What Will The Depression Be Like

[billybong]

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Edited September 7, 2011 by billybong

[billybong]

Maxi skirts, kipper ties and large collars....the say depressions bring out the best in people...back to life back to reality.

Shops closing at 1730 hours during the week and closing all day Sunday - the reason given this time to save energy. What fun.

[Saberu]

Will they sell their properties or pass them on to their children?

No chance, my grandparents are probably upper middle class yet wouldn't dream of doing that. Whatever gets passed down will be leftovers after as much money can be spent as fast as possible- after all they earned it themselves so why *should* they have to care about how much gets passed down?

This is the British mentality, quite the opposite of how people think in Asia. In a lot of Asian countries parents consider the wealth of the family overall, rather than only caring about themselves. They are more proud to gift wealth to their children, and likewise children do likewise give back to their parents.

There have been recent cases where parents have given children money for a deposit on a house, but I think this is mainly due to their opinions that house prices only go up so they thought they'd make a profit off this 'investment' in their childrens assets rather than it being an investment in their children

[Guest_FaFa!_*]

No chance, my grandparents are probably upper middle class yet wouldn't dream of doing that. Whatever gets passed down will be leftovers after as much money can be spent as fast as possible- after all they earned it themselves so why *should* they have to care about how much gets passed down?

This is the British mentality, quite the opposite of how people think in Asia. In a lot of Asian countries parents consider the wealth of the family overall, rather than only caring about themselves. They are more proud to gift wealth to their children, and likewise children do likewise give back to their parents.

There have been recent cases where parents have given children money for a deposit on a house, but I think this is mainly due to their opinions that house prices only go up so they thought they'd make a profit off this 'investment' in their childrens assets rather than it being an investment in their children

Stop drinking the commie kool-aid. The reason why people don't hand on inheritances in the UK is due to the belief that children should stand on their own two feet. In the UK people tend to want to be able to say they earned what they have. Speak for yourself - in my family the money is/was not spent as soon as possible. Thrift and lack of ostentation despite means is very much the FaFa family way and those of families of established means. Your grandparents sound nouveau riche if that is their attitude. The idea that UK people in general are more avaricious than the Chinese (that's your Asian experience, right? Again you need to stop drinking the commie-kool aid that (i) Asian=Oriental and (ii) all Oriental culture derives from China and is basically Chinese at its core) is comedy stuff. One of the reasons the Chinese like handing stuff to their kids is that they like the idea of their children being beholden to them and being kept as and treated as perpetual children until the parents pop their clogs.

[aa3]

I think there will be surreal aspects. Like with modern technology, people, if allowed, can create huge amounts of real wealth. So we could have a situation where some people have what appears to be impossible amounts of money. At the same time a growing percentage of the population is just surviving. Food, shelther, basic medical care. They are essentially non-participants in the economy.

Just from observation it seems to me like half the working age population is already non-participants in the economy. And most of these are working, just their compensation is so low that they cannot really participate in the economic life of the nation.

[Odakyu-sen]

No chance, my grandparents are probably upper middle class yet wouldn't dream of doing that. Whatever gets passed down will be leftovers after as much money can be spent as fast as possible- after all they earned it themselves so why *should* they have to care about how much gets passed down?

It's a cultural thing. In our family, rental properties are handed down through the generations. My father looks after the properties he inherited from hs father, and keeps them in good order. I will in turn look after their maintenance, take a little from the rent, and pass them on to my children. If a family doesn't accummulate a certain level of weath over time, they will always have their hand out to the government for welfare.

Of course, I want my children to seek their own fortune in the world. That's the tricky part: the balancing act between giving your children financial resources and having them weakened by the prospect of waiting for Daddy to die and getting it for free. Part of the way around this is to have the conditions that a) the kids have to prosper through their own efforts, they don't inherit until they are in their late 40s, c) if they turn out to be feckless, they don't inherit anything (because they would only squander it.)

This way of thinking is based on Matthew 25:29

"For everyone who has will be given more, and he will have an abundance. Whoever does not have, even what he has will be taken from him."

In other words: reward success; punish failure.

Edited September 7, 2011 by Odakyu-sen

[Tuberider]

It's a cultural thing. In our family, rental properties are handed down through the generations. My father looks after the properties he inherited from hs father, and keeps them in good order. I will in turn look after their maintenance, take a little from the rent, and pass them on to my children. If a family doesn't accummulate a certain level of weath over time, they will always have their hand out to the government for welfare.

Of course, I want my children to seek their own fortune in the world. That's the tricky part: the balancing act between giving your children financial resources and having them weakened by the prospect of waiting for Daddy to die and getting it for free. Part of the way around this is to have the conditions that a) the kids have to prosper through their own efforts, they don't inherit until they are in their late 40s, c) if they turn out to be feckless, they don't inherit anything (because they would only squander it.)

This way of thinking is based on Matthew 25:29

"For everyone who has will be given more, and he will have an abundance. Whoever does not have, even what he has will be taken from him."

