Upcoming Recession and financial Crash

[grrclark]

2 minutes ago, Vince Green said:

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 

All depends on your evaluation of risk really Vince, if you're certain that it is coming then buy into a fund that shorts.

[Lloyd90]

1 hour 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  

Sorry to break it to you but there’s a chance it’ll be sold to pay for your mums care home should she need one. 

[Whatmuff]

1 hour ago, grrclark said:

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.

Awesome great info, as Vince said as an amateur it's way to risky as it's something I've never done and I've gone pretty much all in on precious metals, as in the past during crashes especially after 2008 they've spiked, and with them always being suppressed by the banks, I'm kinda hoping that gets properly exposed and they then break free (mainly silver) 

[Retsdon]

6 hours ago, Lloyd90 said:

3+% over how long though? 

Indefinitely really. Since the 2008 crash interest rates have been at an historically anomalous low. https://www.economicshelp.org/wp-content/uploads/2009/04/historical-interest-rates-1800-2010.png . Consequently, if - or rather when - interest rates return to anything like  'normal' levels then a 3% rise in the current mortgage rate is pretty much baked into the cake. Of course there's the Brexit thing to consider too. Sterling has been in decline for years,http://www.ft.com/fastft/files/2016/10/MAS_CHART.jpg but since the Brexit vote that decline has accelerated sharply (see the tail on the end of the second chart). It has to be a worry that if there is a disorderly 'hard' Brexit, that that decline could turn into a rout - at which point any Chancellor would have no choice but to raise interest rates sharply to 'defend' the pound. There's nothing new here - Callaghan, Healey, Lawson,  and Major were all forced down that road at some point. Think a mortgage rate at 8% or more. A little high by today's standards but nothing special either. In a time of globally easy money, these are the current base interest rates worldwide  - https://tradingeconomics.com/country-list/interest-rate . Note how low Eurozone (zero) rates are compared to most of the rest of the world.

Edited October 12, 2018 by Retsdon

[Retsdon]

5 hours ago, Whatmuff said:

Awesome great info, as Vince said as an amateur it's way to risky as it's something I've never done and I've gone pretty much all in on precious metals, as in the past during crashes especially after 2008 they've spiked, and with them always being suppressed by the banks, I'm kinda hoping that gets properly exposed and they then break free (mainly silver) 

You should be well happy today then. GDX was up 6.5% yesterday. Plenty of room to run too - it's still only a third of the price it was in 2013.

[oowee]

The higher interest rates went along with higher inflation. That inflation allowed us to pay off our houses early as wages went up and the value of that debt decreased. Many of us live in houses that are valued far beyond that which we could have bought with what we earned. The houses my kids buy now look to be based on a long mortgage term but the reality is inflation and wage growth will eat into the time frame and the mortgage will be eroded. We all know many who live in houses of value way beyond what they could have bought even at the end of their working life. 

 

[team tractor]

8 hours ago, Lloyd90 said:

Sorry to break it to you but there’s a chance it’ll be sold to pay for your mums care home should she need one. 

That’ll never happen  my parents are only in their 60’s and would live with me. 

The business has been given me too. 

My nan was in a home for free as we proved she had dementia.

[blackbird]

8 hours ago, Lloyd90 said:

Sorry to break it to you but there’s a chance it’ll be sold to pay for your mums care home should she need one. 

+1 it has happened to quite a few I know, makes my blood boil

[team tractor]

8 hours ago, Lloyd90 said:

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!! 

My mates are paying £1200- £1500 a month on their mortgages. 

 

5 minutes ago, blackbird said:

+1 it has happened to quite a few I know, makes my blood boil

I know it happens but I genuinely have space at mine as it’s 4 double bed so I’d have either here. 

Work hard, pay tax then pay the government it all back  It’s ridiculous 

[Retsdon]

30 minutes ago, oowee said:

The higher interest rates went along with higher inflation.

