House prices..

[Slam62]

hmmm interest rates are on the way down energy prices going up will result in a spike in inflation, but the resulting higher cost of goods and services will lead to eventually lower inflation, that combined with the lending crisis, and the pound is weakening leading to more expensive imports ( more short term inflation - less spending - higher unemployment)

edit: and don't forget the resulting loss of tax revenue and higher government (social) costs - maybe higher taxes

 

[sunama]

edit: and don't forget the resulting loss of tax revenue and higher government (social) costs - maybe higher taxes

That, in itself, should stop people spending like there is no tomorrow, as they realise their pay-packets are getting smaller as more deductions are being made.

This should mean fewer Ipod, mobile phone and flat screen tv sales, which seem to have become the must-have items for any spend-thrift worth their salt.

 

[carpmaster]

I think that's a pretty good argument, and is most likely what the MPC will quote when they lower interest rates further. I hope to god they don't lower rates but they will probably see the inflation surge as short term, and expect the CPI to fall back into line because of the general slowdown in the economy which has been forecast.

 

[Chris1983]

In what way will the pound be in trouble. Further reducing the interest rates should help lower the value which will be of great benefit to our manufacturing industry.

Thats from 2000, so I would say industry it a fair bit lower now, and service higher.

That would be nice if we had any industry left, that has not gone to china or wherever.

Don't forget this is the miracle economy! The only reason we haven't got a lot more unemployment is due to government employing everybody and don't forget all those estate agents & mortgage companies.

Lets face it the back bone of this country has been gutted and what we have left is debt and an economy based on spending/consuming. Its not going to be pretty, expecially when people find they can't get any more credit, and they can't use their house as an ATM machine.

If the Central Bank really cared about the pound they certainly wouldn't be lowering interest rates. Since August the pound has been hammered. Its now at an all time low against the Euro. The only reason it doesn't look so bad against the dollar is due to that getting a beating as well, due to cutting rates.

Could this be the final death blow of the pound before they offer the "solution" as the euro?

 

[Dolph]

Thats from 2000, so I would say industry it a fair bit lower now, and service higher.

That would be nice if we had any industry left, that has not gone to china or wherever.

Don't forget this is the miracle economy! The only reason we haven't got a lot more unemployment is due to government employing everybody and don't forget all those estate agents & mortgage companies.

Lets face it the back bone of this country has been gutted and what we have left is debt and an economy based on spending/consuming. Its not going to be pretty, expecially when people find they can't get any more credit, and they can't use their house as an ATM machine.

If the Central Bank really cared about the pound they certainly wouldn't be lowering interest rates. Since August the pound has been hammered. Its now at an all time low against the Euro. The only reason it doesn't look so bad against the dollar is due to that getting a beating as well, due to cutting rates.

Could this be the final death blow of the pound before they offer the "solution" as the euro?

Yes, great idea, do you remember what made the recession of the early 90's so bad?

 

[Chris1983]

I personally don't think the central banks can doing anything stop whats coming. Whether you raise or lower interest rates, its going to hurt the consumer.

Weaker pound by lowering interest rates will mean we have to pay more for imports, and because our little insland is overcrowed, and hasn't got the resources to sustain itself that will mean a higher cost of living.

Raising rates will mean a strong pound, so cheaper imports, but will also mean mortgage rates and credit card rates will rise, translating to higher cost of living for most people.

Maybe the best bet is to keep the rate the same.

I think even if you lower the interest to 0% it won't help, as what we are facing is more of a solvency issue. Creating more debt isn't the answer. Basically this country is bankrupt, and theres no easy way out of this mess.

 

[Alibaba99]

Thats from 2000, so I would say industry it a fair bit lower now, and service higher.

That would be nice if we had any industry left, that has not gone to china or wherever.

Don't forget this is the miracle economy! The only reason we haven't got a lot more unemployment is due to government employing everybody and don't forget all those estate agents & mortgage companies.

