Upcoming Recession and financial Crash

[AVB]

1 hour ago, Whatmuff said:

Different?? Really. I had a professor come to where I work to talk about psychology and leadership and he travels the country talking to banks and he also warned that he was seeing the same practices that went on back in the day before the recession, and is almost certain the same mistakes are being made again. Just because I don't have data, doesn't mean people aren't doing it, alot of people close to me are doing it, using credit cards to buy stocks and currency, that was in the news and well known.

 

Yes the stock market is dominated by institutional investors and the same people that own half of London, the same people that will take their money when the markets start to turn and who will loose? The small fry (public) everytime. 

I mean where has the money that has been pumped into the stock market over the last 10 years come from? It doesn't just reach all time highs from earnings and profits. That money has been borrowed to prop the markets up. Good for the economy?? Nope. 

 

I'm genuinely interested in economics and learning all the time and try to research as many sources as possible, I'm not trying to argue with you, I'm genuinely interested in debate and learning from others as to what's going on. It just interests me as people around me are making huge gambles and taking on massive debt while driving nice cars and not having the earnings to back it up, and on the other side the mainstream media and banks are saying everything is rosie. Just doesn't add up.

That was a few days ago??? That's the Bank Of England worried about debt being lent to companies with debt?? There are hundreds of these articles over the past 2 years.

Sorry I don't have the time to try to debate with somebody who throws words around like CDO without really understanding what they are and how 2018 is different to 2008. If you do please enlighten me. I am going to bed as I need to be up early as I am finishing restructuring a CDO desk and a Stock Lending/borrowing business and then fly back to the UK on Saturday so time is short!

[Lloyd90]

8 hours ago, team tractor said:

 

My mortgage renewal is going up £200 a month  and I owe hardly anything. I’m going to shop around but this is happening. I guess it’s going up £5-600 a month to the big borrowers .

How much did you borrow and at what rate? 

I got mine for about 1.34%  recently been in about 8 months. That’s on a fair size loan. 

If interest rates go up +2% to 3.34% my payment goes up £250. 

If you owe hardly anything they shouldn’t be going up by such a large amount 🤔

also I guess it depends how much they go up over the next few years - are we expecting 1% per year? 2% a year? 

If so it won’t be long before lots of people are in hot water. Be like 89/90 again with people just handing their house keys over to the banks! 

[Scully]

Of course, we could always just talk ourselves into a recession. Speculators repeating it often enough could be all it takes. There are people out there whom spend their entire lives just trying to make ends meet; living hand to mouth is often a way of life. These people can’t even tell when we’re out of recession, so it makes little difference to them. Like I said, if it happens it happens; there’s nothing the average working man or woman can go about it. 

[Whatmuff]

28 minutes ago, AVB said:

Sorry I don't have the time to try to debate with somebody who throws words around like CDO without really understanding what they are and how 2018 is different to 2008. If you do please enlighten me. I am going to bed as I need to be up early as I am finishing restructuring a CDO desk and a Stock Lending/borrowing business and then fly back to the UK on Saturday so time is short!

Excellent well done you, I'm sorry I didn't realise the title of the group was "explain a CDO" and others can pick holes in the argument because the OP hasn't explained what one is. So you should know more than others that gathering debts together (mortgages) and selling them on to financial investors didn't work in the past. Tell me that CDOs today aren't made up not only from mortgages, but car loans, credit cards and finance deals, these may have been renamed but effectively still various loans grouped together and sold on to investors? I may not be a stock broker, or fund manager or a CDO desk restructuring extraordinaire but I can read and educate myself enough to know when things aren't going well.

 

still as you say, debt is good! I'll see you back here in a couple of years and you can let me know your thoughts then. 

1 minute ago, Scully said:

Of course, we could always just talk ourselves into a recession. Speculators repeating it often enough could be all it takes. There are people out there whom spend their entire lives just trying to make ends meet; living hand to mouth is often a way of life. These people can’t even tell when we’re out of recession, so it makes little difference to them. Like I said, if it happens it happens; there’s nothing the average working man or woman can go about it. 

That's the trouble Scully, it's always the average man or women that suffers and the banks go on to win again. 

[Retsdon]

Well, the stock markets are due a massive correction. From 2008 to now, that S&P chart is a copybook Elliot Wave chart peaking in three waves. And for the people who rode this market up, they've made pots of money. Nothing lasts forever so it' would be far more sensible now to sell and  lock in profits than to chase what are obviously diminishing returns and get caught in a precipitous crash. And with more sellers than buyers, there goes the uptrend. How that will impact on the general economy is hard to say, but traditionally falling markets and recessions go hand in hand.

