL - surely that is a bad thing as they are, in effect, Gov jobs and don't actually contribute anything to the country's growth other than costing those of us in the private sector money from our taxes... surely they should have been trying to get encourage jobs in the private sector rather than jobs in the public sector, or am I missing something?
Credit Crunch Takes it's toll - Screwloose
surely they should have been trying to encourage jobs in the private sector rather
than jobs in the public sector - or am I missing something?


The "payroll vote" and extra union subs...?
Credit Crunch Takes it's toll - Kevin
>Current public debt as of September 2008 is 43.4% of GDP INCLUDING Northern Rock. If we EXCLUDE NR
>then its about 37.5%.

Exclude NR? The taxpayer or more to the point, those taxpayers who actually generate income for UK plc, are liable for NR's current and future potential losses - whatever that total may eventually turn out to be.

>Even adding in the much talked about PFI figures only adds a few £bn.

A few £bn eh?

In March this year total public liability to PFI was estimated to be in the region of £110bn and unfunded public sector pensions added another £700bn. When they are included, the real public debt is over 100%.

One example - tinyurl.com/6m4ydv

You can't pretend it doesn't exist just because you've fiddled the balance sheet.

Kevin...
Credit Crunch Takes it's toll - Pugugly

You can't pretend it doesn't exist just because you've fiddled the balance sheet.


Oh yes you can - especially if you're in power, when it all comes out when you lose the next election all you do is blame the other guys. Tried and tested.
Credit Crunch Takes it's toll - Kevin
>Oh yes you can - especially if you're in power,..all you do is blame the other guys. Tried and tested.

Nope, I don't think that's going to work anymore.

I went to a family get-together near Stocksbridge, South Yorkshire a few months ago. Even the old guys in the pub who lost their jobs during the steel and coal strikes have seen through the interminable lies.

Kevin...
Credit Crunch Takes it's toll - qxman {p}
>Current public debt as of September 2008 is 43.4% of GDP INCLUDING Northern Rock. If
we EXCLUDE NR
>then its about 37.5%.
Exclude NR? The taxpayer or more to the point those taxpayers who actually generate income
for UK plc are liable for NR's current and future potential losses - whatever that
total may eventually turn out to be.


NR is being paid down a lot faster than anticipated. IIRC about £10bn has already been paid back. NR will no doubt end up costing us something, but not the vast amounts once predicted.
>Even adding in the much talked about PFI figures only adds a few £bn.
A few £bn eh?
In March this year total public liability to PFI was estimated to be in the
region of £110bn and unfunded public sector pensions added another £700bn. When they are included
the real public debt is over 100%.
One example - tinyurl.com/6m4ydv


The example you cite is a Telegraph column, hardly impartial. The Eurostat figures include PFI and the only ones worth quoting. You'll never get me defending PFI, its a very flawed and corrupt concept, but not the vast numbers bandied about and not 100% of GDP.

Not sure why on Earth you would include all public sector pension liabilities, other than try to make things look much worse than they are. Things are bad, but some of the current bonkers stuff being written and reported is just infantile and is destroying what little consumer confidence remains.
Credit Crunch Takes it's toll - Kevin
>NR is being paid down a lot faster than anticipated. IIRC about £10bn has already been paid back.
>NR will no doubt end up costing us something, but not the vast amounts once predicted.

You don't have a clue what it will cost us. I don't have a clue what it will cost us. You say that it won't be the "vast amounts once predicted" but don't give anything to back up your statement.

>The example you cite is a Telegraph column, hardly impartial.

If you'd bothered to read the Telegraph in the last few years you might have noticed a change in political affiliation. Don't let that stop you denigrating the source though.

Here's one from The Mirror if you prefer it: "The state is set to owe a total of £2,354 billion - some 61% more than the UK's annual GDP." tinyurl.com/6mzf79

>but not the vast numbers bandied about and not 100% of GDP.

Pray tell how you know that. Give me links to a full balance sheet of UK plc. not something massaged Enron-style.

>Not sure why on Earth you would include all public sector pension liabilities, other than try to
>make things look much worse than they are. Things are bad, but some of the current bonkers stuff
>being written and reported is just infantile and is destroying what little consumer confidence
>remains.

I really do despair. Unfunded public sector pensions are not a liability?

Where exactly should a future commitment to pay £700bn appear on the balance sheet?

Kevin...
Credit Crunch Takes it's toll - Screwloose
Kevin

To be fair to Northern Crock; they have made great strides in deliberately trashing their mortgage book and are well ahead of schedule in repaying their loan; as at Q3/08 they'd repaid 57% of the £27B advanced. Not good for their business long-term; but mortgages "gone elsewhere" are mortgages that can't go bad.

Given their renowned aggressive action in de-housing defaulters; that should also "encourage les autres..." and keep the overall balance in the black.

As "the bank that can't go bust" they are also fully stuffed with cash that they didn't have to offer silly interest to attract - and if they do run into difficulties, the government could easily lift their deposit cap to let them absorb even more.

