Sheer Heart Attack

In my game, all competitors really know each other and we talk a lot. There aren't that many of us and we all buy from each other from time to time. Anyhoo, one guy, known him since 2001, announces that "it's never been this tough in advertising. I'm out of it in 6 months". This was after he told me that another competitor which owed him £1,200 went into liquidation two months ago owing nearly £100,000. Baton down the hatches, convert all your assets, dump your liabilities, keep small & lean and don't enter into any long term agreements for 5 years. Just wish I could have told myself that 9 months ago. :angry:

'Scuse my ignorance, but what was it before?

Thanks for that. So, the question is, how long until it can no longer be hidden and there are more runs on banks? I know that is a "how long is a piece of string" question, but guesses would be appreciated.

This is, quite frankly, astonishing. Can anyone cite a precedent for this in the last 30 years? Can anyone involved in the higher end of banking or who has a great deal of knowledge therein explain how this could have occured?

Sounds fantastic, Mr Parry. Mine is a 2-bed small house in the North East of England. I bought it for £120,000 last February and I bet you could get a lot more for your money in Thailand.

Market Oracle 15% - great, but not enough. If the credit crunch continues and all but the most gold-plated owner occupiers can only get 70-75% LTV, is a 25% drop not more likely?

ZaNu Liebour are a bunching of clucking funts and I can't express how much I hate them. Trouble is the Tories won't be any better at all... • Massive increases in taxation for not many tangible benefits • The sheer weight of employment legislation. Don't get me wrong - minimum wage etc all good, but most of the rest of the rules seem to be written by no-one with any private sector HR or financial nous • Slightly leftfield, but the grinding to a halt of tram and light rail schemes. So much for environmental concerns. • The health and safety culture, admittedly starting pre 1997, but increased exponentially in the last 10 years. • Sheer bloody mindedness. Take the smoking ban - why could they not have sealed-off smoking areas in pubs & clubs? I thought tolerance was a British virtue - apparently not. • 3,000 new laws and a massive cutback in civil liberties. I could go on and on. As soon as possible, I am out of this country. I used to love this strange old girl, but now she's nothing more than a well-used whore plying her trade in a inner city hellblock.

A very interesting set of responses - thank you. The point about fiat currencies is interesting, but could it not be one massive red herring? Aren't all currencies now fiat? If so, the vested interests and central banks merely have to prop up the illusion of worth in the money. After all, it's not as if the dollar, pound, euro etc are fiat currencies and every other currency is asset-backed or gold-backed. I find the clamour of people calling for an interest rate cut interesting. To my recollection, it was standard practise to raise interest rates when inflationary pressures were building. There is general derision of the inflation rates as stated by Gordon and his henchmen. In addition to that, banks are not legally obliged to follow the movements of interest rates and all indications are that they won't. When I first started posting on the site, I did feel influenced by the predictions of cgnao. I still think there is some value to his posts. However, looking for a wider range of views has stopped my panic somewhat and I'm going to try to continue on as normal. It's going to be bad for the next 2-3 years but not the end of the world as we know it.

Two or three interesting bits in this week's Moneyweek I'd like to share with you all. In Simon Nixon's Cityview column, he gives five reasons to be cheerful. He prepends the whole thing by stating that there is now open discussion on a repeat of the 1973 crash and mentions that the "director of a major US investment bank even (says) she thinks we might be heading for a repeat of the 1930s." Some of his points are that "corporate balance sheets remain strong", "the Middle East and Asia are awash with liquidity" and "emerging markets are still booming". The point I found most interesting though was that he states that "banks are well-capitalised". He says that the banks' Tier 1 capital is on average 8% against the minimum required of 4%. A $200bn hit would take that down to 7.5% and, extrapolating on that, if the losses are $400bn as have been predicted, Tier 1 capital would take that down to 7%. In the Moneyweek Roundtable, Chris Taylor, investment director and head of research at Neptune Investment Management, states "the normal annual run rate of bank write-offs is about $500bn-$600bn a year, which the system can handle. Over the next 18 months, we reckon that there will be the best part of another trillion coming." Therefore, if bad debt write-offs are on average twice as much as normal for the next 12-24 months, it will be a very bad time for the banks and financial institutions but surely this would simply be a recessionary time for the banks? It appears the losses would be just too small for it to go into meltdown. With lenders scaling back on mortgage products and requiring much higher credit standards and LTVs, it seems inevitable there will be some sort of correction in house prices. The lack of extra lending from the banks and depressed consumer confidence will doubtless turn into a recession in the whole economy. However, cgnao's talk of a worldwide financial meltdown seems unlikely with these scenarios. As someone who knows more than the average person about the financial markets (which isn't saying much) but a lot less than someone working in the financial markets, is my analysis right?

