Don't Get Too Carried Away By The Coming Crash

[stormymonday_2011]

The most severe recession since World War II was not in the 1970s or 1989-93 it was in 1980-82.

There were plenty of riots then and I expect we are going to see the same or worse this time around.

[NoIdea]

I wouldn't say that exactly...

Despite the intrinsic respect I feel for you, I have only one thing to say:- Tosser.

[Sheer Heart Attack]

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.

[yellerkat]

PS, read post #46 by OnlyMe on this thread. Most of us realise what a recession will do, but it is so long overdue and so much damage has been caused by recklessly low interest rates over such a long period that the sooner it arrives the better - for everybody.

[Justice]

I too am convinced the coming recession will be really sh1tty.

I moved on in 2003 from thinking recession and now i'm bordering on depression and total meltdown.

House prices are only just starting to turn and look at the casualties ao what will it be link as it gains speed.

Yes i have a stack of food and a few other bits and bobs as it's better safe than sorry and the bonus is food is going up by double digits so i'm glad i made a start

[eric pebble]

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.

I have JUST posted this here - http://www.housepricecrash.co.uk/forum/ind...showtopic=60148

"This may be simplistic - but I think that the last 10-15 years will be looked back on as the Craziest Times... And - I think that, silly as this may sound now, the Powers That Be will only solve the problems we have today by breathing a huge inflow of cold and fresh air........ and making a decision that - HOUSES and HOUSING should be LEGALLY EXCLUDED from being used as pawns and/or assets to be casually tossed about. The model since WW2 shows plainly that, if people are NOT ALLOWED TO BORROW more than 3.5 x salary to buy a roof over their head..... the system will work well - as it largely did from c. 1945 to c. 1985.

However, if Speculators are allowed to treat residential property as a pawn in a pyramid selling scheme/scam/game, and Moneylenders are allowed to treat Borrowers as pawns in that game - and thus twist and destroy that old and proven rule - 3 to 3.5 x salary MAX, or 4 x joint salary MAX -- it will ALWAYS lead to boom and bust - and in the process make countless millions of people's lives unstable and unhappy...... I actually think it is really quite that simple."

AND I read your post Pacific State -- and ENTIRELY concur with what you say. I FIRMLY believe your summary - "We are pawns in a game played by men with money, power and a lack of responsibility."

Edited November 3, 2007 by eric pebble

[amethyst]

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.

That is such a sad story - and you sound like a very caring person. I hope the people you had to let go will be OK, especially the two older guys. It's very sad when people put everything of themselves into their work, and yet still lose their jobs - must be devastating.

I think you are absolutely right to lay the blame on the greedy people at the top. For me this includes people in the government who I am sure had a vested interest in seeing property prices go up both because they invested in property themselves, and because this gave the general population an illusion of prosperty and kept it quiet and off issues such as pensions, the appalling state of the education system, the death of manufacture in Britain, etc. :angry:

[Sheer Heart Attack]

I have JUST posted this here - http://www.housepricecrash.co.uk/forum/ind...showtopic=60148

"This may be simplistic - but I think that the last 10-15 years will be looked back on as the Craziest Times... And - I think that, silly as this may sound now, the Powers That Be will only solve the problems we have today by breathing a huge inflow of cold and fresh air........ and making a decision that - HOUSES and HOUSING should be LEGALLY EXCLUDED from being used as pawns and/or assets to be casually tossed about. The model since WW2 shows plainly that, if people are NOT ALLOWED TO BORROW more than 3.5 x salary to buy a roof over their head..... the system will work well - as it largely did from c. 1945 to c. 1985.

However, if Speculators are allowed to treat residential property as a pawn in a pyramid selling scheme/scam/game, and Moneylenders are allowed to treat Borrowers as pawns in that game - and thus twist and destroy that old and proven rule - 3 to 3.5 x salary MAX, or 4 x joint salary MAX -- it will ALWAYS lead to boom and bust - and in the process make countless millions of people's lives unstable and unhappy...... I actually think it is really quite that simple."

AND I read your post Pacific State -- and ENTIRELY concur with what you say. I FIRMLY believe what you say - "We are pawns in a game played by men with money, power and a lack of responsibility."

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.

[huw]

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.

By selling now, you'll be making a greater fool of someone ... let it be a speculator!