Source:-

uk.reuters.com/article/businessNews/idUKTRE49D2NY2...4
Credit Crunch Takes it's toll - Kevin
>To be fair to Northern Crock;..as at Q3/08 they'd repaid 57% of the £27B advanced.

NR haven't done bad so far in repaying our cash but there's still over £10B to go.

The point I was trying to make was that until it is repaid in full it's a liability and can't be left off the balance sheet just because it looks bad.

This isn't Mandy's mortgage application.

Kevin...
Credit Crunch Takes it's toll - Screwloose
until it is repaid in full it's a liability


A loan given shows as an asset on the books.
Credit Crunch Takes it's toll - Kevin
>A loan given shows as an asset on the books.

Not if you loan the money to yourself. NR is now owned by the taxpayer.

Kevin...
Credit Crunch Takes it's toll - madf
"Completely serious question to all of you in the "if you think this is bad, just you wait..." category - what satisfaction is it going to give you if you are right? "

I trade shares:
and expect a rally next week for about 4 months..


BUT
if you look at the economy, the recession is only beginning. The BOE are in denial - keeping interest rates up and worrying about UK inflation driven by oil and food prices.. which are collapsing.

The Government did not see it coming. forecast growth was 2.5% in this year's budget.

The FSA - as usual -..well they continued as ever in lah lah land.

And the banks had jumped like lemmings off the same cliff 3 years ago,

I expect GDP to contract 2=3% a year for 3 years and unemployment to reach 3 million.. I have seen it all before and these forecasts of mild recession are made by people who have ZERO credibility as they DID NOT FORECAST A RECESSION.



So under these circumstances: I adopt a well proven plan:
own no shares.. the bottom of the bear market is at least 15 months away (last 27 months min).
Loads of cash.
No debt.
Don't buy anything major that is inessential.

BUT watch out for distressed sales.

I seriously expect the second hand car market to be awash with unsaleable executive cars: unsaleable as no-one can get credit/cannot afford to run them.. etc.

There WILL be huge bargains: for CASH buyers.

Watch Premier League clubs go to the wall due to owners not being rich enough..(see Rednapp leavingPortsmouth)...

And lots of nice footballers' cars to come..

I expect the FTSE to bottom sub 2000.





Edited by madf on 26/10/2008 at 16:45

Credit Crunch Takes it's toll - nick62
I was talking to a dealer yesterday. He has a yard full of cars (25+) currently loosing approx. £500 each per month at the moment, as they go unsold!

Edited by nick62 on 26/10/2008 at 17:37

Credit Crunch Takes it's toll - Pugugly
Sorry people, in splitting the threads, I "lost" a post by Smithsonian (I think) Sorry - wears hair vest for the next week !
Credit Crunch Takes it's toll - jbif
Question:

If, as Brown and Darling say, the UK is in a better than most [if not the best] placed countries in the world to ride out a recession, why is it that the £ is getting hammered?

Edited by jbif on 26/10/2008 at 20:06

Credit Crunch Takes it's toll - qxman {p}
Don't think Britain is best placed by any means, but it could be worse.
There is a good argument that Sterling was overvalued at $2 and its dropping back to something more sustainable. Obviously the market is looking at cuts in interest rate, more to come and Brown's admission of a recession. It will drop a good deal further if BoE cuts interest rates further, which is sure to happen.

Edited by Pugugly on 26/10/2008 at 20:49

Credit Crunch Takes it's toll - paulb {P}
madf: thanks, that is an entirely pragmatic view and I agree with pretty much all of it.

The people of whom I am beginning to tire (mainly, those who insist on adding their opinions to every Telegraph opinion piece at the moment) are those Jeremiads who say things along the lines of "Ooooh dear, it's all going completely wrong, I'm getting out while I can/I got out years ago, sauve qui peut, stuff all the rest of you" and so on. That was what prompted my comment this morning.
Credit Crunch Takes it's toll - Sofa Spud
Just look around you. Houses not selling, building sites ground to a halt, businesses closing, people losing their jobs - not to mention the collapsing stock market and the international banking system on life support.

The newspapers are behind the game on this one and they're playing catch-up now.

Edited by Sofa Spud on 26/10/2008 at 22:52

Credit Crunch Takes it's toll - cheddar

IMO Down and Bawling should take responsibility for doing too little too late rather that swanning around like Batman and Robin, and resign today calling a general election in the process, that would give us all the lift we need and bring the other lot in who surely will do a better job in respect of both actions and, as importantly currently, confidence terms.

However it should not be all doom and gloom despite what the media say (I agree 100% with Lud's portayal of the media doom mongers in the first post above), for instance if you are in a secure job, have a mortgage that is only, say, 30 - 50% of your property value and have been planning to move to a bigger house then it is a good time, all property has dropped so the gap to bridge is reduced and competitive mortgage rates are on offer if you dont want to borrow more than around 75% of the property value. Likewise there are great discounts and finance deals on new cars etc, why aren't people doing it? The doom and gloom media reporting, we have come full circle.
Credit Crunch Takes it's toll - yorkiebar
Whilst I agree (in principal) with your view cheddar I am more despondant over your belief that "the other lot" wil do a better job.

