Growing Evidence That The Upturn Is Upon Us
Joined: Feb 2000
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From: England
Some time ago and to hoots of derision I pointed out that oil was a sideshow. On a typical shorthaul low cost airline ticket its £20 - £30 even at $147 a barrel. Less than the car park.
The IR cut yesterday will save the typical £150,000 mortgage holder £25 a month. You think that's fixed the problem and saved the economy? Me neither.
WWW
The IR cut yesterday will save the typical £150,000 mortgage holder £25 a month. You think that's fixed the problem and saved the economy? Me neither.
WWW
Joined: Aug 2008
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From: between a rock and a hard place
Black Knat
I do suspect we will see a brief but significant up turn in the stock market before we really hit the bottom.
Although I don't think we can draw exact conclusions from past averages and statictics as we haven't had this level of intervention from governments.
I do suspect we will see a brief but significant up turn in the stock market before we really hit the bottom.
Although I don't think we can draw exact conclusions from past averages and statictics as we haven't had this level of intervention from governments.
Joined: Aug 2005
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From: UK
Topslide-
I am interested in your comments about houses as I think that could be the trigger that causes the final collapse of the financial system in its current form within the UK.
My thinking goes along the lines that most people have had to take a mortgage out to buy a home. While they stay in employment they can afford the payments. Assuming massive job losses, many won't be able to pay the mortgage. Given 'normal' conditions they would sell the house and clear the loan (given no negative equity).
In the current situation people who would 'normally' be regarded as good borrowers are unable to obtain a mortgage due to the credit squeeze. Coupled with this the confidence in the housing market has collapsed, hence rapidly falling prices.
The result of the above will mean millions of people will not be able to get rid of their homeloans. However, when they default on the loan and possibly give up and hand the keys back to the bank/lender, the result will be that these lenders end up with thousands or millions of properties that they cannot sell (or at least sell at realistic prices). What happens then?
I am interested in your comments about houses as I think that could be the trigger that causes the final collapse of the financial system in its current form within the UK.
My thinking goes along the lines that most people have had to take a mortgage out to buy a home. While they stay in employment they can afford the payments. Assuming massive job losses, many won't be able to pay the mortgage. Given 'normal' conditions they would sell the house and clear the loan (given no negative equity).
In the current situation people who would 'normally' be regarded as good borrowers are unable to obtain a mortgage due to the credit squeeze. Coupled with this the confidence in the housing market has collapsed, hence rapidly falling prices.
The result of the above will mean millions of people will not be able to get rid of their homeloans. However, when they default on the loan and possibly give up and hand the keys back to the bank/lender, the result will be that these lenders end up with thousands or millions of properties that they cannot sell (or at least sell at realistic prices). What happens then?
Joined: Feb 2000
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From: England
What really gives the government and the banks the heebie geebies is the following scenario.
The trickle of people using the bankruptcy courts starts to swell. Somebody on Trisha or Jeremy Kyle mentions how good it was just to get rid of the negative equity house and the credit card and the consolodated loan. Suddenly the chav minions collectively decide they like the sound of this and the queue around the block for the bankruptcy courts are longer than for the bank run.
The Judge can see that some are genuinely bankrupt but also that a lot have made themselves this way. But if he tries to fine or imprison those in front of him who are attempting fraud he knows that, 1) they have no money, and 2) there are only 982 prison places spare this week in the prison system. The Courts will have no viable sanction against tens of thousands of bankruptcy claims.
The hard pressed but solvent population will soon cotton on to the fact that the reckless, feckless and lazy are exploiting bankruptcy to escape the debt treadmill scot free and they will be enraged. Politically this is difficult and their rage will encourage them to max their credit cards, lose their job, go bust, and spend more time with the kids they barely have time to see.
By this point the banks and creditors are in real trouble as they are havig to write off millions of loans and the assets being seized are worth zip. Property auctions are ALREADY flooded with repossessed properties that are not making their reserve set at half peak valuations. I could show you hundreds of catalogues.