[Sheer Heart Attack]

That is such a sad story - and you sound like a very caring person. I hope the people you had to let go will be OK, especially the two older guys. It's very sad when people put everything of themselves into their work, and yet still lose their jobs - must be devastating.

I think you are absolutely right to lay the blame on the greedy people at the top. For me this includes people in the government who I am sure had a vested interest in seeing property prices go up both because they invested in property themselves, and because this gave the general population an illusion of prosperty and kept it quiet and off issues such as pensions, the appalling state of the education system, the death of manufacture in Britain, etc. :angry:

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 pebble]

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.

Pacific State: I really wish you all the best. I too, despite occasional despair [borne out in my posts here on HPC over 3+ years], am a capitalist. But, what has been going on re: housing is NOT capitalism. It is gross market manipulation -- I believe, PRINCIPALLY by the Moneylenders - who have DELIBERATELY fueled the "housing market" by pumping it with more and more "lent Money". I am CONVINCED of this. Immigration and lack of house building are also contributors - but the VAST level of Mortgage Fraud (in various guises - see below) is the KEY reason behind the gross and deliberate Bubble/Pyramid Scheme.

I wish you all the VERY best PS - - HOLD ON IN THERE! - Glad to hear you've got back with the GF!

Edited November 3, 2007 by eric pebble

[OnlyMe]

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.

Don't worry about that, let the specualtor take the hit, you'd be doing a family a favour by not selling to them at this point in time.

Your story is very sad, I think you will find many parallels here (at least on an individual level) - people who have had their careers fast-tracked out of the UK partly/largely thanks to this bubble.

[Nicholas Cage]

I am now more confident about my short term (i.e. 0-5 year) view on real estate than I have ever been - and it's a view which most of you share. However, and while there is nothing wrong with house prices falling per se, there is a chance that they fall very quickly and trigger a very, very nasty recession.

There is likely to be a very sharp contraction indeed in financial services over the coming months - the losses that have been announceed so far are a fraction of what is to come. This is no hyperbole - most of the securities which are most affected are still being marked in the books at cost price, and most of those are worth nothing. I mean this - not 28 cents in the dollar, nothing. At least, but probably more than, all the of the job growth in financial services of the last two years will be reversed in the next two years, and that is going to hurt not only the London real estate market, but the economy as a whole. More than 25% of GDP is in financial services and industries serving that sector. So, we get a 10% contraction in financial services alone, and GDP growth falls by 2.5%! Now, if falling house prices force not only the debt-ridden consumer to roll over, but also large increases in unemployment in the construction and related sectors, we have a very serious recession on our hands. It will make the 1989-1993 recession look like childs play.

I promise that none of you will enjoy that. I don't mean to spoil the party, but there is at least one more phase to the credit crunch and it is much, much bigger than the one we have just had, so if house prices fall fast from here, things will start to look ugly for everyone.

You managed to say nothing , apart from a 2.5% drop in GDP which from a 2.5% would be 2.44% GDP. Apart from that, total nonsense.

[eric pebble]

I have JUST posted this here - <a href="http://www.housepricecrash.co.uk/forum/ind...showtopic=60148" target="_blank">http://www.housepricecrash.co.uk/forum/ind...showtopic=60148</a>

"This may be simplistic - but I think that the last 10-15 years will be looked back on as the Craziest Times... And - I think that, silly as this may sound now, the Powers That Be will only solve the problems we have today by breathing a huge inflow of cold and fresh air........ and making a decision that - HOUSES and HOUSING should be LEGALLY EXCLUDED from being used as pawns and/or assets to be casually tossed about. The model since WW2 shows plainly that, if people are NOT ALLOWED TO BORROW more than 3.5 x salary to buy a roof over their head..... the system will work well - as it largely did from c. 1945 to c. 1985.

However, if Speculators are allowed to treat residential property as a pawn in a pyramid selling scheme/scam/game, and Moneylenders are allowed to treat Borrowers as pawns in that game - and thus twist and destroy that old and proven rule - 3 to 3.5 x salary MAX, or 4 x joint salary MAX -- it will ALWAYS lead to boom and bust - and in the process make countless millions of people's lives unstable and unhappy...... I actually think it is really quite that simple."

AND I read your post Pacific State -- and ENTIRELY concur with what you say. I FIRMLY believe your summary - "We are pawns in a game played by men with money, power and a lack of responsibility."

Saturday, Nov 3rd: And the news seems to be getting worse and worse.....