[team tractor]

2 hours ago, Lloyd90 said:

How much did you borrow and at what rate? 

I got mine for about 1.34%  recently been in about 8 months. That’s on a fair size loan. 

If interest rates go up +2% to 3.34% my payment goes up £250. 

If you owe hardly anything they shouldn’t be going up by such a large amount 🤔

also I guess it depends how much they go up over the next few years - are we expecting 1% per year? 2% a year? 

If so it won’t be long before lots of people are in hot water. Be like 89/90 again with people just handing their house keys over to the banks! 

They say is could go up by 3+% 🙈 I’m going to sort it over the never week but I was on 5.1%    12 years ago . Currently on 1.5 % the last 3 years.. 

People we know are borrowing £250-300k which is madness. If they loose their jobs they’re stuffed. 

£20-30 an hour employed and all of a sudden they are on short time and the rates going up will be the loss of their homes.

Edited October 11, 2018 by team tractor

[Retsdon]

In 1987/88 interests rates doubled from about 7% to over 15%. I had to sell the farm, the machinery, the livestock, my dogs, the lot. Basically I was made homeless. I left Britain two years later and have hardly been back since. And we only owed about 40% of the capital value of the place. Can't imagine how people nowadays would cope with a spike to historically high interest rates.

Edited October 11, 2018 by Retsdon

[amateur]

7 minutes ago, Retsdon said:

In 1987/88 interests rates doubled from about 7% to over 15%. 

and we survived!

[RockySpears]

4 hours ago, AVB said:

And can you read? I also said within reason. 2-5% is what central banks aim for.  

Like I said, you mean you are in favour of having 2 - 5% of your money simply "lost" each year?  I said nothing about deflation either.

With a 3.5% (like maybe the last 10 years) inflation your £100 has only the buying power £ 70 after 10 years.  Your wages took a real terms loss of 30% !!!  You think inflation is good?

 

RS

[Mice!]

The biggest con for me is house prices, my first house was £43k on the same street my folks had bought 22years before at about £5k (1975) now i sold my house think it was £53k and thought I'd done well, the same house two years later went for just over £100k (around 2001 ish)

wages certainly haven't gone up that much, the only "people" that win in this situation is the banks, even if you sell and move your buying at inflated prices, so then everyone is buying and selling at double what they were so double the debt, just watch an old episode of location.

This has driven everything else up in price.

another example, in 2008 i bought a 1 year old Mondeo for about 11k a one year old Mondeo now is about £19k.

If the bubble bursts its going to be loud.

[grrclark]

40 minutes ago, RockySpears said:

Like I said, you mean you are in favour of having 2 - 5% of your money simply "lost" each year?  I said nothing about deflation either.

With a 3.5% (like maybe the last 10 years) inflation your £100 has only the buying power £ 70 after 10 years.  Your wages took a real terms loss of 30% !!!  You think inflation is good?

 

RS

I’m sure this converstaion has been had before on PW.

That is an overtly simplistic consideration of inflation and inflationary growth.

[team tractor]

37 minutes ago, Mice! said:

The biggest con for me is house prices, my first house was £43k on the same street my folks had bought 22years before at about £5k (1975) now i sold my house think it was £53k and thought I'd done well, the same house two years later went for just over £100k (around 2001 ish)

wages certainly haven't gone up that much, the only "people" that win in this situation is the banks, even if you sell and move your buying at inflated prices, so then everyone is buying and selling at double what they were so double the debt, just watch an old episode of location.

This has driven everything else up in price.

another example, in 2008 i bought a 1 year old Mondeo for about 11k a one year old Mondeo now is about £19k.

If the bubble bursts its going to be loud.

Going to be mental. 

My mums house has gone up £250k in 25 years. 

My house has gone up £20k in 12 but after the work it’s gone up £80k .

my van in 5 years went up £4K on new prices

[grrclark]

From reading through the thread, when did the Renminbi (Yuan) become a gold standard currency?

[Mice!]

21 minutes ago, team tractor said:

Going to be mental. 

My mums house has gone up £250k in 25 years. 

My house has gone up £20k in 12 but after the work it’s gone up £80k .

my van in 5 years went up £4K on new prices

well £20k seems reasonable just for growth, plus the work you've done.

£250k seems potty, unless your mum down sizes the only people who benefit is her family hopefully in many many years.

How your van has gone up in price I've no idea.

I'm another about to plan an extension so a slow down might help us, but as someone else above said most builders are still busy, if there any good.