Quite quickly the whole system of capitalism, of banking and debt finance collapses. A whole section of society will have cottoned on that there is no debtors prison and that they can recklessly borrow with impunity. Therefore the banks will have to go back to 1950's style lending practice and this will only support an economy a fraction of the size we are used to and politicians are used to taxing.
The whole edifice of 'the system' is currently swaying because the fundamental debt instrument - house prices - are crumbling. Until those prices stop falling the walls will continue to crack and Mr Darlings expensive plaster work will never set.
In the end its all about the house prices.
WWW
The trickle of people using the bankruptcy courts starts to swell. Somebody on Trisha or Jeremy Kyle mentions how good it was just to get rid of the negative equity house and the credit card and the consolodated loan. Suddenly the chav minions collectively decide they like the sound of this and the queue around the block for the bankruptcy courts are longer than for the bank run.
The Judge can see that some are genuinely bankrupt but also that a lot have made themselves this way. But if he tries to fine or imprison those in front of him who are attempting fraud he knows that, 1) they have no money, and 2) there are only 982 prison places spare this week in the prison system. The Courts will have no viable sanction against tens of thousands of bankruptcy claims.
The hard pressed but solvent population will soon cotton on to the fact that the reckless, feckless and lazy are exploiting bankruptcy to escape the debt treadmill scot free and they will be enraged. Politically this is difficult and their rage will encourage them to max their credit cards, lose their job, go bust, and spend more time with the kids they barely have time to see.
By this point the banks and creditors are in real trouble as they are havig to write off millions of loans and the assets being seized are worth zip. Property auctions are ALREADY flooded with repossessed properties that are not making their reserve set at half peak valuations. I could show you hundreds of catalogues.
Quite quickly the whole system of capitalism, of banking and debt finance collapses. A whole section of society will have cottoned on that there is no debtors prison and that they can recklessly borrow with impunity. Therefore the banks will have to go back to 1950's style lending practice and this will only support an economy a fraction of the size we are used to and politicians are used to taxing.
The whole edifice of 'the system' is currently swaying because the fundamental debt instrument - house prices - are crumbling. Until those prices stop falling the walls will continue to crack and Mr Darlings expensive plaster work will never set.
In the end its all about the house prices.
WWW
Joined: Nov 2004
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From: The Desert but shortly to be HK!)
Believe it or not guys everything you have mentioned above is known and has been known for sometime.... Jo public is just catching up. It is the reason wholesale funding markets has been shut for over a year and there are calls to recapitalise the banks.
Bad debts have yet to really spike or threaten bank levels of bank capital so all of the measures currently being taken are in anticipation of the events you talk about. Most losses to date at banks have been taken on debt securities where mark to market losses force banks to take future losses today. Loan losses can be spread over a greater time period and at least partially be absorbed by ongoing earnings. Total "cash" losses on sub-prime to date have only been 5-10% of the write-downs booked by the banks. I am no a bull on the economy but the banking sector and markets have moved well ahead of your thinking..... the government intervention and bank recapitalisation is a big step forward and will help stop things getting even worse.
Topslide the US & UK government intervention was necessary. Without it the FTSE would be much more than 1000pts lower. Time will tell and I have been uber bearish on this site for months but it is churlish to ignore positive and necessary steps that are being taken. And the £500bn will be collateralised so the bulk will be repaid. It is not "spent" like the money on the Olympics so your comparison is not 100% accurate. The governement will also actually make money on the capital injected into the banks given the coupon they will charge relative to their cost of borrowing. Banks will repay this 10-15 years down the line once they have rebuilt equity organically.
The people I talk to are very very positive about actions taken this week and I am comfortable many of them know what they are talking about.
Bad debts have yet to really spike or threaten bank levels of bank capital so all of the measures currently being taken are in anticipation of the events you talk about. Most losses to date at banks have been taken on debt securities where mark to market losses force banks to take future losses today. Loan losses can be spread over a greater time period and at least partially be absorbed by ongoing earnings. Total "cash" losses on sub-prime to date have only been 5-10% of the write-downs booked by the banks. I am no a bull on the economy but the banking sector and markets have moved well ahead of your thinking..... the government intervention and bank recapitalisation is a big step forward and will help stop things getting even worse.