Bear. 33. Above average earner in North East England. Own a house which I am trying to sell. Never engaged in property speculation or BTL. Hoping the bubble will last 6 months longer so I can get out of the market - not much hope of that!

I was thinking Spain, Bandwagon. There is a smoking ban there but everyone ignores it. Same for Portugal too, I think. Seems that the countries that have been ruled by openly-declared fascist dictatorships in the last 100 years seem to have the best handle on civil liberties. Their doctors also seem to know that death by passive smoking is absurd. We live in a fascist dictatorship - 3,000 more illegal things than in 1997 now - but it's not openly declared yet. I'm pleased for you - I really am. In 2 years' time, people who STRd in 2007 will be seem as financial wizards by their friends and family. The fact that my redemption penalties end next Feb stopped me from putting the house on the market earlier. My estate agent valued the house at £25,000 more than when I bought it last February, representing an effective 20% jump in the "price". I told him at the time that I thought his valuation was optimistic - he said to stick it there and be bid down on price. It's been two weeks on the market and not a single expression of interest.

"Guardian Online" Grim reading. I am currently trying to sell to rent, but have just told my other half that I think we will now be stuck here for 5-10 years. So much for moving to a hot country where I can smoke in bars, pay less taxes and get a bit of a tan.

As an exiled Geordie, I disagree. NuLab's grip on the North East is so complete that they'll win the area's seats even if they put a real donkey up as a candidate. Because their support is pretty unbreakable, it's not a swing area so why the hell would they want to help the Geordies if they would get in anyway?

Thought I'd give everyone an update on small business confidence. I run a small little advertising company selling to businesses across the UK. A few customers have mentioned house prices to me (as many of them know I am currently STRing) but most in denial about a possible crash. These are rough descriptions of market sectors for customers and the reports they are giving us... Advertising - my business...still slow but up on October. Now around 60% of last year's levels. Investment Companies - I've heard it's carnage - one customer only got one response from a magazine of 30,000 wealthy directors and he was flogging properties in Dubai Vehicle Leasing - "never seen it like this before", according to quite a few customers. A lot to do with the general jitteriness around finance at the moment, but also, in large part, to do with a massive supply shortage. The factories aren't pumping out the cars and vans as fast at the moment. Business finance services - for example, commercial loans, mortgages, asset financing and so on. Enquiries way down on last year, not that many people passing. Business coaching - a big drop from this time last year, in the region of 70% IT consultants - big increase on this time last year. Incoming call handling services - 40% down from this time last year, occasionally worse on some weeks Outbound telesales - booming, running against the trend I'll put down more as I can think of them. What's it like in your sector?

As daft and unbelievable as this statement sounds, Gordo's and Tone's government could have you arrested under the Prevention of Terrorism Act for such a statement. Welcome to the new world.

Cheers, Eric. The housing market is a massive Ponzi scheme and has been for the longest time. A vital commodity - the roof over our heads - has become a speculator's market - the people finish last. And I'm not some deranged, statist socialist - I am a capitalist and love the energy and creativity of that particular monetary theory. I'm chuffed to be back with Miss PS. She's been excellent and supportive of me even in the decision to STR (which she hates).

Laziness and inertia - you've got it spot on. I moved my personal & business account to the bank in 1998. My merchant facilities are with them. However, as one poster said, how do I know it won't be out of the frying pan?

amethyst, I feel gutted for them. Especially because it's weeks before Xmas and they ALL have kids. I could only pay them one week's severance plus holidays - I wish it could have been more. There's a line on the Simpsons which has always stuck with me since I heard it - one of those things you always remember but don't know why. Ralph Wiggum thinks he has a chance with Lisa but he's deluded. When Bart shows Lisa the video of her dumping him, he said "You can actually see the moment when his heart broke". That's how I and the other founders felt when we made them redundant. It's not the vast majority of our people that are the enemy of us lot here on HPC. We should never forget that.