True - but a falling pound will mean higher inflation. Plus, for years inflation in the west has been suppressed by exporting jobs and plant to where labour is cheaper. But an awful lot of that deflationary 'bonus' of globalization - low wages and manufacturing costs etc has already been used up and the pendulum is starting to swing back. Just look at wage inflation in Asia.

https://asia.nikkei.com/Economy/Asia-seen-leading-global-wage-growth-in-2018

You'd have to think that eventually this seemingly inexorable upward pressure on manufacturing costs at the point of origin must eventually translate to higher prices globally. 

Edited October 12, 2018 by Retsdon

[Lloyd90]

34 minutes ago, team tractor said:

That’ll never happen  my parents are only in their 60’s and would live with me. 

The business has been given me too. 

My nan was in a home for free as we proved she had dementia.

Sorry mate just saying - I probably have to tell at least 2-3 people a week that it will happen, and it does. 

You might want to take advice now about different options for future. 

Sometimes saying ‘my family would live with me’ just isn’t an option when they need 24/7 care. 

Re your nan - not sure what happened there without the details - some people who are extremely challenging or very very sick can apply for health funding but it’s very difficult to get. Having dementia definitely isn’t a way to automatically get it. 

[Lloyd90]

40 minutes ago, blackbird said:

+1 it has happened to quite a few I know, makes my blood boil

Can see both sides of it mate. On one hand people say they’ve paid in all their lives and shouldn’t have to pay for their care. 

On the other hand - you’ve got someone with basically absolutely loads of money (house worth hundreds of thousands) - saying “I don’t want to spend my money for the care I need ... I want the tax payer to fund it” whilst they keep their money and give it away. 

Why should I, you or any other tax payer fund someone’s care whilst they have hundreds of thousands of pounds? They don’t need it - by that point in time it’s no use to them. 

They always say “I’ve paid in all my life!” - well the majority of people when taking into account all the benefits of living in this society get out more than they put in. I believe you have to make over £50k ish a year before your a net contributor rather than a net Drain. How many people have done that? 

 

 

[SpringDon]

1 hour ago, Retsdon said:

True - but a falling pound will mean higher inflation. Plus, for years inflation in the west has been suppressed by exporting jobs and plant to where labour is cheaper. But an awful lot of that deflationary 'bonus' of globalization - low wages and manufacturing costs etc has already been used up and the pendulum is starting to swing back. Just look at wage inflation in Asia.

https://asia.nikkei.com/Economy/Asia-seen-leading-global-wage-growth-in-2018

You'd have to think that eventually this seemingly inexorable upward pressure on manufacturing costs at the point of origin must eventually translate to higher prices globally. 

^ this very muchly. The developed world has run out of places to export inflation to. This, as much as anything, is why the train is nearing the buffers.

And, as an aside, is why I believe the eu is so keen to expand to the east.

[team tractor]

5 hours ago, Lloyd90 said:

Can see both sides of it mate. On one hand people say they’ve paid in all their lives and shouldn’t have to pay for their care. 

On the other hand - you’ve got someone with basically absolutely loads of money (house worth hundreds of thousands) - saying “I don’t want to spend my money for the care I need ... I want the tax payer to fund it” whilst they keep their money and give it away. 

Why should I, you or any other tax payer fund someone’s care whilst they have hundreds of thousands of pounds? They don’t need it - by that point in time it’s no use to them. 

They always say “I’ve paid in all my life!” - well the majority of people when taking into account all the benefits of living in this society get out more than they put in. I believe you have to make over £50k ish a year before your a net contributor rather than a net Drain. How many people have done that? 

 

 

My mum and dad have paid more tax than most and at 67 still working. 

Tax payer should pay for it like they have for others . My parents support the scrounging **** in the world. 

My dad has worked hard and done well but others don’t and sit at home living off benefits all their lives but get it for free  

52 years of paying in so far ? Why should he pay but a benifit claimer gets it for nothing.

that money is my parents and not the state. 

 

You do realise if a guy has earned loads he’s also paid 40-50% tax ? 

 

Edited October 12, 2018 by team tractor

[Lloyd90]

9 minutes ago, team tractor said:

 

that money is my parents and not the state. 

If they do need a Care home,  what do they need their money for when they’re old and possibly have dementia?

