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Here Comes Your Recession

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I am getting very frustrated with what is going on on this board.

The same old arguments rehashed over and over again.

Many people on here seem to think that we need a recession to cause a housing crash, which quite frankly is rubbish.

Housing crashes start BEFORE a recession.

Now some of you may have seen the graph I've posted, showing the timings of housing busts to recessions.

But here is some more evidence from the IMF, if you want to understand what is happening have a good read.

In terms of timing, the beginning of the output slowdown after a housing price bust coincided roughly

with the beginning of the bust itself. This is consistent with the finding that all but one housing price

bust were associated with recessions (that is, declines in the level of economic activity), as the decline

in prices began about three quarters before the fall in economic activity, that is, the level of real GDP

(GDP growth rates begin declining about three to four quarters before the actual recession sets in).13

As noted in Helbling and Terrones (forthcoming), the fall in output growth rates during busts typically

reflects declining growth rates in all key components of private domestic absorption.

http://www.imf.org/external/pubs/ft/reif/2005/eng/ch1.pdf

ie what that says in simple terms is that once prices start to fall, consumers stop spending.

The rest you can probably figure out, people lose their jobs, bad debts increase, banks tighten lending to protect their interests. The economy tanks.

That is what is happening now, economic growth in the UK has slowed dramatically.

Unemployment is now rising.

It's all happened before, and it's going to happen again.

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Study history.. see that it is happening again exactly as it has before..

and still the bulls crow..

Well bulls, we know more then you..

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Guest Charlie The Tramp

The rest you can probably figure out, people lose their jobs, bad debts increase, banks tighten lending to protect their interests. The economy tanks.

I am already seeing the beginning of serious problems for both business and individuals.

The level of bad debts is rising steadily it is estimated to be in the region of 20%. In other words, the banks are losing about £20 for every £100 they lend. Given that the money that they lent was created out of thin air in the first place, it is money that they can afford to lose. It just means that their profits are a few billion pounds less each year than they would otherwise have been.

For the individual borrowers concerned, however, this difficulty with indebtedness is not so easily dismissed, for the banks do not allow them to walk away from their commitments without difficulty. Homes are repossessed; businesses go bankrupt; county court judgements are imposed; debt-collectors are set onto people.

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I am getting very frustrated with what is going on on this board.

The same old arguments rehashed over and over again.

Many people on here seem to think that we need a recession to cause a housing crash, which quite frankly is rubbish.

Housing crashes start BEFORE a recession.

Now some of you may have seen the graph I've posted, showing the timings of housing busts to recessions.

But here is some more evidence from the IMF, if you want to understand what is happening have a good read.

http://www.imf.org/external/pubs/ft/reif/2005/eng/ch1.pdf

ie what that says in simple terms is that once prices start to fall, consumers stop spending.

The rest you can probably figure out, people lose their jobs, bad debts increase, banks tighten lending to protect their interests. The economy tanks.

That is what is happening now, economic growth in the UK has slowed dramatically.

Unemployment is now rising.

It's all happened before, and it's going to happen again.

And coming to a job very near YOU. How many recession hopers will still be singing the benefits of recession if and when we really do get one?

Edited by nodumsunreader

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Ans coming to a job very near YOU

You've yet to tell us what your alternative option is ?? How do we avoid a recession and how will property speculation assist us in doing so ??

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Guest growl

About last August some of you will remember how I related some stories about freinds of mine who had lost their jobs. Here's and update:

The chef still hasn't got re-employed, neither has the Nanny, and her husband lost his job in January.

I also know of shops which are closing down or going online (good business for me).

The beginings of the recession happened in the retail sector this time last year as did the the housing market slow become stagnant and drop in some places. Unemployment started towards the end of last year.

I see it all around me, I live in the south and as before it will gradually filter up north. ;)

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You've yet to tell us what your alternative option is ?? How do we avoid a recession and how will property speculation assist us in doing so ??

I've posted on other threads that a slow decline in house prices (relative to inflation) over 5 years or so, rising incomes associated with high skilled jobs in a stable economy and continued low IR's are a better option than a crash for people wanting a house.

IMO of course.

Edited by nodumsunreader

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About last August some of you will remember how I related some stories about freinds of mine who had lost their jobs. Here's and update:

The chef still hasn't got re-employed, neither has the Nanny, and her husband lost his job in January.

I also know of shops which are closing down or going online (good business for me).

The beginings of the recession happened in the retail sector this time last year as did the the housing market slow become stagnant and drop in some places. Unemployment started towards the end of last year.

I see it all around me, I live in the south and as before it will gradually filter up north. ;)

Economic growth in the UK has fallen quite sharply since 2004, we're down to 1.8%.