[Whatmuff]

22 minutes ago, grrclark said:

From reading through the thread, when did the Renminbi (Yuan) become a gold standard currency?

https://www.google.co.uk/amp/s/www.globalresearch.ca/chinas-gold-backed-petro-yuan-challenges-us-dollar-hegemony/5634034/amp

 

Sorry should have said Petro-Yuan

[RockySpears]

40 minutes ago, grrclark said:

simplistic consideration of inflation and inflationary growth.

  Simplistic maybe, but not wrong.

  Inflation is NOT growth, it is the destruction of wealth.

  Growth is the increase in the production of wealth .  "Inflationary Growth" is an Oxymoron!

  Under what economy does destroying the purchasing power of your "money" mean growth?

Ahhh.  Mr J M Keynes,

RS

Edited October 11, 2018 by RockySpears

[blackbird]

Reading through these posts the ones I really worry for are the young starting out in life how the hell are they going to get a home. A friends son of mine has just signed for a 40 yr mortgage he is 28 & will own the house at 68 yrs of age. 

Edited October 11, 2018 by blackbird

[grrclark]

7 minutes ago, Whatmuff said:

https://www.google.co.uk/amp/s/www.globalresearch.ca/chinas-gold-backed-petro-yuan-challenges-us-dollar-hegemony/5634034/amp

 

Sorry should have said Petro-Yuan

The petro-yuan is not a currency, it is a terminology in the context of oil trading.

The currency is still the yuan, which is still a fiat currency, but the oil futures contracts  traded on the particular exchange may, or may not be, backed by gold, i.e. The transaction is backed by a gold reserve to lessen the risk (to the investor) of fluctuation of the base currency (in this case the yuan) against the future price of the commodity in dollars (as that is still the global standard currency fror oil trading on the open market) 

Having had a cursory glance I can’t see anything that is hard and fast about that gold backing, other than press articles.

4 minutes ago, RockySpears said:

  Inflation is NOT growth, it is the destruction of wealth.

Growth is the increase in the production of wealth .  "Inflationary Growth" is an Oxymoron!

Under what economy does destroying the purchasing power of your "money" mean growth?

Ahhh.  Mr J M Keynes,

RS

Keynes’ school of economic thought is only 1 way of thinking, Hayek as an example is almost diametrically opposed.

In the context of how you are considering inflation as having an impact on monetary value alone then many other things have to be fixed, such as commodity values and labour values, and that is classic Keynes, he asserts that you can fix certain elements through things like fiscal and goverment policy and not allow the market to determine itself.  Keynes is favoured by anti-capitalists.

The only consistent thing amongst economic scholars is their consistency in choosing to consider things differently from each other.

Ask 100 economists the same question and you’ll get about 300 answers.

[Whatmuff]

18 minutes ago, grrclark said:

The petro-yuan is not a currency, it is a terminology in the context of oil trading.

The currency is still the yuan, which is still a fiat currency, but the oil futures contracts  traded on the particular exchange may, or may not be, backed by gold, i.e. The transaction is backed by a gold reserve to lessen the risk (to the investor) of fluctuation of the base currency (in this case the yuan) against the future price of the commodity in dollars (as that is still the global standard currency fror oil trading on the open market) 

Having had a cursory glance I can’t see anything that is hard and fast about that gold backing, other than press articles.

Keynes’ school of economic thought is only 1 way of thinking, Hayek as an example is almost diametrically opposed.

In the context of how you are considering inflation as having an impact on monetary value alone then many other things have to be fixed, such as commodity values and labour values, and that is classic Keynes, he asserts that you can fix certain elements through things like fiscal and goverment policy and not allow the market to determine itself.  Keynes is favoured by anti-capitalists.

The only consistent thing amongst economic scholars is their consistency in choosing to consider things differently from each other.

Ask 100 economists the same question and you’ll get about 300 answers.

Happy with that, but with China calling for a change in the Global currency (US Dollar and them trading oil with the petroyuan system (possibly gold backed) and with Russia and China hoarding gold all of a sudden, wouldn't this be an indication of a currency/monetary system that's gold backed? This would be devastating for the dollar? I saw a few vids way back on thus by a few economists but I can't find them and info has pretty much dried up. But with trade wars increasing and Russian activity on the up, economics between the three superpowers doesn't look great.

[12gauge82]

37 minutes ago, blackbird said:

Reading through these posts the ones I really worry for are the young starting out in life how the hell are they going to get a home. A friends son of mine has just signed for a 40 yr mortgage he is 28 & will own the house at 68 yrs of age. 

