WWW
"Major house price crash = major recession"
Why?
Because, although prices were overinflated to begin with, the real crunch came as the banking sector run out of money and confidence.
The current house price 'crash' is just an adjustment of prices back to standard values following a period of stupid greed fuelled price soaring - nothing more.
Errr. Nope. There is an element of price adjustment but there are underlying inflationary pressures on the economy that have been in place for quite some time.
Typically house price 'crashes' follow not proceed recessions dont they?
Not this time
Recession > manufacturing/service sector (seen as we dont make anything anymore) downturn > job losses > mortgage difficulties > house price crash?
Manufacturing/service sectors havnt crumbled, people arent being laid off left right and centre.....no recession as yet
AFAIK.
Your following standard model. If you look at it as an economic loop, which is what it is. Then any part of that loop which breaks, has a knock on effect to other parts of the economy. Interest rates are not coming down, they are going up. Grain prices are at an all time high although eased a little, there are no long term indicators that prices will ease by much more. Everything you eat depends upon grain, so your food bill is going up significantly. I calculated food inflation to be at 4% pa last December. My figures at the farm gate for March was 5%-6% pa. My latest farm gate figures for May show an inflation rate of 8% pa. I predict that this will be close to 10% by the year end.
Inter-bank issues exist granted - not really indicative or a result of the UK economy IMHO. In fact the UK economy has dealt with this pretty well (so they keep telling us) - which maybe indicative of it its strength.
Too simple. The UK economy is not doing well, in fact its very fragile. Northern Rock - gone. Bradford & Bingley - teetering. Massive write downs by all the big boys, plus inflation. More to come. It's not an if, its a when, regarding recession.
Oil prices -woooo - Not a shortage lead issue
AFAIK. This is a supply issue. The OPEC countries are squeezing us by strangling thier supply/prcessing rates. Might end in war (in which we all jump out of our airliners (when/if we ever get in one) and into our Typhoons....yay) but not a recession
There is a small surplus in the world oil production, so no, not completely true to say that is just a supply issue. Hedge fund managers are heavily into oil speculation since the American sub-prime went belly up. They are looking to make up for heavy losses. In a way, if oil was to reduce in price, I feel that many banks would suffer further.
Too gloomy for my liking although i am with DJ here in that I think the train-headlight reference is very good
I knew I would find something that we would agree on
It is gloomy, but it is reality.