Funny how that coincides with the slowdown in the property market.

We are also now starting to see the corresponding rise in unemployment.

Guess what that's going to do to the bank's bad debts.

I have noticed a few of my favourite shops close down recently.

I've spoken to a shop owner who has recently gone bankrupt.

I have colleagues who've just found out their friends are getting sacked.

If you want to understand what is happening it's all very clear.

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The level of bad debts is rising steadily it is estimated to be in the region of 20%. In other words, the banks are losing about £20 for every £100 they lend. Given that the money that they lent was created out of thin air in the first place, it is money that they can afford to lose. It just means that their profits are a few billion pounds less each year than they would otherwise have been.

Any idea at what point the banks would actually start to get hurt? Comments from some of the banks I've seen make it look like they aren't bothered or it's what they want you to think. The reserve level is what, 10%, but there are other costs involved in lending money and running the banking business, at what point does bad debt have to get to so the banks will take it seriously and not just shrug it off? If it does start to hurt them what are they likely to do?

We're still in a situation where people can borrow 100K quite easily (as a homeowner), there are adverts on the TV all the time. With a situation like this the rot can still be hidden, but will be much worse when it's exposed.

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And coming to a job very near YOU. How many recession hopers will still be singing the benefits of recession if and when we really do get one?

I work in an industry that deals in risk. Whether my job is safe remains to be seen, but I have made arrangements for the worst.

I have enough money to live well through any recession, if need be I have another house outside the UK where I can live on very little.

How have you planned for losing your job?

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I work in an industry that deals in risk. Whether my job is safe remains to be seen, but I have made arrangements for the worst.

I have enough money to live well through any recession, if need be I have another house outside the UK where I can live on very little.

How have you planned for losing your job?

I have de-risked completely. no Job, no mortgage and self sufficient. No I am not trying to be smug just being honest.

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I've posted on other threads that a slow decline in house prices (relative to inflation) over 5 years or so, rising incomes associated with high skilled jobs in a stable economy and continued low IR's are a better option than a crash for people wanting a house.

IMO of course.

Perhaps a better option in your ideal world......

But crash / recession is a better option for the future generations wishing to get on the housing ladder, it will smack the noses of the greedy even harder.....

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yes... all this and the fact Blair has really screwed us badly.

In 2004 the bulls were saying that we won't have a house price crash

because the economy's doing great... blah... blah... blah...

high employment, low interest rates, grateful people in Iraq, loving good old tony.

Now they are saying they won't crash because we got the £ucking Olympics???

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I am getting very frustrated with what is going on on this board.

The same old arguments rehashed over and over again.

Many people on here seem to think that we need a recession to cause a housing crash, which quite frankly is rubbish.

Housing crashes start BEFORE a recession.

Now some of you may have seen the graph I've posted, showing the timings of housing busts to recessions.

But here is some more evidence from the IMF, if you want to understand what is happening have a good read.

http://www.imf.org/external/pubs/ft/reif/2005/eng/ch1.pdf

ie what that says in simple terms is that once prices start to fall, consumers stop spending.

The rest you can probably figure out, people lose their jobs, bad debts increase, banks tighten lending to protect their interests. The economy tanks.

That is what is happening now, economic growth in the UK has slowed dramatically.

Unemployment is now rising.

It's all happened before, and it's going to happen again.

An alternative view from the experts:

"A balance of plus 13 per cent expect output to rise over the next three months, the highest since February 2005 (+19%). It is also well above the survey average of plus eight per cent since the manufacturing sector pulled out of recession in the early 1990s. "

Taken from the CBI official website.

I thought the definintion of a recession was 3 months of falling output not rising output.

Edited by nodumsunreader

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I am getting very frustrated with what is going on on this board.

The same old arguments rehashed over and over again.

Many people on here seem to think that we need a recession to cause a housing crash, which quite frankly is rubbish.

Housing crashes start BEFORE a recession.

Bandwagon, serous queston. The US seems to be passing up the UK. Is there some way the popping of the bubble in the US, could get the "blame" for a globle recession. I mean, California alone is the worlds 5th largest economy, AND bubble capital USA.

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I thought the definintion of a recession was 3 months of falling output not rising output.

True it is 3 months falling output, but what output are they measuring?

If it's anything like their idea of inflation, then they must be measuring

ring tones!

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An alternative view from the experts:

"A balance of plus 13 per cent expect output to rise over the next three months, the highest since February 2005 (+19%). It is also well above the survey average of plus eight per cent since the manufacturing sector pulled out of recession in the early 1990s. "

Taken from the CBI official website.

I thought the definintion of a recession was 3 months of falling output not rising output.

Actually a recession is generally accepted as 2 consequtive quarters of negative growth, but that's largely academic. The problem is the rise in unemployment.

