Credit Crunch

[Sebrof]

Man of few words is Twitch.

 

S

[Twitch]

Man of few words is Twitch.

 

S

 

Aye.

[Moghrey Mie]

building work has slowed down over here and houses r taking a while to sell and some not selling at all, does anyone think the house prices will drop as quick here as they have been in the uk?

 

 

i did hear on the grapvine chrystals of onchan were closing because they are only selling 3 to 4 houses a month in the last 3 months, don't kno how true that is.....

 

 

i think our pubs r goin 2 find it very hard over the winter with the no smokingnespecially those that have no sheltered areas 4 smokers, i am a smoker and use 2 go out 2-3 times a week but now i stay at home, how many other people r doin the same thing.

 

i really do dread this winter for local business and in 20 years living here this is the 1st time i have had that dread.

 

 

Have you been to Onchan 'Shopping' Precinct lately? There's not a lot of shopping of any kind going on there -never mind calling in to buy a house from Chrystals

[Stu Peters]

The upside of a credit crunch (or 'recession' as we used to call them before spin doctors took over) is that lots of people who have made a killing during the era of cheap money will lose a chunk of it as the world adapts and a new era of stability based on sound policies should/could ensue.

 

Estate agents, financial wizards, bad retailers and others who have made lots of easy money for doing very little, and adding nothing of value to life, will feel the squeeze first. House prices should fall so that FTB's can get back on the ladder of home ownership. Tradesmen who don't turn up on time or who do shoddy work will find it much harder to get jobs as people tighten their belts and do things more themselves.

 

B&Q will do well....

[homarus]

The upside of a credit crunch (or 'recession' as we used to call them before spin doctors took over) is that lots of people who have made a killing during the era of cheap money will lose a chunk of it as the world adapts and a new era of stability based on sound policies should/could ensue.

 

Estate agents, financial wizards, bad retailers and others who have made lots of easy money for doing very little, and adding nothing of value to life, will feel the squeeze first. House prices should fall so that FTB's can get back on the ladder of home ownership. Tradesmen who don't turn up on time or who do shoddy work will find it much harder to get jobs as people tighten their belts and do things more themselves.

 

B&Q will do well....

 

So will casualty!

[Sebrof]

B&Q will do well....

 

Not if nobody is moving house, they won't.

 

S

[Saltire]

B&Q will do well....

 

Not if nobody is moving house, they won't.

 

S

 

Why? They could be doing up their old house because they can't afford to move to a new one!

[immortalpuppet]

 

 

Have you been to Onchan 'Shopping' Precinct lately? There's not a lot of shopping of any kind going on there -never mind calling in to buy a house from Chrystals

 

 

Thats always been a pants place to run any kind of shop from, nothing to do with the credit crunch.

[Sebrof]

B&Q will do well....

 

Not if nobody is moving house, they won't.

 

S

 

Why? They could be doing up their old house because they can't afford to move to a new one!

 

It's a "well-known fact" that when people move house they spend a small fortune on carpets, curtains, paint, DIY, etc. Anybody in these businesses is looking at a downturn.

 

The one thing that is happening is that some people are building extensions, or, in Chiswick, "lower ground floors".

 

Overall, though, lower house sales mean lower turnover in the trades I mentioned.

 

S

[Tris]

The upside of a credit crunch (or 'recession' as we used to call them before spin doctors took over)

 

A recession may/will come off the back of the Credit Crunch but they are two completely different matters.

[Sebrof]

The upside of a credit crunch (or 'recession' as we used to call them before spin doctors took over)

 

A recession may/will come off the back of the Credit Crunch but they are two completely different matters.

 

Well, not entirely. More expensive credit, fewer whizz-kids throwing their money around, and adverse sentiment about house prices (meaning you won't buy right now even if you can afford to), will lead to fewer house sales, rising unemployment in property-related industries, and a general economic contraction which, if it goes far enough, will amount to a recession. So, whilst different animals, the recession (if it happens) will be a direct result of the credit crunch.

 

In my view, the UK is already in recession. But we'll know for sure when the GDP statistics appear in due course.

 

S

[Stu Peters]

Actually, Tris is right - it's cause and effect. But you know what I mean about everyone pussyfooting around trying desperately NOT to use the 'R' word for fear of making it so.

 

Thing is, it's only us old-timers who can probably remember them in the past. I was a young office worker in Manchester the 70's during the three-day week and remember climbing 7 floors on the stairs because we weren't allowed to use the lift, torches and candles everywhere, inflation running wild, petrol rationing (IIRC) everyone on strike, and homes being repossessed and auctioned off.

 

Then in the late 80's a pal took a posting to London, bought a flat down there, and when they came to move back North a few years later they were stuck with a sizeable chunk of negative equity which almost bankrupted them (their mortgage lender wasn't interested - but they eventually found the shortfall elsewhere at a significant interest rate).

 

The other thing is mortgage interest rates - you've never had it so good! The worry is that people have been borrowing large salary multiples to create a monthly repayment they can afford...a couple of points increase in the base rate and it's a huge problem. As we're starting to see now, banks often put UP interest rates in a downturn, which to me is counter-intuitive as it only magnifies the problem.

 

Of course, on Planet Stu we have a solution to all this. Governments to freeze trading in shares in financial institutions (banks etc - they've already gone part-way in banning shorts trading) and a mandatory cut in interest rates across the board to stimulate the economy, rather than compound the problem.

 

Trouble is, we don't have an economist on Planet Stu...so how would YOU fix the current problem?

[hboy]

Have you been to Onchan 'Shopping' Precinct lately? There's not a lot of shopping of any kind going on there

 

I'm waiting for them to re-brand as 'onchan skateboard park'

[Gladys]

Governments to freeze trading in shares in financial institutions (banks etc - they've already gone part-way in banning shorts trading) and a mandatory cut in interest rates across the board to stimulate the economy, rather than compound the problem.

 

Trouble is, we don't have an economist on Planet Stu...so how would YOU fix the current problem?

That will probably make matters worse, you do need an active share market to maintain economic bouyancy. What we do not need is trading in things that have nothing real to underpin them.

 

On Plant G, all the secondary, tertiary etc. trading would be stopped and markets could only be created in things that were real and had a direct economic activity underpinning them other than the trade itself. Stopping selling short is good, as this is stopping the whizz kids from borrowing a stock, selling it at a high then buying it back to return to the person they borrowed from as the price falls - you can see the scope for huge and dangerous positions. Options and futures are kind of understandable and are pretty well directly linked to the 'real' thing as it is directly linked to the stock - simplistically, if share X reaches price Y I will have the option of buying or selling it. But what is not sustainable is the complicated derivatives trading which is so removed from the real economic activity they are supposed to be shadowing that it is, in effect, ficititous trading.

 

Then your cut in interest rates, fine, but the other side to that coin is that the currency becomes very unattractive in the money market as no one wants to buy sterling, leading to a devalution, lower export revenue and higher import costs.

 

Its very complicated so I think we should return to barter.

[keyboarder]

Stopping selling short is good, as this is stopping the whizz kids from borrowing a stock, selling it at a high then buying it back to return to the person they borrowed from as the price falls - you can see the scope for huge and dangerous positions.

 

Not necessarily. I'm no expert, but it seems to me that the short sellers are actually very good at weeding out some of the inefficient or corrupt organisations and realising some true market values. They've been scapegoated to a certain degree for the current fiasco although a temporary halt to their activities is clearly wise.