Agreed, this country and the system we currently have is simply not working for your average Joe public, the young particularly, it says it all that employee wages have been stagnant for the last 10 years while CEOs has rocketed. The banks that failed, bailed out by public money continue to make obscene money out of the public while the little people who bailed them out continue to suffer, something needs to change, I genuinely believe we could see civil unrest in a generation or two if nothing changes, people with nothing to loose are very dangerous people indeed.

[team tractor]

1 hour ago, Mice! said:

well £20k seems reasonable just for growth, plus the work you've done.

£250k seems potty, unless your mum down sizes the only people who benefit is her family hopefully in many many years.

How your van has gone up in price I've no idea.

I'm another about to plan an extension so a slow down might help us, but as someone else above said most builders are still busy, if there any good.

I paid £24k for a 12 plate and when I went to swap it they are £28k now. Sorry if you misunderstood dude.

 

im the only family now so it’ll be mine. Told them both I’m renting it out when they kick the bucket  

Edited October 11, 2018 by team tractor

[Mice!]

4 minutes ago, team tractor said:

I paid £24k for a 12 plate and when I went to swap it they are £28k now. Sorry if you misunderstood dude.

 

im the only family now so it’ll be mine. Told them both I’m renting it out when they kick the bucket  

i get it now☺ 

[grrclark]

1 hour ago, Whatmuff said:

Happy with that, but with China calling for a change in the Global currency (US Dollar and them trading oil with the petroyuan system (possibly gold backed) and with Russia and China hoarding gold all of a sudden, wouldn't this be an indication of a currency/monetary system that's gold backed? This would be devastating for the dollar? I saw a few vids way back on thus by a few economists but I can't find them and info has pretty much dried up. But with trade wars increasing and Russian activity on the up, economics between the three superpowers doesn't look great.

There is not enough gold in the world to use it as a currency standard, or you would have to inflate the commodity price of gold so high that it would become meaningless as a standard.  Taking China as an example right now they have just further relaxed their fiscal policy to allow internal market stimulus as a result of the trade tariffs imposed by the US.  The Chinese banks were required to hold, I think 15%, of currency reserves to cover their lending and this has been reduced to, i think, 12.5%.  The percentages may be wrong, but close enough.  The Chinese government are encouraging the banks to increase domestic lending in order to keep their economy buoyant to offset the drop in foreign income.

China use their sovereign wealth funds of other reserve currencies to prop up the renminbi.

There are a number of commentators in the world that would agree with your fears that another global crash is potentially on the cards, especially in that there is less willingness for international cooperation to effect consolidated remedial measures given the current political landscape, however there are just as many who will argue the contrary.  

If you believe that the economy is going to crash then hedge against it, you could make yourself an absolute fortune if you have the courage of your convictions.

[Vince Green]

I'm sure its coming, just like winter follows summer the markets stretch then overstretch,  doubt creeps in and they contract. There is a degree of inevetablity in the whole process. I've got a  meeting with my broker next week. I'm sure it will be hunker down and sit it out, -again.

Hedging, as an amateur, is beyond risky. We lack the huge information gathering capabilities of the hedge funds. By the time the information filters down to us plebs its too late to act on. Better a fortress mentality and wait 

[Lloyd90]

4 hours ago, team tractor said:

They say is could go up by 3+% 🙈 I’m going to sort it over the never week but I was on 5.1%    12 years ago . Currently on 1.5 % the last 3 years.. 

People we know are borrowing £250-300k which is madness. If they loose their jobs they’re stuffed. 

£20-30 an hour employed and all of a sudden they are on short time and the rates going up will be the loss of their homes.

3+% over how long though? 

We had to borrow over 300k - it was that or don’t live in the city. Pro’s and con’s. 

Pros of living in the city - we can rent spare rooms in our house whist were young in a government backed tax free scheme and pay the mortgage. Always allows us to tuck money away for a rainy day. 

Hope the house prices keep climbing for a while yet lol! Even if they drop, as we have seen time and time again, unless your in a rush and have to sell during a decline, they go back up again. 

Houses are in shortage and the British people have an obsession with being home owners. Not like many Europeans who have long term or lifetime renting cultures. 

I saw on TV the other week a Bristol family who did as you describe, didn’t save anything, rather go on 4-5 holidays a year. Ended up out of work and had to sell their home. They were renting and that was £1,100 a month. 

They went on this show and they said for them to own a similar house it would cost them over £1,600 a month and they’d have to save over 40,000+ deposit as a minimum. There was absolutely no way they could afford it. 

They still said they’d rather own their home than rent. Both had good income jobs but every month they had less than £100 left over 🤦‍♂️. I said by the time they save the £40k deposit, they won’t be able to afford a flat in the city! 

Surprise surprise though, they weren’t willing to give up the 5 holidays a year!!