In other words: reward success; punish failure.

very much the greek-cypriot mindset also. we work hard, buy productive assets and pass these down to our kids. trick as you say, is to not let the kids get lazy and develop a sense of entitlement, but keep them a little hungry so they go out and acheive something for themselves. most GC parents overdo it and spoil their kids, but there are a clever minority who wait until kids are in their 40's before passing down the wealth (doing this myself. each of my kids will get a plot of land here in cyprus and a small terraced house in london, paid off. but they won't know about it until they are well into their 30's).

I see nothing wrong with it, it is normal human behaviour to us. IMO the british way, spend everything on beer and fags and leave your kids to struggle alone, is the wrong one. we are family people and the family has to prosper as a unit. what worse thing is there, than to see your kids struggle with debt and slave their whole lives just for a roof over their heads ?

[cartimandua51]

It's a cultural thing. In our family, rental properties are handed down through the generations. My father looks after the properties he inherited from hs father, and keeps them in good order. I will in turn look after their maintenance, take a little from the rent, and pass them on to my children. If a family doesn't accummulate a certain level of weath over time, they will always have their hand out to the government for welfare.

Of course, I want my children to seek their own fortune in the world. That's the tricky part: the balancing act between giving your children financial resources and having them weakened by the prospect of waiting for Daddy to die and getting it for free. Part of the way around this is to have the conditions that a) the kids have to prosper through their own efforts, they don't inherit until they are in their late 40s, c) if they turn out to be feckless, they don't inherit anything (because they would only squander it.)

The cultural thing is important in another way. As a classic early boomer (1948) I am starting to consider this. I had my 3 kids late, so they haven't settled enough for property purchase to be appropriate.

My major worry is the skanky son-in-law problem; I'm not passing over money to my daughter only for her partner to dump her for a younger model 10 years later & use cash originating from me to set up a second family. I imagine people with sons have even more worries about the skanky daughter-in-law scenario, given the tendency of women to stick to the family home.

The Greek / Chinese model is posited on much firmer marriage relationships than exist here, where anything up to half of marriages / cohabitations break down. There aren't even any enforceable pre-nups such as exist in the US and some of Europe. This makes long-term planning difficult.

The only way I can see round it is to wait until there are grandchildren then skip a generation, which at least keeps it out of the hands of the skanky spouse.

[Sour Mash]

I see nothing wrong with it, it is normal human behaviour to us. IMO the british way, spend everything on beer and fags and leave your kids to struggle alone, is the wrong one. we are family people and the family has to prosper as a unit. what worse thing is there, than to see your kids struggle with debt and slave their whole lives just for a roof over their heads ?

That hasn't been the 'British Way' at all ... The 'Bank of Mum and Dad' has been giving out money over the last decade or more like it has been going out of fashion and played a considerable part in fuelling the housing bubble.

[cartimandua51]

That hasn't been the 'British Way' at all ... The 'Bank of Mum and Dad' has been giving out money over the last decade or more like it has been going out of fashion and played a considerable part in fuelling the housing bubble.

When they were giving out LIAR LOANS (sorry, Eric) of 100%+ I don't thinlk BOM&D were needed for deposits until after 2007....

True, subsidies were going out to kids, but a lot of that was due to tuition fees, graduate unemployment etc.

Hardly a new phenomenon - "money can't buy you love, but it sure keeps you in touch with your children" - J Paul Getty

[mikthe20]

The cultural thing is important in another way. As a classic early boomer (1948) I am starting to consider this. I had my 3 kids late, so they haven't settled enough for property purchase to be appropriate.

My major worry is the skanky son-in-law problem; I'm not passing over money to my daughter only for her partner to dump her for a younger model 10 years later & use cash originating from me to set up a second family. I imagine people with sons have even more worries about the skanky daughter-in-law scenario, given the tendency of women to stick to the family home.

The Greek / Chinese model is posited on much firmer marriage relationships than exist here, where anything up to half of marriages / cohabitations break down. There aren't even any enforceable pre-nups such as exist in the US and some of Europe. This makes long-term planning difficult.

The only way I can see round it is to wait until there are grandchildren then skip a generation, which at least keeps it out of the hands of the skanky spouse.

Pre-nups are enforceable in the UK following a test case last year. Presumably property can be held in some form of family trust to stop any future skanks from benefitting?

In a similar way, I'm hoping my business will be at a level that, once the kids are in their 20s/30s, they could work in it and take it on if they so desired. Getting work is going to be an issue for them IMO, as well as getting housing. And in a similar way to the property portfolio idea, businesses can really grow over several generations, whereas it's very difficult to grow a business massively in say 10 or 20 years, unless very lucky/astute.

[StainlessSteelCat]

It seems increasingly that we are in for if not a 30's style depression, then at least a newer form of the beast.

If this is the case. Then what will this be like, particularly for the housing market. What will happen to interest rates through a depression? Will they necessarily stay low.

I'm assuming it will be a gradual progression of joblessness, greyness and falling asset prices. It won't take more than another five years for people finally to reach the opinion finally that increases in house prices are not a law of nature but that this might change.