Lets face it the back bone of this country has been gutted and what we have left is debt and an economy based on spending/consuming. Its not going to be pretty, expecially when people find they can't get any more credit, and they can't use their house as an ATM machine.

If the Central Bank really cared about the pound they certainly wouldn't be lowering interest rates. Since August the pound has been hammered. Its now at an all time low against the Euro. The only reason it doesn't look so bad against the dollar is due to that getting a beating as well, due to cutting rates.

Could this be the final death blow of the pound before they offer the "solution" as the euro?

UK manufacturing is still around 30% of the economy and a very important part as it brings money into the country through exports and gives us that all important value added. The service industries have to service something that actually does something useful.

 

[Wicksta]

After reading all these posts I've decided it's just a shame the country isn't run by a lot of forum members here who seem to know more about the economy than all these so called 'experts' working in the government and Bank of England.

What a lot of wasted talent we have here, doing normal jobs and renting flats out, they should all be millionaires with all this knowledge!

 

[Dolph]

I personally don't think the central banks can doing anything stop whats coming. Whether you raise or lower interest rates, its going to hurt the consumer.

Weaker pound by lowering interest rates will mean we have to pay more for imports, and because our little insland is overcrowed, and hasn't got the resources to sustain itself that will mean a higher cost of living.

Raising rates will mean a strong pound, so cheaper imports, but will also mean mortgage rates and credit card rates will rise, translating to higher cost of living for most people.

Maybe the best bet is to keep the rate the same.

I think even if you lower the interest to 0% it won't help, as what we are facing is more of a solvency issue. Creating more debt isn't the answer. Basically this country is bankrupt, and theres no easy way out of this mess.

Well, one of the main reasons the last recession was so severe was that our membership of the ERM forced the government of the time to increase interest rates to maintain the £'s value, even though most other economic indicators showed it needed to fall to perk up the economy. This in turn made the problems in the housing market much worse than they could have been.

 

[Dolph]

After reading all these posts I've decided it's just a shame the country isn't run by a lot of forum members here who seem to know more about the economy than all these so called 'experts' working in the government and Bank of England.

What a lot of wasted talent we have here, doing normal jobs and renting flats out, they should all be millionaires with all this knowledge!

You'd think, wouldn't you

 

[sunama]

I have to disagree Wicksta.

The fact of the matter is that the economy has been doing well for the last 10yrs. England is at a point now where the standard of living is at its highest. These days people expect to have cars, big tvs, mobile phones, etc. Even kids have mobile phones.

The fact of the matter is that the current Government have done a good job to allow people (through whatever means), to make money and live a high life. Obviously there comes a point where we must go to leaner times, but those times have not yet arrived.

If the pessimistic forum members were to be believed then we shouldve been deep in recession right now, with lots of people laid off, on the dole, etc. This has not yet happened. The Government are staving off this bad scenario for as long as possible. That is their plan and has been all along. No Government wants to bring on a recession.

Moreover, we seem to have some good theoretical arguments that give you an impression that these are highly intelligent and clued up people. I would refute this. If they were, they would all have got on the BTL train back in 2000 and would have raked it in. Most of these "people with intelligent arguments" have not done this. They missed the boat completely, mainly because of their poor judgement.

Based on all these poor judgement calls, I simply cannot trust what these people say.

If you pop over to housepricecrash, you will see a lot more of these people with similar opinions, but once again, I sense that their bitterness (of missing the boat) is getting the better of them.

 

[Slam62]

don't forget, the rises and profits from btl were not a sure thing and could still land a lot of people in trouble.

I will never forget the last significant fall in house prices and large rounds of redundancies. There are no guarantees at all, if I did have a btl I would sell it now.

hindsight is wonderful

The service industries now includes the city of london which brings in an awful lot of cash.

We have had a negative trade deficit for a long time so I guess the strength of the pound is based on security (relative), which is why defence and oil are so important.

If you owe a lot of money, you need to be either very clever or very lucky, I am neither.

