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Hmm, an MP saying soothing things about the economy- that's me sold then. The Government versions don't want to be held accountable for the massive asset price bubble they have let inflate over the last decade. Their deregulation of lending gave us a 280% rise in house prices, fueled a feel-good factor that allowed three Labour terms for the first time ever. As that bubble now bursts the Opposition MP's cannot crow too much as nobody wants to vote for a public sector employee jumping up and down telling people that financial ruin lied ahead for them.
I seem to recall stating my belief that UK house prices would collapse in the summer last year. Most said no way. Well now mortgage approvals for house purchase were down by nearly 50% year-on-year in March. The British Bankers’ Association said that the number (35,417) was the lowest since it started records in 1997. Think about that for a minute. Half as many people arranged a mortgage. That means half as many houses were sold (not many do so without a mortgage). Or to put it another way, demand has fallen in half. You don't need to have studied much economics to know what happens to prices when demand fall in half. And so it has come to pass. A great many people in the UK live well beyond their means based on easy credit and house price inflation. With both of these now gone they will default on their debts (the banks needing bailouts) and they will also rapidly draw in their spending horns. This will hit the airlines. Look how low the savings ratios are in the UK these days, much much worse than the last recession, many people have NO safety net, nothing for a rainy day, no nest egg, no contingency, nothing: http://www.moneyweek.com/uploaded/im...ings_ratio.gif I don't believe they will be able to fiddle the figures enough to avoid a technical recession. Even if they did it won't matter. Rising costs and lowering confidence are already facts that will guarantee lower loads and lower yields. There won't be a massive crisis in Wannabeism until and unless an AOC airline goes under and makes its pilots redundant. Then its game over overnight. WWW |
WWW, haven't you anywhere else to peddle your pessimism? :{
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I,m with Lurking123 on this one, you would not want to do a Sharm with WWW by the time you got back to Gatwick you would be wanting to slash your wrists!
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Doom and Gloom
Unemplyment falling
Interest rates no where near 15% as they were is the last recesion (90s) Inflation in target House prices rising in some areas (Scotland) falling in others (Wales) flat in most places People queuing up in droves to have their cars HAND WASHED at the weekend - that's no recession! Anyway all this doom and gloom sells papers; one real issue is that its been so cold in recent weeks that the BBC have had to shelve their global warming stories and have had focus on the economy (doom and gloom stories) "Its been a turbulent day on the exchanges and we have been forced to leave the ERM" (interest rates at 15% thats a real recession) - this is chicken feed |
However the increase in the price of fuel is very real and is hurting every airline particularly those operating older less fuel efficient machines.
Reducing Plog Fuel , Lower Flap settings for Landings , Single Engine Taxi after landings , all Sop's bought into my Airline recently to save on the Fuel Bill . The article in the Times is pretty spot on. ps i fly with WWW , he lets me have first choice on the crew meals , laughs at my jokes and i get a free economics lesson ;) |
So, are we at the denial phase now?
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Good article from Grass Strip Basher, sums it up nicely.
http://business.timesonline.co.uk/to...cle3810477.ece Again a lot of reason to take a very conservative approach to flight training, and also a lot of reason to take the "90% of our students get a job within 6 months" story's with a pinch of salt. This seems to be a thing of the past. Also my compliments to the 'mainstream media'. Every person embarking training now can be blamed themselves for not having done enough research before their training, if it does turn out to be a mess. |
I think one thing that isn't mentioned enough in this thread is that flight training is a completely suicidal idea anyway.
Excuse my lack of experience but from what I can see from my training path is that even if times were as good as a few years back I am still spending around £30,000 to become a PPL instructor, maybe earning £10,000 - £11,000 a year! On top of that, because my ATPL will expire without an IR I am pretty much forced after 3 years to spend another £10,000 to get one, then add an MCC which on completion means I can then wait up to a year to get another low paid job, if my training hasn't expired by then. The point I am trying to make is that anybody spending 50,000 just so they can start sending out the odd CV in the hope of a airline job is nuts, especially if they are taking out huge loans to do so. We know it and anyone we tell our plans too knows it, but we do it anyway! So regardless how bad things get and how much doom and gloom is forecast, I can be sure that myself and everyone else learning on here is going to carry on anyway, because we were all absolutely mad in the first place and a bit of common financial sense isn't going to stop us now. |
Dont worry!! I have it on good faith that all will be fine in the coming year (and for the next few years at that!).
