Friday, August 10, 2007

Its on!

Asia markets fall after US losses

Nikkei down 2.4%, Bank of Japan injects $4.2bn, Australia injects double its normal level of cash. "Analysts say that a credit crunch - when it becomes harder for banks, companies and consumers to get access to loans and cash to run their operations - is a serious occurrence that could lead to a recession".

Posted by planning4acrash @ 08:01 AM (1597 views)
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8 thoughts on “Its on!

  • Where’s the Japenese equivalent of Cramer?

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  • I don’t have much of an insight into global markets, stock exchanges etc. What I do see, as a most casual observer, is that one day investors are crying because shares have dropped for some or another reason and the next day everything is fine and they can get back to drinking champers ! Can something on this scale be shrugged off in a couple of days/weeks by the markets or is the rot likely to really set in ? This seems to me to be the perfect way to bring house prices screaming to a halt and remind us that nothing ever keeps going up. But it would be just too good to be true wouldn’t it – if the house price party were to be sent crashing by the same factors that helped set it it off …?

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  • speculatorone says:

    According to expert opinion (on business news last night) house prices will only start to tumble if the BOE raise interest rates to 6.25 to 6.50, not 6% as expected?

    Given that earlier this year we were never going to see 6%, my opinion is sit tight it cannot be too far away now.

    Anyone have any other thoughts?

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  • speculatorone the real crunch will come when mortgages reset later this year to the standard variable rate from the initial teaser rate, then expect a flood of defaults.

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  • Speculatorone…I can’t claim to be one of these “experts”, but the stats that are available to us all say that repossessions are already increasing and prices are already actually dropping in some areas of the country, and at least slowing everywhere else. Additionally these stats have a time lag – sales take 3 months to complete and repossession proceedings won’t even be instigated until the defaulter has missed a month or three’s payments, so the stats only show the state of play 3+ months ago in reality, when the base rate wasn’t even as high as it is now. It therefore seems that there are plenty of people out there that have borrowed really silly money that they couldn’t afford to pay back unless rates stayed at about 4.5%, so even the 5.25% of a few months ago has been high enough to start the slide.

    Therefore, if 5.25% was enough to start causing problems to show up in the stats, then today’s 5.75% is already more than enough to keep things going; we don’t even need still higher rates, they will just speed things along. And further still, a good proportion of people are on fixed rate mortgages that are soon to reset, and long-term interest rates (set by the market, not the BoE) have also increased substantially.

    These “experts” were predicting that 6% would cause real problems when they thought rates would never go that high. Now their rates prediction has proved wrong, they revise their doom prediction upwards too. Strange that… 🙂

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  • Speculatorone,

    They have been saying that for the most part of this year. When they were 5.5% they said that a .25% increase would create serious problems. This doesn’t appear to have happened. Yet……..

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  • planning4acrash says:

    Mrmickey, an even bigger crunch will occur if there isn’t enough liquidity for sub-primes and alt-a’s to re-mortgage and they go from 4.5% fixed rates to 8% standard variable rates.

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  • speculatorone says:

    Me and my family have been sitting put in a rented for nearly a year now with our capital in the building society. I think for the time being it’s the best situation to be in.

    When I don’t look at this website for a few days all the problems mounting don’t seem real. Then when I log on it’s amazing how many articles there are now on the subject.

    What I am trying to say is that people who are mortgaged to the hilt are not being expsoed to the problem. Plus if they choose to bury their heads in the sand and pretend there its a problem they can. I have a couple of friends like that who think it’s all something and nothing?

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