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Sky: " Credit Crunch: 'worst Yet To Come' "

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http://uk.biz.yahoo.com/10072008/140/credi...unch-worst.html

Thursday July 10, 07:31 AM
Credit Crunch: 'Worst Yet To Come'
By
Sky News
| | |
In the last six months, the Sky News Money Panel has become much gloomier about our economic prospects.
Right now almost
every statistic is pointing in the wrong direction
- the cost of living is rising, house prices are falling sharply, companies (Advertisement)
are laying off staff.
And then there is the ongoing credit crunch.
The
portents are looking bleak
, the whisper is of recession. The Bank of England's Monetary Policy Committee has a lot to ponder.
We asked the 10 financial experts who sit on the Sky panel when they expect the UK housing market to recover.
If the Nationwide has got its sums right, house prices have been falling for the last eight months.
First-time buyers seems to be waiting to see how far prices will fall and those who do want to buy are finding mortgages have become more expensive.
The panel feel this is the
beginning of a long correction
and it will be 2010 at the earliest before prices start rising again.
Angela Beech, Head of the Personal Tax Department at Blick Rothenburg told Sky: "It is doubtful whether we have ridden the worst of this yet given that redundancies are in the main being deferred for the time being - more families will be forced into debt to keep a roof over their heads."
We asked the panel if they think the UK economy is headed for a recession. Half said yes and all felt the UK economy is set for several years of very weak growth.
Ian Templeman, from the Institute of Directors said: "I think we're heading into a downturn. Whether it's a recession or not, who knows, but it's going to be tough economically and I think it's going to last well into next year so I think we'd better get used to it."
The high oil price and the soaring cost of almost every commodity is impacting on our standard of living.
The price of many everyday goods and services has crept up making many of us feel worse off.
We asked the panel if they think we will be feeling better off in six months time. All 10 said "no" unanimously.
Nick Parsons from NAB Capital said: "There's a real squeeze on disposable income at the moment.
"That's not to say that average earnings are going to fall but the amount of money you have to spend on utilities, food, petrol and taxes is going up and up and we don't see an end to that anytime soon. I think there's a real possibility that come Christmas we'll be feeling worse off than we do now."
The Bank of England faces a dilemma: does it lower interest rates to stimulate a slowing economy or does it raise them to combat inflation?
Which is the bigger problem? The Money Panel feels that at a time of such uncertainty the Bank of England will opt to do nothing.
All 10 members predict rates will, for now, be kept on hold.

SKY a bit on the gloomy side this fine Summer morning? IMagine the effect on the viewers as bad news is compounded by general agreement thaty the worst is, indeed, yet to come.

Merv will be caught in the headlights again, frozen, and unable to decide whether inflation is really his remit or is it propping up Gordon's crumbling miracle economy.

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Mervyn King is a twit who should be shot, if he was a racing horse the vet would have already administered the bullet.

Christ knows how he managed to get to be a Prof he must have a very long tongue.

I cannot see anything other than the entire global financial system imploding people are going to lose all trust in money. The powers that be appear to have lost the plot.

This is certainly the calm before the storm.

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I think what has amazed everyone and even the so called experts is the speed of the doom and gloom in the economy and also the housing industry. When everyone talks about the last crash they talk of 15% interest rates, they forget to mention the lowest interest rate was around 7% but average was 8% to 10% and it did hit 15% but briefly and came down quite quickly, remembering the average property price in London was 70K . Interest rates have indeed doubled this time around as some people were on 3.5% and now on 7%. Unemployment tends to follow a CRASH as we are seeing now, similar to last CRASH. Interest rates dropped from 15% to 6% last time around but it took a further 2-3 years before property stopped falling .

The last CYCLE was around 9 years after a 3 year BOOM (last time you had the tail end of the BABYBOOMERS being FTBs with hefty deposits, no student debt and good salaries coming in the mid 90s)

This time around it could be 20 years after a 10 year BOOM (FTBs this time around student debt no deposit and prices way out of reach)

SOUND ECONOMY : MYTH BUSTED

UNEMPLOYMENT LOW : MYTH BUSTED

ITS NOT 15% THIS TIME AROUND : MYTH BUSTED

Looks like we are heading for the biggest BUST in history

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The last CYCLE was around 9 years after a 3 year BOOM (last time you had the tail end of the BABYBOOMERS being FTBs with hefty deposits, no student debt and good salaries coming in the mid 90s)

This time around it could be 20 years after a 10 year BOOM (FTBs this time around student debt no deposit and prices way out of reach)

SOUND ECONOMY : MYTH BUSTED

UNEMPLOYMENT LOW : MYTH BUSTED

ITS NOT 15% THIS TIME AROUND : MYTH BUSTED

Looks like we are heading for the biggest BUST in history

That is exactly the point - the last bubble didn't come to a screeching halt with 15% interest rates, it stopped almost to the day that double Miras actually got pulled, up till that point couples were bidding up anything to get their joint tax allowance.

The area under the curve of the period during which the bubble conditions exist is the real key point - just like you suggest - last time round it was a fairly short run affair. This time round successive idiotic moves by the BOE to keep the bubble going have extended the bubble, engorged it and exposed far more people and businesses to it.

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  • 399 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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