Topslide the US & UK government intervention was necessary. Without it the FTSE would be much more than 1000pts lower. Time will tell and I have been uber bearish on this site for months but it is churlish to ignore positive and necessary steps that are being taken. And the £500bn will be collateralised so the bulk will be repaid. It is not "spent" like the money on the Olympics so your comparison is not 100% accurate. The governement will also actually make money on the capital injected into the banks given the coupon they will charge relative to their cost of borrowing. Banks will repay this 10-15 years down the line once they have rebuilt equity organically.
The people I talk to are very very positive about actions taken this week and I am comfortable many of them know what they are talking about.
Joined: Nov 2004
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From: The Desert but shortly to be HK!)
WWW I am coming off a very low base 
... I actually withdrew several thousand pounds of hard currency from a bank 2 weeks ago as "emergency funds" in case the whole system ground to a halt.... I never thought I would ever be doing that but it was looking so so bad at that stage.
There is plenty of misery to come but the chance of "life as we know it" changing is subsiding from where I sit. I can stomach a harsh mind numbingly bad recession... in fact I would bet that is what we will get... but as you know it was looking much much worse than that at one stage.
... I actually withdrew several thousand pounds of hard currency from a bank 2 weeks ago as "emergency funds" in case the whole system ground to a halt.... I never thought I would ever be doing that but it was looking so so bad at that stage.There is plenty of misery to come but the chance of "life as we know it" changing is subsiding from where I sit. I can stomach a harsh mind numbingly bad recession... in fact I would bet that is what we will get... but as you know it was looking much much worse than that at one stage.
Joined: Aug 2008
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From: between a rock and a hard place
The US appears to be considering stepping into line with the UK and following our example 
Video: US could copy British-style bank bailout - Times Online
This is in danger of almost becoming a coordinated rescue.
btw, I put as much as I can away in NS and I certificates in case the sky does fall in...I just wish I could put away more...all I need to do now is buy 3 years worth of beans
(i'm supprised no one mentioned the rumour that the Bank of America ordered 'We are closed for trading today' signs
....although I think that one will probably appear as 'false' on Snopes
Video: US could copy British-style bank bailout - Times Online
This is in danger of almost becoming a coordinated rescue.
btw, I put as much as I can away in NS and I certificates in case the sky does fall in...I just wish I could put away more...all I need to do now is buy 3 years worth of beans
(i'm supprised no one mentioned the rumour that the Bank of America ordered 'We are closed for trading today' signs
....although I think that one will probably appear as 'false' on Snopes
Joined: Nov 2005
Posts: 301
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From: Uk
The result of the above will mean millions of people will not be able to get rid of their homeloans. However, when they default on the loan and possibly give up and hand the keys back to the bank/lender, the result will be that these lenders end up with thousands or millions of properties that they cannot sell (or at least sell at realistic prices). What happens then?
What happens next is that the Government in 12 months time will have to step in a rescue the housing market!! Buy backs, freeze repossesions or reduce interest rates (0% ???) who knows.. The fall out from the last few weeks in the financial markets wont really be fully felt in the housing market until this time next year, so fingers crossed the governement can at least get some sort of a plan together... What the Government can't allow to happen is to let repossesions carry on picking up pace at the rate they are at the moment. If it does the housing market in 6 months will be in free fall, as who wants to buy a house at market value when you can buy a repossesion at 30% lower?! If it carrys on going this way, it will be a buyers market which can only push prices down further..
On a brighter note, at least the likes of property ladder, how to sell house and homes under the hammer might finally be off our screens for the time being!!