Personally I have no faith in "any lot" at the minute.

This is a time when a "Great" leader is due. I can't see one; in any party !
Credit Crunch Takes it's toll - gordonbennet
This is a time when a "Great" leader is due. I can't see one; in
any party !

>>

Couldn't agree more, is there any difference at all between the main 3 parties.
No one stands out as having the nous to tell the truth whether we like it or not, just bleat the same old cliche's and resort to playground yah boo tactics.

This constant propaganda politics and buying of votes by appeasement to the various factions and classes in this fast dividing society is of no use at all to this country overall, we so desperately need someone with gravitas and strength to stand up and tell us in simple terms ''truthfully'' without PC flowering exactly where we are and what they will do to put things right, regardless of who they offend in the process.

A good start would be to stop paying people to do nothing, themselves the politicians included, payment by results same as most of the rest of us. (that would see a swift reduction in much of the public and parliamentarian sectors)
Credit Crunch Takes it's toll - Alby Back
Absolutely GB.

Time for a benevolent dictator.
Credit Crunch Takes it's toll - jbif
payment by results same as most of the rest of us.


You mean "bonuses" such as paid out to Bankers on profits generated by the Banks in the past?

Credit Crunch Takes it's toll - gordonbennet
You mean "bonuses" such as paid out to Bankers on profits generated by the Banks
in the past?


Probably, when the company makes no money, those responsible get no wages/have to repay their portion of the loss.
Tends to concentrate the responsible part of the mind somewhat, bad decision big loss for company and banker, good decisions good for all concerned, whats wrong with that.

Its really no different in my mind to the colossal waste involved in the public sector.
Credit Crunch Takes it's toll - jbif
whats wrong with that


I agree with you. It's just that Nulab blames the crisis as being caused the bonus culture.

Credit Crunch Takes it's toll - gordonbennet
I agree with you. It's just that Nulab blames the crisis as being caused the
bonus culture.


Haven't politicians always done that, appeal to petty jealousies of many people, find a bogeyman as a scapegoat, point the finger light the blue touchpaper and stand back.

No different to the naming of witches in the dark ages, the religious hatreds, the mob mentality, and rule by fear...sound a bit familiar?
Credit Crunch Takes it's toll - jbif
Two stories today dealing with the top two high value purchases in the UK; Houses and Cars:

1. Persimmon cuts £600m off value of land bank
"Persimmon, the UK's biggest homebuilder by market value, said prices in the second half will fall twice as fast as predicted earlier and land values will be cut by £600m.
.... .... has closed three offices and cut 1,100 jobs as surveys showed property values dropping the most in at least a quarter of a century.
Cancellation rates at Persimmon have increased to about 35pc as customers are less willing to part with their cash amid the financial crisis and the belief prices may still fall further.
"


2. How about this for relying on manufacturing industry in hard times:
GKN to cut car jobs after profits warning
"GKN, the automotive and aerospace group, is to cut more than 2,000 jobs after giving warning that its profits will be 20 per cent lower this year because of a dramatic slowdown in its main businesses.
The company, which makes drivetrains for cars, has shut down factories and introduced flexible working at its sites in the UK and United States. More than 5 per cent of GKN's 42,000-strong worldwide workforce will also go as part of its restructuring. GKN's shares fell 20p to 97.5p in early trading and are 72 per cent below this time last year.
GKN's two factories in Birmingham and one in Telford, West Midlands, which employ 2,500 automotive workers, will be hit by the production changes and job losses. "

Edited by jbif on 27/10/2008 at 10:22

Credit Crunch Takes it's toll - John F
This is a time when a "Great" leader is due. I can't see one; in
any party !


I was brought up by parents who lived through 2 world wars. Compared to the social conditions in 1930s Germany we aint seen nothin'yet. Let us hope we never, ever again see the emergence of a 'great leader'. Such emergence always seems to result in death and misery for 10s of millions.

snip!

Edited by Webmaster on 27/10/2008 at 18:40

Credit Crunch Takes it's toll - yorkiebar
IMO opinion a great leader isnt 1 who automaticaly thinks war is a cure!

Honesty as GB says is what makes a Great leader. IMO anyway!

Nothing wrong with saying we are at the bottom of the pile! But then to tell us how to we are going to get out of it; and doing something about it! Not just criticsing the other party (who are not blame free!)

But also going back to '30s Germany. The "great US" who we so boldy support as a nation were not exactly blame free in Germanys then crisis. In fact they seem to be involved in every country that has a crisis !
Credit Crunch Takes it's toll - madf
There's a very good article on the US $ here...
www.marketoracle.co.uk/Article6985.html


I'm expecting GDP for Q4 2008 to be -0.75 to -1.0% as the financial services secotr, car making and other manufacturing contract and oil price falls lead to a reduction in monetary oil output.

That is far worse than any of the muppet economists forecast ... but as they did not forecast the coming recession they are useless .

I expect next year GDP to be -2.5 to -3% and a similar figure for 2010 but improving end 2010. Public sector deficists will balloon to over £100 billion...