Eric, I loved your post. It sums up to me how government and regulation have become obsessed with picking on the "little people" for who they are and what they do. For instance, why is banning smoking in all public places (not allowing sealed off areas for poor social lepers like me to smoke indoors) considered a higher priority than the financial (and linked emotional) wellbeing of the population? Our government is rotten - they have created over 3,000 new criminal offences in 10 years but one of them is not denying VIs the ability to shut huge portions of the public out of the right of just owning where they live. It's unbelievable. I am a capitalist - make no mistake. However, housing is a unique asset class that should be protected from speculation. My dear GF works her **** off in a management position within a multinational but she can't even afford a flat in the shittiest places where we live. We split up for a week a few months ago and I felt so guilty about throwing her out of my mortgaged place into the bearpit of the landlords. Thankfully, we pulled back from the brink and got back together again. I paid £120K for my little shoebox last year. I felt like a mug and feel like a mug still. I am currently selling to rent but I'm trying to make me promise to myself I'll sell this little two-bed house to a family and not a speculator. But I'm scared of what the next few years have in store and my natural instinct is to adopt a defensive position. Either legally control multiples or tie HPI to the real inflation rate. There is no other way.

I am with a major high street bank and have become very concerned about them in the last 2 weeks. I don't want to name them, but if I said they were one of two banks that went to the Fed for a $30bn credit line and also went to the BoE twice in the last three months, you could understand my concern. Which bank would be best to put my business and personal savings into? Or are they all in a mess?

Much as I love this place, I also despair of it sometimes. The lunatics that seem to want everyone to lose everything are just as bad as the rapture-waiting Armageddon nutters in American politics wishing for nuclear war so Jesus can return to Earth. Those freakos saying that we need death and misery on an unprecedented scale so Jesus can return to show us where we've gone wrong are as bad as Financial Planner's idiotic "I wouldn't say that exactly..." response to the OP. Let's step back a moment here and realise that 90%+ of our population aren't greedy BTL bastards. They're people trying to get by in life. I am an employer. I have made all my staff redundant in the last 2 weeks because the bottom fell out of the market. That's four jobs lost. One guy in his late 50s - a really funny, talented guy who'd been left behind because of his age but we saw something special in him and were proven right. One guy in his early 40s - come out of a depression caused by a divorce and a real star - we couldn't keep him on because the cashflow from the main business dropped by more than 50%. Two others - a real pleasure to work with. It became apparent in early September something was badly wrong when two of our competitors (I only found out about the 2nd one this week) closed and sacked 20 people. All of us REALLY tried to pick up profit - the truth was that, even despite their valient and much appreciated efforts, the company had to slim down to its 3 founders or it would become technically insolvent within 6 months. Employees and their employers are doing what is normal - trying to keep a roof over their head, feed their loved ones and make a contribution to society. I spoke to my bank manager on the phone yesterday who called up for a chat. She sounded devastated because she's been involved with so many companies going wrong in the last 2-6 months. It is not the fault of the vast majority of the population that house prices have shot up. It is the fault of estate agents, finance companies and the class that changed housing from a home to an asset. We are pawns in a game played by men with money, power and a lack of responsibility. I believe the next 10 years could be really bad. I would love house prices to fall. I would hate to see people despair as much as when I had to let all of my valued staff go. They were people, loyal people and I will miss them greatly.

1) I rented a flat in Gateshead in August 2002 - it was probably worth around £25,000. I bought it from my landlord in February 2004 for £55,000. I sold it in February 2006 for £77,000 and it's on sale again with an asking price of £95,000. How did the flat go up nearly 300% in price in just 5 years? 2) My mate bought a tiny flat for £89,950 and he's got to pay the freeholder a 5% commission of the sale price at the end. How ridiculous. 3) My lovely parents bought a house for £22,000 in 1988 - it's massive and it's got loads of room. Problem is its in a shitty little Northumbrian town. It's now apparently worth £155,000 in an area with chronic unemployment and a massive drugs problem.

U.S. Tosses Lifeline to Lenders Using Home Loan Banks With the NRK here and this over there, is the last act of any government to go into cahoots with the moneylenders to loot its people? I'm reasonably new to all this - is this unprecedented or not?

Jones' documentary-making skills took a beating in "Terrorstorm" when he said that Tony Bliar capitalised on the events of 7/7 to help him in the election. Only problem was that the election took place 2 months beforehand. I'm all in favour of films showing alternative history and narratives, but those of us who watch them should tear them apart like we would try to tear apart any other source material.

They are a call centre that answers calls for other businesses. They answer our phones when they are busy - do you know the type of service I mean? They currently answer the phones for 300-odd businesses and across those 300-odd businesses, the call centre's incoming volume is around 50-75% of this time last year.