[Sheer Heart Attack]

Pacific State: I really wish you all the best. I too, despite occasional despair [borne out in my posts here on HPC over 3+ years], am a capitalist. But, what has been going on re: housing is NOT capitalism. It is gross market manipulation -- I believe, PRINCIPALLY by the Moneylenders - who have DELIBERATELY fueled the "housing market" by pumping it with more and more "lent Money". I am CONVINCED of this. Immigration and lack of house building are also contributors - but the VAST level of Mortgage Fraud (in various guises - see below) is the KEY reason behind the gross and deliberate Bubble/Pyramid Scheme.

I wish you all the VERY best PS - - HOLD ON IN THERE! - Glad to hear you've got back with the GF!

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).

[Guest Skint Academic]

I promise that none of you will enjoy that. I don't mean to spoil the party, but there is at least one more phase to the credit crunch and it is much, much bigger than the one we have just had, so if house prices fall fast from here, things will start to look ugly for everyone.

That depends on whether you have nothing to lose but everything to gain from a financial collapse. We don't have a house but we have our freedom. We're prepared and able to leave the country and work elsewhere. We just need to pay off the rest of our university debts next year and then we're completely free. Basically we will be escaping from debt slavery and won't be funding a repressive financial system.

I'm assuming that a nasty recession will hit, and for quite a long time. I also feel that Britain has no future because of how it has mortgaged its future generations.

I recognise that I'm human and therefore I don't mind admitting to schadenfreude. What comes around goes around.

[cartimandua51]

That depends on whether you have nothing to lose but everything to gain from a financial collapse. We don't have a house but we have our freedom. We're prepared and able to leave the country and work elsewhere. We just need to pay off the rest of our university debts next year and then we're completely free. Basically we will be escaping from debt slavery and won't be funding a repressive financial system.

I'm assuming that a nasty recession will hit, and for quite a long time. I also feel that Britain has no future because of how it has mortgaged its future generations.

Umm.. doesn't that rather assume that Britain is going to hell in a handcart on its own? I rather think that the recession will be Europe-wide (except perhaps Germany, which has already had a very nasty dose) and everywhere else is likely to take a dim view of all those immigrant Brits trying to flood into their country, and slam the gates.

I do agree that if there is a serious recession things will get seriously nasty - Yugoslavia / Rwanda / Darfur have all gien us an insight into how vicious people can be to each other, especially when there aren't enough resources to go round. Question is, what constitutes "enough" in the "I-know-my-rights" & "Because you're worth it" society may not be as basic as food and warmth.

[piece of paper]

The tone of this thread is that we may be entering a Depression of the magnitude of the Great Depression. Does anybody know the relative size of the public sector at that time?

Governments increase the size of the public sector during depressions to keep unemployment as low as possible. I read on another thread that public employment accounts for 60% of all employment in the UK. There just can't be any scope to increase this further!

If the public sector goes, with its guaranteed income structure, we might see a return to true affordability of property.

Who would benefit?

p-o-p

[cartimandua51]

The tone of this thread is that we may be entering a Depression of the magnitude of the Great Depression. Does anybody know the relative size of the public sector at that time?

Governments increase the size of the public sector during depressions to keep unemployment as low as possible. I read on another thread that public employment accounts for 60% of all employment in the UK. There just can't be any scope to increase this further!

If the public sector goes, with its guaranteed income structure, we might see a return to true affordability of property.

Who would benefit?

p-o-p

According to Middleton (1997) (University of Bristol) "Looking first at public sector employment (Figure5) we observe a near fivefold rise in its share of the total working population between 1900 and 1979," if that answers your question. It has probably dropped since then, or been "massaged" out, but still a LOT more.

What worries me is not just the idea of recessionary shake-out - I'm old enough enough to have been working in the early 70s and the 3-daY Week - but the fact that the link between effort and reward seems to have been broken. This affects a lot of things: I grew up in a council house in a nice little enclave; in the 1950s there was a "reward" system: be a good tenant, keep your house nice, pay your rent promptly and you get get upgraded to a bigger /nicer house in a better area. Allocation now is merit-blind, so the more inadequate and irresponsible you are (short of certain seriously criminal behaviour) the more the Nanny state looks after you. If there is a serious recession and the state can't/ won't support those who've got used to not working ( the three-generation benefit dependents we hear so much about) are they just going to look industriously for any available work? I think not. I reckon "It's my right, I'll take it" is more likely to be the order of the day.