A friend of mine bought a rural ruin in Northern france for approx 50k in the late 1980's then spent £300k over the years rebuilding it and its associated barn. He's planning to sell it for around what he paid for it. You see, property in France doesn't necessarily rise in price and there's less expectation that it will. If that psychology got embedded in the UK what a different place it would be.

It will be very much the same as now because we are already in it. Most people will stay in work but will be fearful of losing their job and seek to save money/pay down debts. The rest won't have any spare money. Either way - no-one will spend anything they don't have to which'll make things worst.

It is instructive to look at HotUKDeals and see what is appearing in the deals. Lots of middle of the range consumer electronics that aren't totally necessary. Sure it might be nice to upgrade to a 22inch monitor but it certainly isn't needed But most online stores are doing the same. The run up to Christmas will be the most interesting though as it's typically the time which the prices of tat go up.

[miko]

It's a cultural thing. In our family, rental properties are handed down through the generations. My father looks after the properties he inherited from hs father, and keeps them in good order. I will in turn look after their maintenance, take a little from the rent, and pass them on to my children. If a family doesn't accummulate a certain level of weath over time, they will always have their hand out to the government for welfare.

Have you ever thought that some familys hoarding property renting it out and passing it on might have a connection with other familys having to put their hand out to the govenment for welfare as they cannot compete with this having never been handed down property.

[Tuberider]

Have you ever thought that some familys hoarding property renting it out and passing it on might have a connection with other familys having to put their hand out to the govenment for welfare as they cannot compete with this having never been handed down property.

Yes of course I have. But we live under the capitalist system which means we have to f@ck each other over to survive.

I have to do what I have to do.

[Neverland]

Yes of course I have. But we live under the capitalist system which means we have to f@ck each other over to survive.

I have to do what I have to do.

very nice attitude you have there :angry:

The point is we dont have to f@ck each other to survive but f@cking someone else is the easiest way to get rich for the lazy and greedy

I'm sure the Turks rationalised things the same way when they invaded most of Cyprus

...but oh thats different isn't it

I hope under your "capitalist system" one of those roving gangs of feral squatters decides to camp out in one of your multigenerational rental properties

That would be karmic

[Lepista]

What will it be like?

[Bruce Banner]

Best to have a solid asset like a house as long as you have a Job to pay for it, I would not want a lot of savings depreciating in the bank so I am buying now, rent will just go up.

It will be nothing like the 1930's. Its slow growth here and abroad. Not the whole world is facing this problem only really the euro zone and USA, need to just refocus on emerging markets such as Brazil and India. Growth is occurring all over the place we have just become fixated with the collapsed banking economy that is not the real economy of actual goods and services

Is that so? .

I'm happier with my cash in the bank rather than tied up in an illiquid, depreciating, asset.

[Neverland]

Is that so? .

I'm happier with my cash in the bank rather than tied up in an illiquid, depreciating, asset.

Your cash in the bank is a rapidly depreciating asset as well though...

...which could of course suddenly disappear down a black hole if the bank goes t*ts up because of mortgage loan losses

[Bruce Banner]

TBF rents around here (South Hampshire) have gone skyward at quite a rate, so although property prices have come off (no doubt about that), rents really have shot up.

My rent has increased by £20pcm during the last five years, same general area.

[Bruce Banner]

Your cash in the bank is a rapidly depreciating asset as well though...

...which could of course suddenly disappear down a black hole if the bank goes t*ts up because of mortgage loan losses

My UK cash is mostly in NS&I bonds or below £85K per bank. Cash is liquid and can be moved instantly into different banks or even currencies, you can't say that about a house.

[Neverland]

TBF rents around here (South Hampshire) have gone skyward at quite a rate, so although property prices have come off (no doubt about that), rents really have shot up.

They would have to come up quite a whack for rents alone not rents plus capital appreciation to justify even current house prices at current interest rates

At what interest rates should be in a country with 4/5% inflation, rents would need to increase even more

So good luck with that argument, I hope it works out for you

[Neverland]

My UK cash is mostly in NS&I bonds or below £85K per bank. Cash is liquid and can be moved instantly into different banks or even currencies, you can't say that about a house.

Yep, that we can agree about

But the NS&I bonds are earning little real return and the amount you can invest in these is pretty small

The bank deposits are losing money after tax and inflation every day

The BoE is screwing you over to support the feckless and greedy

[Bruce Banner]

Well, there is some poverty in Hampshire you know.

Top area .

[Bruce Banner]

Yep, that we can agree about

But the NS&I bonds are earning little real return and the amount you can invest in these is pretty small

The bank deposits are losing money after tax and inflation every day

The BoE is screwing you over to support the feckless and greedy

Obviously my cash is depreciating due to inflation, but not by much. I can live with that for a few years, what I couldn't live with is buying a house and watching it depreciate 30% or 40% which is what I expect to happen.

[Neverland]

Obviously my cash is depreciating due to inflation, but not by much. I can live with that for a few years, what I couldn't live with is buying a house and watching it depreciate 30% or 40% which is what I expect to happen.

Over what time frame do you expect that to happen?

By contrast, at 5% pa inflation your cash will lose 25% of its value over 8 years (allowing for 1.5% net interest after tax)