Government debt is low at present: I agree about excluding Northern Rock etc.. and as long as the banks survive we will get most of our money back.
BUT
the only way we get our money back is by banks deleveraging and lenidng less- see Northern Rock which is putting up renewal costs so borrowers go elsewhere.

So this will prolong the recession in the real economy.



As for politicians, anyone who believes anything they say is an idiot as most have politicians are proven liars who make unsustainable promises: often KNOWING they were unsustainable. And only idiots trust people who clearly and openly lie.

Anyone for no more boom and bust? I did not have sex with that woman? 30 minutes before our troops in Cyprus are hit by missiles form Iraq? WMD?

I rest my case.

Meanwhile my Yaris does nearly 60mpg £35 VED and my financials are set up for the worst... I hope...





Credit Crunch Takes it's toll - ForumNeedsModerating
A quick question -and something that always slightly puzzles me - why, if our GDP falls, say 3% (or roughly where we were in 2006), do we howl & suffer so much? I mean, most people weren't that much poorer then (I certainly didn't feel deprived anyway) - but now, it means chaos & catastrophe?

I now it 'not as simple as that' , but I'd be grateful if anyone here could elucidate. I've got a feeling that no-one will though - we all take these rather meaningless numbers for granted.

Edited by woodbines on 27/10/2008 at 12:05

Credit Crunch Takes it's toll - jbif
... why, if our GDP falls, say 3% (or roughly where we were in 2006), do we howl & suffer so much? I mean, most people weren't that much poorer then (I certainly didn't feel deprived anyway) - but now, it means chaos & catastrophe?


The credit crunch is supposed to have occurred in the main due to the sub-prime lending in the USA and similar junk mortgages in the UK. However, the resulting loss in asset values across the world has been many times the value of those bad debts.

It is animal instinct characterised by "stampeding herds" - which unfortunately humans are not immune from even though we like to think of our species are being intelligent.
Hence the bust follows boom follows bust follows boom cycle. [Only Canute claimed to stop tides and only Brown claimed to stop bust.]

This is all compounded in today's "one World" fed by 24 hour internet and TV media, the news channels and blogs compete to bring you the worst breaking news every minute.

I like to think of an imaginary datum which represents the balanced position. In boom times, the values ramp up gradually and then exponentially until near the peak some catalyst tips the balance over the edge. The fall from that edge tends to be very fast and near vertical, and the drop tends to overshoot the balanced position by a huge margin. It then takes a long time to recover to the correct balance but by then [people are back in the boom mindset and carry on upwards until the next correction.

Credit Crunch Takes it's toll - ForumNeedsModerating
Yes, jbif - I could quite happly live with a notional '3%' less of everything. I guess equity & asset value can fall by much more because of that loss of compounded growth over a longer period. My real beef with all of this is that because of the fancy-Dan financial derivatives it seems that , by the wonders of the leverage produced, a rickshaw driver going bust in Delhi can cause an Icelandic bank to fail (to analogise a classic Chaos theory example).
Credit Crunch Takes it's toll - Baskerville
I'm just trying to think of a 'Great Leader' or wannabe who didn't leverage irrational prejudice against minority groups to gain and keep control at the expense of the lives of large numbers of his/her 'subjects'. This prejudice usually masquerades as 'plain speaking' or 'being a maverick' or 'honesty' and provides simple answers to questions that are too hard for most people to understand. Hitler was 'honest' about the Jews and their role in Germany's decline for instance; Saddam Hussain was 'honest' about the Marsh Arabs; George W. Bush was 'honest' about the threat from Iraq. I don't like that kind of honesty.
Credit Crunch Takes it's toll - Sofa Spud
Re great leaders - I'm torn between Russell Brand and Jonathan Ross LOL LOL LOL.

Credit Crunch Takes it's toll - Lud
To be fair to those yearning for a Great Leader, they aren't all in the mould of murdering illiterate carphounds like Hitler or Saddam Hussein or 'men of destiny' like Napoleon or Mao. They may be thinking of people more along the lines of Franklin Roosevelt or Churchill. But then again of course, they may not.

The problem for everyone really is that the nation-state as we know it has almost vanished, and won't be back soon. No one who has been exposed to the economic news recently can doubt that it's a single 'system' although an unequal and chaotic one. No leader in the democratic world has real autonomy, not even the US president.
Credit Crunch Takes it's toll - Sofa Spud
Quote:...""No leader in the democratic world has real autonomy, not even the US president.""

Nor have they ever done. Churchill was forced to accept future dismantling of the British Empire in return for the Marshall Plan in the Second World War.

And George W. Bush was forced to change the emphasis of his presidency after 9/11 by actions inspired by a psychopath in Afghanistan.

Edited by Sofa Spud on 27/10/2008 at 14:01

Credit Crunch Takes it's toll - Lud
Churchill was forced to accept
And George W. Bush was forced to change the emphasis


Am I alone in finding this parallel excessively flattering to the outgoing (Alhamdulillah!) Leader of the Free World and his gang of sleazeball racist thieves?
Credit Crunch Takes it's toll - cheddar
>>gang of sleazeball racist thieves? >>


While I agree with your first post in this thread that is completely OTT Lud, not really worthy of comment TBH.

