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Willy Weasel

Possible Recession?

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I'm as pleased as most on this forum about today's IR decision but I also spent a depressing couple of hours reading the BoE's Financial Stability Report and it seems to me that the stupid people out there who have helped push house prices up might now push us into recession as they all declare themselves bankrupt with the consequent effects on spending, growth etc. A lot of people on this site are laughing at those people but the joke could be on all of us if the financial system, to use a priceless BoE expression, "unravels in a disorganised way" ie the S**T hits the fan

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Shrug. Worst that can happen in a recession is that I go work in a bar in Tahiti for a few years or something... but then I have savings rather than an insanely large mortgage that would bankrupt me if I was out of work for a couple of months.

That's a great thing about not being in debt: you don't have to go through life scared stiff of what might happen outside your control.

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A HPC always leads to a recession.

The expansion of credit causes serious HPI initially, misallocation of resources, soaring price of land, followed by the inevitable credit crunch and depression.

Why is the joke on us ?

If (and its a big if) you can keep your job whilst millions are unemployed then obviously you gain relative to many. I believe its actually easier to improve your lot during a recession although it requires luck to a degree.

The past 4 years have been a personal race to manouvre myself into a postion to ride the wave of the forthcoming storm and end up in a far more beautiful situation on the other side.

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I'm as pleased as most on this forum about today's IR decision but I also spent a depressing couple of hours reading the BoE's Financial Stability Report and it seems to me that the stupid people out there who have helped push house prices up might now push us into recession as they all declare themselves bankrupt with the consequent effects on spending, growth etc. A lot of people on this site are laughing at those people but the joke could be on all of us if the financial system, to use a priceless BoE expression, "unravels in a disorganised way" ie the S**T hits the fan

Oh yes, America has a one way ticket to recession and we will probably lag by another 6 months, but it'll come for sure. The fall out will be massive, far bigger than the early 90s but I'll be laughing - I don't owe a bean to anyone, run my own recession proof business and will be bottom fishing assets - I hope :lol:

Look Tuffers, we're going to have a recession but if I gave you a magic wand would you really want the present situation to continue, ie; all these MEW'd scumbags driving about in X5s and generally rubbing people's noses in it that their house has inxcreased in value by x amount? Of course not. Revenge is sweet and I intend to enjoy it to the full!

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I'm as pleased as most on this forum about today's IR decision but I also spent a depressing couple of hours reading the BoE's Financial Stability Report and it seems to me that the stupid people out there who have helped push house prices up might now push us into recession as they all declare themselves bankrupt with the consequent effects on spending, growth etc. A lot of people on this site are laughing at those people but the joke could be on all of us if the financial system, to use a priceless BoE expression, "unravels in a disorganised way" ie the S**T hits the fan

Yes unfortunately a recession or HPC may not help most who are out of the property market anyway. All those savings going on living expenses when the jobs are gone and the banks will be very unlikely to lend money out at all.

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I believe its actually easier to improve your lot during a recession although it requires luck to a degree.

Indeed. If the average house price is dropping 10% a year during a recession, you're making 20k a year tax-free by _not_ buying a house... that's even better than making 20k a year tax-free by buying one, since it requires you to do absolutely nothing, whereas owning a house means taking out a mortgage and all the other junk.

I was laid off in the last recession when the company I worked for went bust: took a whole month or so to get another job. Even if we have 10% unemployment, that still leaves 90% of people working.

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Definite recession.

Every house price crash has been followed by a recession, I think this is a fairly well known fact, though their is some debate about whether this is just chance.

It was either hyper-inflation or recession for us, I think today we have seen the BoE decide its the recession route.

As the pound is still so strong we are almost definitely heading for a recession, trade deficits will get bigger and bigger and we can't keep the money going on public spending anymore we are too far in debt, we have no industry left, we can only hope that a few deals with some oil rich nations and our magical service industry will keep going. I for one think our dependance on services will hurt us bad. I suspect places like india and china who are making things we need will do much better.

It is possibly going to turn into a global recession. Plenty have already called a recession in the US.

I don't think the level of debt is really quite bad enough to make the shit hit the fan yes 1.1trillion is an amazing amount but we have about 6 trillion in assets, a large proportion of this is houses but no one here is expecting more than a 50% fall in prices which at most would take us to 3 trillion of assets against that 1 trillion debt (I reckon about 4 trillion will be the final value after the crash). I think in the end it will just about hold together though I do expect we could have a rough ride. We deserve a lot of trouble for letting debt hit those levels (eg. 1*GDP) but we haven't gone so far that it is irreversable.

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I have tried to be sensible (my mortgage is only 1.5 times our joint income) so I'm confident I can ride out a recession but I don't believe it's in the interests of society as a whole for the financial system to 'unravel in a disorganized way'. If you've read the BoE report it has some pretty frightening albeit currently low probability scenarios. If some of these come to pass we will have a complete meltdown of the world banking system not just a bog standard recession

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It is possibly going to turn into a global recession.

Since it was a global boom caused by a global glut of cheap credit, I think it's pretty clear that it will be followed by a global recession. However, having kept rates down this long, Brown will be able to blame it on America, not his own policies.

If some of these come to pass we will have a complete meltdown of the world banking system not just a bog standard recession

Given the 'world banking system' caused this problem, that may not be such a bad idea.

The simple fact is that the entire post-WWII global economic and political system is fundamentally broken: fiat currencies rarely last for more than a few decades. Maybe it would be better to let it collapse and rebuild from the wreckage than spend decades trying to 'fix' it.

Edited by MarkG

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Indeed. If the average house price is dropping 10% a year during a recession, you're making 20k a year tax-free by _not_ buying a house... that's even better than making 20k a year tax-free by buying one, since it requires you to do absolutely nothing, whereas owning a house means taking out a mortgage and all the other junk.

This may apply if you are in STR, but I dispute "tax free" becuase you will be taxed on your interest payments *and* remember that money does not (generally) hold its value (I believe they call it Inflation, which is the main reason we have today's news).

If you are not in STR, this sounds to me like the mad logic people were spouting when prices where going up. "Look my house earns more than I do". It is fundamentally unsound economics which, frankly, will not pay the rent.

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I dispute "tax free" becuase you will be taxed on your interest payments

That's a clever idea. Because I don't have a house and the average house price is dropping 20k a year, Gordon Brown will claim that I'm effectively earning 20k more a year by not owning a house and tax me on it.

Sounds like you could have a great future at the Treasury.

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Housing collapse/recession go hand in hand, you cannot have a HPC without a recession. why? Because otherwise when prices drop 10/15% all those that are looking to jump in will jump in. If there is a recession you have no job so cannot jump in which makes the price drop further until we call it a 'HOUSEPRICECRASH'

I said it before and will say it again, secure your job, take on more work and responsibilities make yourself as indespensible as possible, save money and have contingency in place if you want to ride this storm that's brewing.

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For the sensible man on the street this is what you should think about a recession:

Debt is a promise to do work in the future.

Credit is acknowledgement of work I have done.

A recession will reduce my ability to do work.

So whatever you do, avoid debt pre-recession.

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  • 302 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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