Sunday, July 15, 2007

Is this the 1st nudge for our ‘house of cards’?

Profit warnings at five-year high

Profit warnings issued by UK-listed firms are at their highest level since the low point of the technology-led stock market crash in 2001.

Posted by nearly30 @ 08:22 PM (558 views)
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15 thoughts on “Is this the 1st nudge for our ‘house of cards’?

  • My 2 most interesting quotes from the article:

    [1] A shortfall in sales was the most often quoted reason for warnings, suggesting a downturn in the UK economy. – don’t want to say ther R word then?
    [2] Tighter credit conditions will stretch companies and consumers. The assumption of ‘risk-free’ lending will have to change. – all the money has already gone – debt & real!

    These figures are for historic events – IMHO – the wobble has already begun!!!

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  • Can somebody please tell me where these figures have come from as when I look at the Land Reg website from the link below the figures are completely different.

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  • Yes, but the tech bubble only affected a handful of tech speculators with more money than taste, people who could easily absorb the cost. The upcoming crash is concerning properties (homes) and this affects everybody.

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  • Remember, people who don’t have the readies to spend borrow it, if and when they cannot physically borrow any more they stop spending. We are currently at the point where existing levels of spending cannot be sustained (or financed) therefore spending in real terms will fall across most sectors of our consumer economy because most folk will be forced to curb their spending when they are, or fear, being skint.

    In the real world people earn money and then spend it, unlike the fantasy world of borrowing excess amounts money to spend now and then worrying about paying later.

    In addition the worst form of borrowing of them all must surely be the interest only mortgage taken out by the sort of person who wants a house they cannot afford under the hallucination that they can sell it later (if they need to) and downsize (mortgage free) on the notional profit!

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  • “Tighter credit conditions will stretch companies and consumers. The assumption of ‘risk-free’ lending will have to change.”

    Credit crunch here we come!

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  • Tighter credit conditions will stretch companies and consumers. The assumption of ‘risk-free’ lending will have to change.”

    Credit crunch here we come!

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  • No wonder the BofE boss was warning that the next decade will not be as nice as the last. Over borrowed consumers, an over borrowed government and now surprise surprise companies are wondering where the next lunch is coming from. So in summary then – against a background of rising interest rates, companies will lay off more people (forget cooked up nonsense government meaningless statistics) making the general economic environment pretty unpleasant and leading to even more social problems. Just a minute didn’t we already have the highest divorce rate in Europe, the highest prison population and the most indebted population with record numbers of people going bankrupt. Oh yes then there was that report saying it wasn’t a particularly nice place to bring up kids either. You could say that our leaders have seriously lost the plot.
    Still looks like housing is at least going to become more affordable in the near future.

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  • tyrellcorporation says:

    Berp! is that reflux or a PFI stuck in my throat?!? Let’s also not forget Gordon’s magical buy-now-pay-far-in-the-future schemes. These mammoth debts lumped onto unsuspecting babies (who are being born right now) are the biggest scandal to hit taxpayers for decades – and yet the media are eerily quiet. Every shiny new Audi and Bentley you see has been effectively bought using cheap credit (either directly or through MEW/HPI) and the illusion (and affluence) will very quickly evapourate if the credit crunch really starts to bite.

    I really do sense a change in sentiment… Greed is turning into fear.

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  • planning4acrash says:

    Tyrell, for us it is, I think we will have to wait until next spring or even later, next autumn? before it hits the national psyche big time. Pundits discussing crashes, etc. are still seen as a bit cutting edge and out there still by those who are actually fuelling the boom and the language is still denial “softer landing” etc. We can read into the stats, but, just like yeast, the average consumer carries keeps spending till its run out.

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  • planning4acrash says:

    By hitting the national psyche, I mean a consensus that all regions, including London and the South East are in for a pounding. Most people can shrug off recent falls in Scarborough!

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  • stillthinking says:

    I was sitting outside a pub in chiswick, the bit closest to the acton estates but on the high street, and to my surprise I saw during the duration of two pint/s, a lamborghini and a ferrari and a host of extremely expensive cars. Perhaps all that has happened is that the debt money has flowed upwards and the trickle-down effect never happens. A two-tier society.
    As it is impossible to keep trading your dwelling up forever, the money paid for houses does not necessarily re-enter the housing market. I think that there must be a lot of people who have taken their cash out. I am not talking about the BTL or any kind of buyer, i am talking about the original owners of 8 years ago. People have been selling after all. I could be wrong, maybe thats why the top end of the market kind of took off by itself, achieved independent flight. All that cash from basic dwellings pushed the take off of the decent places.
    I was surprised to see so many expensive cars though, the 100K variety of car. Made me feel a bit embarrassed that I had been too lazy to fix the broken wing of my specs back on.
    Yes, I know chiswick is a reasonably rich area but I haven’t spent time there in 4/5 years.

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  • talking rot says:

    nearly30

    This is a very interesting graph. However, there is a fall towards the end of the “Individual Bankruptcy” line. Does anyone have an explanation? Would the fall in the number of bankruptcies be linked to the rise in IVA?

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  • @talkingrot – my thoughts exactly!

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  • tyrellcorporation says:

    I guess so as the IVA graph ticks upwards at that point too…

    IVAs have been brought in to keep the bubble afloat and tio make ‘bastard savers’ pay for other peoples fun…

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