Edited by cheddar on 27/10/2008 at 14:24

Credit Crunch Takes it's toll - Lud
Not OTT at all, moderate indeed.

But you're right, I shouldn't have said that here. Controversial. Can of worms.
Credit Crunch Takes it's toll - Baskerville
Am I alone


No.

You're right of course about Churchill and Roosevelt, though Roosevelt had severe difficulty persuading the conservatives in Congress and the Senate to support his New Deal. In fact the withdrawal of support from the legislature when the economy showed faint signs of revival resulted in the 'double dip' of 1937. Only the war persuaded them to spend more money and then only as a last resort, despite quite a lot of ships being lost in the Atlantic in the first year or so of the war. Great Leader he certainly was, but he was unable to lead as he would have liked.
Credit Crunch Takes it's toll - gordonbennet
Am I alone in finding this parallel excessively flattering to the outgoing (Alhamdulillah!) Leader of
the Free World and his gang of sleazeball racist thieves?


No, you are most certainly in good company.

I'm afraid it may be some time before we see another from Winston's mould break surface, if ever.
Credit Crunch Takes it's toll - Lud
In the present context though, with Britain boracic along with everyone else, perhaps Churchill was ill-chosen. But would I have got away with Attlee?
Credit Crunch Takes it's toll - b308
I have always thought of Brown as the present day Chamberlain with his bit of paper saying "no boom and bust" on it.... trouble is, I can't see a Churchill in waiting.... which is worrying...
Credit Crunch Takes it's toll - tyro
Question for the economists here:

Was anyone forecasting the incipient recession, and particularly the banking crisis, back in say 2005 or 2006?
Credit Crunch Takes it's toll - Hamsafar
Oh goodness yes, described perfectly over the last few years on other websites.

Edited by Webmaster on 28/10/2008 at 00:36

Credit Crunch Takes it's toll - tyro
Then could you please tell us which economists and commentators did so? Links would be interesting.

Edited by tyro on 27/10/2008 at 17:42

Credit Crunch Takes it's toll - madf
www.rgemonitor.com/index.php

Nouriel Roubini is most famous advocate of crash

Also Roger Bootle Capital Economics
www.capitaleconomics.com/rogerbootle/index.php

warned for years in DT..see his book.

Most other economists are carp...especially those employed by HMG in the Treasury or the BOE



Edited by madf on 27/10/2008 at 17:56

Credit Crunch Takes it's toll - jbif
Then could you please tell us which economists and commentators did so? Links would be interesting.


The first one is the other paper [timesonline]. Search for that and include this in your search " Ten people who predicted the financial meltdown ".
"Vince Cable - deputy leader of the Liberal Democrats
Here is a question Mr Cable?s posed to Gordon Brown, then Chancellor, during Treasury Questions back in November 2003: ?The growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level. What action will the Chancellor take on the problem of consumer debt??
Mr Brown did not answer how he would solve the problem, merely replying that: ?We have been right about the prospects for growth in the British economy, and the hon. Gentleman (Mr. Cable) has been wrong.? "


The second one is from the NY Times and goes back to 1999:
tinyurl.com/3jdn9e
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
...
...
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' "


Edited by jbif on 27/10/2008 at 17:58

Credit Crunch Takes it's toll - tawse
Just google 'Fred Harrison' - been saying this was coming several years back. Been spot on too.
Credit Crunch Takes it's toll - spikeyhead {p}
Question for the economists here:
Was anyone forecasting the incipient recession and particularly the banking crisis back in say 2005
or 2006?


Yes, certainly falls in house prices. It was careless in the extreme that interest rates dipped in 2005 when house prices were showing some signs f stabilizing. I think a few commentators had realized then that we were in the growth stage of a bubble.

The truly worrying thing is just how much potential the payouts form CDS's are in the event of a lot of companies and banks going bankrupt. Originally intended as a way of hedging investments, they've been used as a gambling tool and no-one knows just how much would be outstanding if a couple of major banks were to fail.
Credit Crunch Takes it's toll - PhilW
Very interesting thread and some very knowledgable and well reasoned contributions which are from people who know far more about it than me (I know zilch!!) but tell me
1. If this "thing" is very much down to too much and too easy credit, why are people advocating lowering of interest rates to make credit easier to obtain but rewarding savers less?
2. If some of this "thing" is down to Govs spending far too much and borrowing too much, why are they spending so much on rescuing financial institutions by "borrowing" money?
3. How can we get ourselves out of this "thing" by "spending our way out of a recession" which was caused by us "spending our way into" recession?
4. If much of this "thing" is caused by a crisis of confidence, why do "our leaders" consistently keep telling us that "the worst is yet to come", "it's the biggest financial crisis ever", "we are going into recession", " the 1930s had nothing on this" etc - shouldn't they be doing the opposite?