I suspect the elderly will come off worst as services are cut and crime rises.

I noticed in my teaching days the increasing attitude not just of "I've a right to a job" but "I've a right to an interesting, well-paid job with good prospects" Does anyone else feel the culture of rights without responsibilities is going to make any upcoming recession more unpleasant than the one in the 70s?

Ah, well; have just thoroughly depressed myself.

[RightToExistInASpace]

Can anyone provide some hard facts? I.e. a link to the actual "basket of goods" that is used to calculate CPI? I'm buggered if I can find it on the ONS website!

[Guest AuntJess]

There is no real choice now.

NuLabour have turned UK Plc into a one trick pony...financial services and sales.

The comparitive exams for 16 year olds now place the country as pretty dumb.

the employers say as much with their willingness to import resources...if we had a workforce that were willing and able to do the job we would have got it in house.The fact our education system does not give enough "value added",speaks volumes.

we have an army of psychology graduates that the average poster on here will make absolute mincemeat out of.So much for the degree in social studies.

They do it to get a job,WE DO IT AS A HOBBY!!

You show a deep ignorance of Psychology if you think you can hold your own with a decent graduate, on their territory. Each to his own mate - what is YOUR degree in pray?

There, there. You mustn't get all confused and unduly elated about the ease with which you sort out the magazines pop psych. articles. I could have written those with just an O level( in my day - not today) under my belt.

Whilst I agree with you about the standards dropping, don't kid yourself it is with Psych.,Business Studies, or Sociology, which has to be the easiest subject going. It is THROUGHOUT the WHOLE of education - higher in particular. Trust me - I taught for years with those who graduated pre 1970 and they all threw up their hands in horror at the appallingly low level of ability required to pass modern exams. O...A and Degrees.

Me too: I have taught at A, U/G and Post-G and found that it is getting easier. Just like Mars bars and pencils are getting thinner. There is less for your money which ever way you slice it.

[eric pebble]

Me too: I have taught at A, U/G and Post-G and found that it is getting easier. Just like Mars bars and pencils are getting thinner. There is less for your money which ever way you slice it.

Yep -- Looked at GCSE papers and A-Level papers the other day..... No doubt about it - far easier -- AND - they only do a few hours TOTAL in exams!! When I took A-Levels I sat 27 hours of exams!!! Today - they sit about 12 in total - if that!

[Injin]

Yep -- Looked at GCSE papers and A-Level papers the other day..... No doubt about it - far easier -- AND - they only do a few hours TOTAL in exams!! When I took A-Levels I sat 27 hours of exams!!! Today - they sit about 12 in total - if that!

http://books.google.co.uk/books?id=KS0jIGX...XYZVztbtsBv_oBI

[gravity always wins]

[/b]You show a deep ignorance of Psychology if you think you can hold your own with a decent graduate, on their territory. Each to his own mate - what is YOUR degree in pray?

Why is it that there seems to be more physcologists around these days and yet there are more and more nutters?

Someones not doing their job very well

Edited November 3, 2007 by gravity always wins

[yaakov]

[/b]You show a deep ignorance of Psychology if you think you can hold your own with a decent graduate, on their territory. Each to his own mate - what is YOUR degree in pray?

There, there. You mustn't get all confused and unduly elated about the ease with which you sort out the magazines pop psych. articles. I could have written those with just an O level( in my day - not today) under my belt.

Whilst I agree with you about the standards dropping, don't kid yourself it is with Psych.,Business Studies, or Sociology, which has to be the easiest subject going. It is THROUGHOUT the WHOLE of education - higher in particular. Trust me - I taught for years with those who graduated pre 1970 and they all threw up their hands in horror at the appallingly low level of ability required to pass modern exams. O...A and Degrees.

Me too: I have taught at A, U/G and Post-G and found that it is getting easier. Just like Mars bars and pencils are getting thinner. There is less for your money which ever way you slice it.

Having known a few psychology graduates, I can tell you thay have major problems. Their problem is that their subject is becoming increasingly statistical but most pschology graduates have zero mathematical ability. The same problem exists in biology/biochemistry which is also becoming increasingly mathematical but most biology graduates have little mathmatical ability.

But you are right, this is problem throughout the education system and is certainly not restricted to psychology.