What track record does the CBI have of forecasting economic growth? Why do they even bother?

As the saying goes, if you're going to forecast, you better do it often.

A bit like Halifax telling us that house prices are set to rise x%. They don't have a clue.

If you want a publication that has a track record of understanding what is happening try reading "The Economist".

Edited by BandWagon

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And coming to a job very near YOU. How many recession hopers will still be singing the benefits of recession if and when we really do get one?

Will they even be able to get a mortgage? Will an FTBs savings go entirely to see themselves through periods of unemployment. A recession is not a good option for anyone IMO, even bears.

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Bandwagon, serous queston. The US seems to be passing up the UK. Is there some way the popping of the bubble in the US, could get the "blame" for a globle recession. I mean, California alone is the worlds 5th largest economy, AND bubble capital USA.

I'm surprised at the resilience of the UK housing market.

But if the US housing market tanks (which it currently looks like it's doing) I really can't see how the UK will escape. The markets are too global these days, a serious contraction in the States will hit us hard in the UK.

I think a global recession is a definite possibility, that could be really ugly.

We just seem to be lagging the rest of the world by a little...

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Actually a recession is generally accepted as 2 consequtive quarters of negative growth, but that's largely academic. The problem is the rise in unemployment.

What track record does the CBI have of forecasting economic growth? Why do they even bother?

As the saying goes, if you're going to forecast, you better do it often.

A bit like Halifax telling us that house prices are set to rise x%. They don't have a clue.

If you want a publication that has a track record of understanding what is happening try reading "The Economist".

They are not forecasting economic growth, they are reporting on what their members (manafacturers) tell them about their own businesses. These are the people in the front line, the ones who know day to day what is happening in manafacturing. If they say that output is increasing why would you not beleive them?

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How many recession hopers will still be singing the benefits of recession if and when we really do get one? [nodumsunreader]

An anticipator is not necessarily the same as a hoper.

I've posted on other threads that a slow decline in house prices (relative to inflation) over 5 years or so, rising incomes associated with high skilled jobs in a stable economy and continued low IR's are a better option than a crash for people wanting a house. [nodumsunreader]

Now who's hoping? Which box do we tick for this "option"?

I thought the definintion of a recession was 3 months of falling output not rising output. [nodumsunreader]

It's two consecutive quarters of falling output. While the UK economy as a whole is some way off recession some sectors, such as retailing, are much closer. It's also possible that manufacturing could grow as exports rise due to a falling pound while the economy as a whole moves into recession.

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I have de-risked completely. no Job, no mortgage and self sufficient. No I am not trying to be smug just being honest.

Aha. So you lost your job at Foxtons, your flat got repossessed and you are eating show leather. Good for you. Couldn't happen to a nicer 'chap'.

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How many recession hopers will still be singing the benefits of recession if and when we really do get one? [nodumsunreader]

An anticipator is not necessarily the same as a hoper.

I've posted on other threads that a slow decline in house prices (relative to inflation) over 5 years or so, rising incomes associated with high skilled jobs in a stable economy and continued low IR's are a better option than a crash for people wanting a house. [nodumsunreader]

Now who's hoping? Which box do we tick for this "option"?

I thought the definintion of a recession was 3 months of falling output not rising output. [nodumsunreader]

It's two consecutive quarters of falling output. While the UK economy as a whole is some way off recession some sectors, such as retailing, are much closer. It's also possible that manufacturing could grow as exports rise due to a falling pound while the economy as a whole moves into recession.

Just pointing out the downside to a recession on this thread, not agreeing there will be one.

Youv'e lost me on the other point. Surely under the scenario you suggest, we would move from a consumer based economy back to an export lead manafacturing based economy. How is that a recession? Parts of the economy grow and parts shrink. Has that not always been the case?

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Greed, greed, greed. That is the only reason this economy is in trouble. For god's sake how can people be over their heads in debts in this day and age (see my recent post over in the HSBC thing about how low the cost of living is)? The cost of living is minute. I am awestruck. Really, I am. And the greediness of so many individuals puts the whole economy in jeopardy.

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Surely under the scenario you suggest, we would move from a consumer based economy back to an export lead manafacturing based economy. How is that a recession? [nodumsunreader]

If UK GDP falls for two consecutive quarters due to falling consumer spending that's a recession. At the same time, the much smaller manufacturing sector may still grow if the pound falls in value making exports cheaper and imported manufactured goods more expensive (import substitution). A consumer based economy makes this scenario more likely.

Parts of the economy grow and parts shrink. Has that not always been the case? [nodumsunreader]

Exactly so. The small manufacturing part of the economy may grow while the dominant service sector shrinks.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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