Spent a very nice week in France last week, never bought a paper, never saw TV, never listened to the radio ------ life seemed much as ever - crisis, what crisis???!!!!
Oh dear, the pound plummetted against the euro - didn't realise 'til I looked at my credit card statement!!!!

Phil
Credit Crunch Takes it's toll - tyro
Many thanks to:
a) those who answered my question
b) PhilW for asking my next question
c) the mods for being patient with regard to this non-motoring-related discussion.
Credit Crunch Takes it's toll - madf
Phil
1. Interest rates can - and likely will fall to 2% or nil.. but if no-one is going to lend you any money, it's irrelevant. Mortgages of 120% of valuation and 7 x earnings - N Rock - will be 80% and 3 times earnings .. so house prices halve.

2. They are rescuing the banks due to necessity: no banks = collapse of economy (literally)... They should jail a few hundred bankers as well but will not.(the US will).

3. We cannot spend our way out if we have too much debt and no-one will lend to those with no credit. SO consumer spending is going to collpase.. new car sales down 20% , auction prices collpasing - see HJ report.

4. The worst is going to be worse than anyone under 50 has ever experienced. It's going to be like Japan in the 1990s but worse.

Anyone who believes anything any politician says is 1. stupid. 2 has a short memory as they tell conflicting stories. 3. stupid , 4. credulous 5 stupid.. and 6 deserves to lose all their money.

If politicians told the truth they would say they were largely at fault for encouraging a debt fuelled spending spree by consumers etc... and ensuring the regulators - especially the FSA - saw it happening and did nowt. The FSA admitted theyscrewed up over N Rock and let the guy in charge of banking go - with a large bonus.

The Government borrowing is ballooning out of control - EXCLUDING bank bailouts and N Rock.. so expect big tax rises 2-3 years out.

Like 10p on income tax or 7% on VAT...or 25% cuts in welfare or both.

Any politician who denies it will happen is : a liar.




Credit Crunch Takes it's toll - PhilW
Thanks madf, that's a pretty comprehensive reply and, I fear, pretty spot on!
But
1. It's a bit of a pink fluffy dice that the one time in the last 60 years I have a little bit of money in the bank and few debts that interest rates are likely to decline to nowt. I seem to remember that when I was really cash strapped with a young family and a big mortgage (in those days) that interest rates were about 15% - and interest on my credit card debts about double that!
2. Dead right - some of those so-and sos need stringing up. They walk away with their huge salaries and bonuses having been bailed out and the ordinary taxpayer has to pick up the bill - equivalent of £19,000 for everyone of us I read somewhere. Trouble is, most of us did not have a clue what they were doing - what on earth is a hedge fund/derivatives/futures/short-selling?? (hypothetical question - I don't even want to know!)
3. Even worse than you say - I have heard from a recently made redundant employee of a large car dealer in E Midlands that sales in year up to August were 30-40 cars a week. Since Sept they have been 3-4 cars a week. Another prestigious dealer in German cars sold 1 car in 5 days the week before last - previously also 30-40 a week.

I have had no faith in the FSA since they made Standard Life flog off most of their equities when the market was at its lowest a few years ago, thus ensuring that my endowment mortgage just met the mortgage but fell somewhat short (£29,800) of the £30,000 bonus we were supposed to get.
4. Come on madf! don't you start, talk us up, give us confidence, tell us to go out and buy, buy, buy shares!!! You know it makes sense!!

"Anyone who believes anything any politician says is 1. stupid. 2 has a short memory as they tell conflicting stories. 3. stupid , 4. credulous 5 stupid.. and 6 deserves to lose all their money."

What?? You mean you don't believe that we have seen the end of boom and bust? That UK is not "best placed" to see out the credit crunch? That the economy will grow by 2.5% this year? That Gordon has "saved the world" by acting decisively and injecting money into the system? That our financial businesses are the strongest in the world? That inflation is only 2%? That we have a "strong economy".

Dear me madf, you are a cynic.............. can I join your club???

Tell you what though - there are some bloomin' good deals available on both new and second hand cars at the mo' -as a Berlingo driver, I am torn between an Audi TT Quattro and a Boxster as a second car "runabout". Another few weeks of this and an Audi A5 may be affordable!!!

Good luck to all
Phil



Credit Crunch Takes it's toll - Alanovich
Anyone who believes anything any politician says is 1. stupid. 2 has a short memory
as they tell conflicting stories. 3. stupid 4. credulous 5 stupid.. and 6 deserves to
lose all their money.

>>>>

What about that which Vince Cable said in 2003 during PMQs, as quoted elsewhere in this thread? The bloke has been consistently right and the sanest voice in Parliament for years on this issue and others (Iraq?) and yet his party is roundly ignored.

Politicians don't have exclusivity on idiocy, it's endemic amongst us unwashed also.
Credit Crunch Takes it's toll - Screwloose
Phil

1/
Very good point; as cutting interest rates will crash the pound [we have little or no exporters that will benefit] and just embed inflation into our massive import bill.

2/
Probably because it seemed a good idea at the time. Spending some money patching the earthquake damage - just before the tsunami arrived....