You think the tax payer should fund them and their money should just sit in their bank accounts and them not even be able to spend it ... 

 

What your honestly saying is you should have the money if they have any left ... let’s not beat around the bush.

You think tax payers should fund the care, so you can keep an inheritance. 

Just because there are people out there on benefits scrounging doesn’t make that right. That’s like saying we should all try to avoid paying tax because it only gets wasted on benefit scrounges. 

 

What actually happens when your left with the state to fund your care is, you have to move into the cheapest placement available at the time, and trust me some of them I wouldn’t want to leave my dog in. 

People who have funds to privately pay actually get to choose their care home, they get to pick one close to their families and friends, with the staff that they want with the facilities and support that they want. 

People seem to think paying for your care is a bad thing. They seem to miss the point that you actually get to be treated with a bit more respect and decency if you’ve been fortunate and worked hard throughtout your life. 

[grrclark]

6 hours ago, blackbird said:

+1 it has happened to quite a few I know, makes my blood boil

Why does it make your blood boil?

If you have accumulated enough wealth in life to pay for your own healthcare in your dottage, why is it a bad thing that you have to?

Should the state (taxpayer) fund a significant healthcare bill just so that kids can inherit?

Obviously there are nuances and subtleties unique to personal circumstance, but consider the questions in general terms.

 

[Mice!]

I can certainly understand why people don't like the idea of having to sell your house to pay for a care home, paying a percentage may be fair.

[grrclark]

1 minute ago, Mice! said:

I can certainly understand why people don't like the idea of having to sell your house to pay for a care home, paying a percentage may be fair.

Why, assuming that there is not a spouse that is otherwise left homeless?

[amateur]

Unfortunately, the rule is pay out everything you own until you are left with £23k, then the state will "help" you

[Mice!]

11 minutes ago, grrclark said:

Why, assuming that there is not a spouse that is otherwise left homeless?

Because like amateur says, they currently take everything until your down to 23k, so spend all your life paying for your house and taxes, then give your house back to pay for a care home?

[grrclark]

12 minutes ago, amateur said:

Unfortunately, the rule is pay out everything you own until you are left with £23k, then the state will "help" you

Why is that unfortunate?  Why should those who can afford it not be expected to pay for their own care in their decline?

Acute care is still covered free of charge as it is for everyone else.

1 minute ago, Mice! said:

Because like amateur says, they currently take everything until your down to 23k, so spend all your life paying for your house and taxes, then give your house back to pay for a care home?

But why shouldn’t you pay for it if you can afford it?

What good is a £250k house sitting empty and left untouched so kids can inherit the lot when joe taxpayer is fronting up the residential care for the owner of that house?

[Mice!]

3 minutes ago, grrclark said:

Why is that unfortunate?  Why should those who can afford it not be expected to pay for their own care in their decline?

Acute care is still covered free of charge as it is for everyone else.

But why shouldn’t you pay for it if you can afford it?

What good is a £250k house sitting empty and left untouched so kids can inherit the lot when joe taxpayer is fronting up the residential care for the owner of that house?

so everyone might as well sell up, gift the money to family and move into rented property.

 

[amateur]

1 minute ago, Mice! said:

so everyone might as well sell up, gift the money to family and move into rented property.

 

The local authorities are already on to that - any recent dispersal of assets is taken into account, so the kids would have to pay.

[grrclark]

3 minutes ago, Mice! said:

so everyone might as well sell up, gift the money to family and move into rented property.

There is an argument that would at least be a redistribution of wealth, by some measure.

[Sciurus]

The reality is that those people who have lived modestly, built up savings and own their own home will have to pay for their own care in old age.

However,Those people who live recklessly, or who would rather have fancy holidays but not save for their old age are rewarded by having their care costs paid by the State.

However for me, the final insult is that Local Authorities do not pay the true cost of running the Care Home, so any shortfall is made up by the private fee paying resident. In other words the person who has carefully saved, has to pay for himself out of savings, pay for the feckless through taxation and make up the shortfall of the feckless by paying above the cost of running the Home. A triple whammy!