What happens next is that the Government in 12 months time will have to step in a rescue the housing market!! Buy backs, freeze repossesions or reduce interest rates (0% ???) who knows.. The fall out from the last few weeks in the financial markets wont really be fully felt in the housing market until this time next year, so fingers crossed the governement can at least get some sort of a plan together... What the Government can't allow to happen is to let repossesions carry on picking up pace at the rate they are at the moment. If it does the housing market in 6 months will be in free fall, as who wants to buy a house at market value when you can buy a repossesion at 30% lower?! If it carrys on going this way, it will be a buyers market which can only push prices down further..
On a brighter note, at least the likes of property ladder, how to sell house and homes under the hammer might finally be off our screens for the time being!!
Joined: Dec 2005
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From: UK
Looks like OPEC are getting a little twitchy about their £100 dollar per barrel 'ideal' :-
AFP: Oil prices drop despite news of emergency OPEC meet
$50 per barrel by year end anyone??
AFP: Oil prices drop despite news of emergency OPEC meet
$50 per barrel by year end anyone??
Joined: Feb 2000
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From: England
FTSE futures off 4% and starting to kiss 4000. The rescue ain't doing what it was supposed to do..
The Dow closed down a massive 678.9 points or 7.33 per cent at 8,579.19. A year ago today, the Dow closed at a record high above 14,000.
Cancel the caterers.
WWW
The Dow closed down a massive 678.9 points or 7.33 per cent at 8,579.19. A year ago today, the Dow closed at a record high above 14,000.
Cancel the caterers.
WWW
Joined: May 2008
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From: FL 350
Mike who knows where the oil price will end up 
All i know is that it is a function of supply and demand and right now because of the slowing economy the world does not need much oil hence this is reflected in the price. When all this mess is sorted out and we start recovering the oil price will increase.
Meanwhile in a galaxy far far away.....
Airline industry faces 'year of hell' - Times Online
All i know is that it is a function of supply and demand and right now because of the slowing economy the world does not need much oil hence this is reflected in the price. When all this mess is sorted out and we start recovering the oil price will increase.Meanwhile in a galaxy far far away.....
Airline industry faces 'year of hell'
The airline industry is facing a “year of hell” that could be worse than the downturn after the attacks of 9/11, the industry warned.
Mike Ambrose, the director general of the European Regional Airlines (ERA), which represents 79 airlines, said he expected the number of carriers around the world declaring bankruptcy to double to at least 70 this year.
“We are now up to around 35 this year,” Mr Ambrose said. “I see at least that number over the winter.”
Numerous carriers have already been grounded because of a combination of high fuel costs and falling passenger demand. XL, the travel company, was declared bankrupt last month stranding 80,000 passengers and other carriers such as Zoom, Silverjet and Oasis have also been forced to close.
The airline industry is facing a “year of hell” that could be worse than the downturn after the attacks of 9/11, the industry warned.
Mike Ambrose, the director general of the European Regional Airlines (ERA), which represents 79 airlines, said he expected the number of carriers around the world declaring bankruptcy to double to at least 70 this year.
“We are now up to around 35 this year,” Mr Ambrose said. “I see at least that number over the winter.”
Numerous carriers have already been grounded because of a combination of high fuel costs and falling passenger demand. XL, the travel company, was declared bankrupt last month stranding 80,000 passengers and other carriers such as Zoom, Silverjet and Oasis have also been forced to close.
Joined: Dec 2005
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From: UK
heli,
Not quite a function of supply and demand....more a function of supply according to how much $ can be screwed out of every last inch of the barrel. The Venezuelan's and the Iranian's have enjoyed the taste of $15O DPB and will do anything to persuade the rest of the Cartel to cling on to high prices. I dont think it will be long before OPEC cuts production again.
Not quite a function of supply and demand....more a function of supply according to how much $ can be screwed out of every last inch of the barrel. The Venezuelan's and the Iranian's have enjoyed the taste of $15O DPB and will do anything to persuade the rest of the Cartel to cling on to high prices. I dont think it will be long before OPEC cuts production again.
Joined: Aug 2008
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From: between a rock and a hard place
Originally Posted by WWW
FTSE futures off 4% and starting to kiss 4000. The rescue ain't doing what it was supposed to do..