3/
We can't; just about every similar attempt in history ended in disaster. See Japan. Appearing to have a cunning plan helps calm the passengers while the plane's crashing though...

4/
"Small earthquake in the Midlands; little damage done.." doesn't sell newspapers or forge media stardom.

P.S.

Anybody got any views on these people? www.goldbullionsecurities.com/sites/uk_gbp/shares/

Edited by Screwloose on 27/10/2008 at 21:50

Credit Crunch Takes it's toll - malden blue
On the news tonight several thousand Jaguar workers have been sent home on basic wages, apparently the demand for their cars has all but dried up

The credit crunch isnt the whole problem, its the unfortunate fact that we were heading into recession anyway, a real double whammy

As for Brown he will be remembered as the most disastrous Chancellor/PM ever IMHO

And why when the price of a barrel of oil has dropped by 50% has a litre of petrol only gone down by 10%?
Credit Crunch Takes it's toll - tyro
And why when the price of a barrel of oil has dropped by 50% has
a litre of petrol only gone down by 10%?


I know nothing about economics, but just to prove I've been reading the posts of the experts . . . "Because oil is priced in dollars and the value of sterling has collapsed against the dollar - a pound was worth $2 in July - only $1.55 now."

Did I get that right? ;-)
Credit Crunch Takes it's toll - Pugugly
There's more to it - please read the fuel thread rather than divert this one.
Credit Crunch Takes it's toll - malden blue
Yep you got it right!

Only if Gordon Brown is right and we ARE 'uniquely placed to benefit from the upturn when it comes' with 'no return to boom and bust' and 'prudent financial planning'


why do foreign economist and traders think the UK downturn will be the worst of all western nations and why is the pound collapsing?

Credit Crunch Takes it's toll - madf
Well my charts say today is the bottom for the markets - for a while..
Credit Crunch Takes it's toll - Screwloose
Well my charts say today is the bottom for the markets - for a while..


madf

You're a guru; the Dow has just closed 900 points up.
Credit Crunch Takes it's toll - cheddar
You're a guru; the Dow has just closed 900 points up.


That is because the markets are accounting for an expected rate cut by the Fed which if it happens should help the £ v $ a little.
Credit Crunch Takes it's toll - jbif
You're a guru; the Dow has just closed 900 points up.


;-) You chose the right Sanskrit word "guru". It refers to a teacher or guide in a "religion" that is heavily based on mumbo-jumbo of scientifically proven superstition and unquestionably absolutely accurate astrological charts. :-0

" Well my charts say today is the bottom for the markets - for a while ".

Credit Crunch Takes it's toll - Optimist
Couldn't help smiling this morning at the news that hedge funds have taken a caning in shorting VW shares.

They may want to complain but the German attitude to them is that they're "locusts" so they won't get far.

Bit of an error of judgement, what?

Credit Crunch Takes it's toll - jbif
Couldn't help smiling this morning at the news that hedge funds have taken a caning in shorting VW shares.


You obviously like a bit of "schadenfreude".
I thought you believed hedge funds always made profits, never any losses.

www.efinancialnews.com/homepage/pressdigest/conten...3

www.usatoday.com/money/markets/2008-10-28-short-se...m

Credit Crunch Takes it's toll - Steptoe
This thread is of great interest, I pay far more credance to the opinions expressed here rather than the financial forums simply because this is in general a motoring forum. It seems to then follow that anyone who sticks their head above the financial parapet on here actually knows their stuff.

The opinions expressed above will help considerably with sorting out personal finances.

When trading equities I have never really considered where they come from or go to; put the order in and it happens [ :-o ], though I have read that there some mystical figures termed 'market makers' flitting around on the floor of the stock exchange.

I have always assumed these to be sort of financial bookmakers, holding the shares for a short while until they find a buyer, making a profit from the difference in the 'buy' and 'sell' quote.

It has suddenly occurred to me that, if this is indeed so, and they feel that they cannot move a share on because no-one is buying, the market will collapse; after all they can only hold as many shares in their trading portfolio to the value of their credit facility, can't they?

Hopefully somebody will tell me I'm wrong, though is this scenario what has caused stock markets in other countries to be temporarily closed?
Credit Crunch Takes it's toll - madf
Steptoe
Most shares have Market Makers.

In FTSE stocks and larger ones that are traded through the Stock Exchange Electronic Trading System, people put orders into a giant electronic spreadsheet and they are filled or not depending on which way the price moves. So Market makers are relatively unimportant as the market basically makes itself.
Smaller shares may be traded on SETS,,, but if thinly traded the Market makers may make a market by buying or selling from third parties, making a spread.. on resale.

If stock go up a lot, Market Makers may sell shares they do not own.. going short.. and buying back on the way down.
On the way down, Market Makers will hold as few shares as possible hence large falls on little volume.

The above is GROSSLY simplified: I could write a book - and be wrong! :-)

Edited by madf on 28/10/2008 at 09:23

Credit Crunch Takes it's toll - Steptoe
As I feel a twinge of guilt for killing this thread by taking it away from motoring.....