 

[EvilFranky]

Moreover, we seem to have some good theoretical arguments that give you an impression that these are highly intelligent and clued up people. I would refute this. If they were, they would all have got on the BTL train back in 2000 and would have raked it in. Most of these "people with intelligent arguments" have not done this. They missed the boat completely, mainly because of their poor judgement.

What if they were all under 18 in 2000? I think thats a stupid comment to be fair.

Their knowledge may have only progressed over the last couple of years as they have taken an interest.

Just a generalised paragraph of nonsense!

 

[Rotty]

Well, one of the main reasons the last recession was so severe was that our membership of the ERM forced the government of the time to increase interest rates to maintain the £'s value, even though most other economic indicators showed it needed to fall to perk up the economy. This in turn made the problems in the housing market much worse than they could have been.

and even with all this we ended up with flat housing prices

 

[Dolph]

and even with all this we ended up with flat housing prices

but this time, we know the world is going to end, the rotation of the earth is going to change and you'll have to pay someone to take your house away...

 

[Chris1983]

You'd think, wouldn't you

Well from what I can tell the people who do make the decisions don't seem to have a clue, otherwise we wouldn't be in this mess. Lets face it the people in power don't care about the people they are suppose to serve, we are serving them.

Any educated person can spend 100 or so hours researching and you start to wonder whether this whole thing was planned or string of very bad decisions. I mean giving credit to anyone that breathes and approving mortgages that people surely cant afford is asking for trouble. The banks allowed this practice, knowing full well how it would end.
Instead of the government helping the man on the street, they would rather bail out the banks, as with northern rock (which has been de-listed off the FTSE 100). I expect more bank failures in the future as defaults rise. Mainly because they can't refinance due to negative equity. Will the banks get bailed out by the BOE? I expect so, but the man on the street will get no help.

 

[Dolph]

What if they were all under 18 in 2000? I think thats a stupid comment to be fair.

Their knowledge may have only progressed over the last couple of years as they have taken an interest.

Just a generalised paragraph of nonsense!

Several of the posters doing this have been doing it for many years on here, with the same tired old story.

It's like the boy who cries wolf, everyone stops listening when they've been wrong that many times.

 

[Dolph]

Well from what I can tell the people who do make the decisions don't seem to have a clue, otherwise we wouldn't be in this mess. Lets face it the people in power don't care about the people they are suppose to serve, we are serving them.

Any educated person can spend 100 or so hours researching and you start to wonder whether this whole thing was planned or string of very bad decisions. I mean giving credit to anyone that breathes and approving mortgages that people surely cant afford is asking for trouble. The banks allowed this practice, knowing full well how it would end.
Instead of the government helping the man on the street, they would rather bail out the banks, as with northern rock (which has been de-listed off the FTSE 100). I expect more bank failures in the future as defaults rise. Mainly because they can't refinance due to negative equity. Will they get bailed out by the BOE? I expect so, but the man on the street will get no help.

*takes a deep breath*

Northern rock has nothing whatosever to do with defaults. The problems in the UK housing market are nothing like the sub prime issues in the US.

The current problems relate to banks being unwilling to lend each other money, which in turn reduces the amount of money available to be lent out to consumers. Not problems with defaults.

 

[Heliospherez]

I have to agree,

The guys that should have seen this coming don't really have any Idea when it will peak, when it will get bad or how to control it.

In fact - I think the majority of the posters in here (including myself) could do a better job of the economy. Unfortunately, no one gives a monkeys what we think & as much as I would like to get paid £200,00 a year to predict the UK economy, I think the fact no one knows what will happen from month to the next would annoy me too much.

 

[Haircut]

The problems in the UK housing market are nothing like the sub prime issues in the US.

That's not strictly true.
The models that were used to price CDOs were based on invalid assumptions and this let to excessive lending worldwide.
It just took the defaults on subprime mortgages in the USA to bring this to peoples' attention.