Life in my small Norfolk market town seems to be going on much as normal, but behind the scenes....I cycled down to the builders merchant this morning (two national chain operations adjacent to each other, shortly, with somewhat unfortunate timing, to be joined by a third) The place was deserted, with the staff rushing to oblige me with my modest needs, but what struck home was the car transporter business on the other side of the road: the entire fleet was parked in the yard as if it were Sunday. In fact in better times the wagons weren't there on Sunday either as they parked up in a layby somewhere in the country ready for Monday's job.

A frightening sight, considering how much of our economy revolves around motoring.
Credit Crunch Takes it's toll - Screwloose

I've heard this afternoon that a Honda dealer in the Bristol area has gone under - anyone local have any confirmation?
Credit Crunch Takes it's toll - J500ANT
I've heard this afternoon that a Honda dealer in the Bristol area has gone under
- anyone local have any confirmation?

Not heard anything here, but I thought they were manufacturer owned.
Credit Crunch Takes it's toll - Screwloose

I was told about it in a garage this afternoon while discussing the deteriorating situation in the trade. The garage owner was a friend of a salesman in this unnamed Honda dealers.

Apparently the sales team were called in yesterday and told that they were all redundant and the dealership was going under. That's all I have at the mo.
Credit Crunch Takes it's toll - cheddar
I think that there are two Honda dealers in Bristol and one in Bath that seem to be connected and are, I would guess, probably Honda owned.
Credit Crunch Takes it's toll - Alby Back
All manner of woe being spoken of locally tonight re Bentley. Allegedly cutting around 300 jobs. Night shift cancelled. 5 week "Christmas" shutdown.........tragic for local community.
Credit Crunch Takes it's toll - Falkirk Bairn
Business W reports -

One hundred staff at a Gloucestershire car dealership have spent the day coming to terms with being made unemployed with no pay and redundancy money.
All of the staff at Amethyst Honda, which has showrooms and garages in Cheltenham, Gloucester and Chippenham, have been hit by the closure of the business.

Some turned up at their places of work today seeking to retrieve their own tools from the workshops, and their personal belongings, to be met with shut doors. Customers cars were locked in garages still requiring work.

Unconfirmed reports suggest talks are underway with Volvo dealer Johnsons, which has a branch in Cole Avenue, Gloucester, as well as Slough, Solihull and the Midlands.

?It ceased trading yesterday (29/10),? said a former Amethyst staff member. ?Staff were told at 17.00 on Wednesday that the company had folded and told they had 15 mins to collect personal belongings and to leave.?

In a letter to staff, dated October 29, director of Amethyst Motor Company Ltd, Roger Moore, said:

?As you will no doubt be aware there has been significant decline in the motor sales industry in the UK in recent months as a result of the wider economic downturn and tightening of credit.

?The company has suffered severe financial difficulties due to these adverse market conditions. In an attempt to address these difficulties you may be aware that the company has recently made several redundancies in an effort to continue as a viable business.

?I am writing with great sadness and regret to confirm that despite your considerable efforts to ensure the future of the company, the board has resolved that the company is facing imminent insolvency. There the company has been placed into administration and steps have been taken today to commence appointment of joint administrators.

?It is therefore necessary for the company to terminate the employment of all of its employees for reasons of redundancy with immediate effect.The company will not be in a position to pay you any unpaid wages, notice pay, holiday pay and redundancy payments which you may be entitled to.?

No one at Amethyst was available for comment.
Credit Crunch Takes it's toll - Screwloose

Thanks FB; I was beginning to wonder a bit there....

If you can't make money selling Hondas in Cheltenham, Chippenham and Gloucester.....
Credit Crunch Takes it's toll - J500ANT
also gone today is www.sidlow.co.uk - if you google news Sidlow a load of different pages come up.
Credit Crunch Takes it's toll - Screwloose
also gone today is www.sidlow.co.uk


Yes; the news of that is now spreading. At this rate - after LSUK last month - I won't have a parts account left by X-mess. That's my VW and PSA supply gone.

There's a fair chance that around 75% of the dealer groups won't survive the next 12 months.
Credit Crunch Takes it's toll - Falkirk Bairn
If you can't make money selling Hondas in Cheltenham Chippenham and Gloucester.....


There are 2 lots of people going about

1) those with little / no money & maybe worried about their job/ finances. So they are not spending as much.
2) Those who have secure jobs and / or have money but not spending as much.

Result - shops in High Street not busy, new car sales down, nobody buying a new house. Nobody able to sell a house / 2nd hand car..........

It is the start of deflation - as bad as inflation.
Japan has had it for donkeys - why buy a car / home today - next week/month/year it is likely to be cheaper in the future.................

I have watched a private seller trying to sell a 2yr old (£32K new) 15K mls 3.5 ltr car - started 1 month ago at £18K, then £18K ono, it is now £11.5K ono.......................I might go for it if it gets to £9,000 - I fancy a bit of luxury motoring - only thing is I will need to keep it for ages as it will be worth even less as the months/years go by - nobody will want a 20mpg/£400RFL/group 17 car - except me!! ( and maybe another few BRs)

 

Ask Honest John

Value my car