Spend your precious pounds on flying because I'm soon to reveal a hidden oilfield that has 50 trillion barrels of that lovely black, silky, delicious wannabe loving liquid! So its on Mars, who cares!! Haha, today we laugh, tomorrow we fly!! |
I'm suprised it's taken 419 posts for someone to do the above - nice one Gordy!:ok:
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www.rbs.com/content/economic/downloads/world/pitfalls.pdf
Crude is over valued about $30 is speculation and not driven by fundamentals. http://www.rgemonitor.com/ Global marco analysis - very good site written by one of the worlds top economists. I agree that you shouldn’t listen to financial journalists as they generally know nothing, but when you have top economists and top hedge fund managers talking doom and gloom backed up by market figures then i tend to listen .. I guess we only have to wait 6-12 months and we can see who's been right about the situation.. :-) I personally will be sending gloating PM's to everyone who's posted the typical arrogant PPRUNE comments ;-) |
Grassy,
Winter and early Spring was a mixed bag. Some days very busy, other days, not so. What probably effected the flying rate was the early Easter and school holidays. I believe it is a bit below expected rates but it is still more than last year. May should be busy, Cannes Film Festival, Monaco Grand Prix and the soccer championships. Summer is typically busier than Winter. Still flying people for day shopping trips. :ok: Looking to hire probably about 100 pilots this year. (Don't know if that includes cadets) Remember, there's no recession if you're in a job (and don't have crippling debt). :E |
Just because you don't like the sound of something doesn't mean it is wrong.
It doesn't help that easy access to credit encourages people to spend money, and money they haven't and wouldn't normally have access to. People are far more likely to spend £50k if they do not have to work, scrimp or make sacrifices for it. Maybe, paying it back after you have spent/enjoyed it is far easier to do. You cannot truly appreciate money or the value of it in this current culture. How can anyone expect the majority of people in their teens/twenties to understand what £50k really is if their parents have given it to them (from equity), or a bank has loaned it to them rather than working and earning it for themselves? Noone saves anymore, everything is needed now. This is everywhere is society and it is going to go tits up, even if only because enough people are thinking it and therefore tightening their belts. It needs a correction because it fundamentally doesn't make any sense. I am not an economist, but I own a (fairly) successful business unrelated to aviation. We are fairly well insulated against a downturn but we are being more selective with our spending and this is being replicated in hundreds of thousands of businesses around the UK. Plus, I have recently been looking at houses as I was considering moving, but I have held off because I don't want to buy something to find that it loses £200k of its value over the next 12 months. This wasn't a consideration in a rising market and 12 months ago I would have moved. This type behaviour has an effect elsewhere in the economy. As usual it is easier to knock people who put a huge amount of time into helping others on this site. WWW may be a bit short :uhoh: (I did meet him once at the first Wannabes thingy near Gatwick) but I have always had a lot of time for him and he tells it as he sees it and I don't believe he has anything other than good intentions. In my limited experience, this can't be said about many people in life. If you are desperate to do flight training, why not do it piecemeal rather than all at once? It has to be the sensible way to do it. It sounds great "learning to fly for a year" but there are massive consequences not least having to pay back a frightening amount of money once the course is over. In the currrent climate it just doesn't stack up to me. Take your advice from the right sources and those are normally the ones who have been there and done it. This is why I have never listened to any sex education from a priest. := Anyway, just another opinion to be ignored from an old before his time 36 yr old :) |
Headline in FT tomorrow............. "Negitive equity crisis overblown".
WWW can't be writing for the FT can he? |
A & C weren't you disparaging listening to financial journalists just some hours ago? To quote you:
As we all know the standard of reporting in the papers on aviation matters is appauling[sic] so why should the standard of reporting on financial issues be any different ? Time to get some opinion from another sorce[sic]?............ I think so!! But if you want to trade headlines from tomorrows press I'll counter with The Telegraph: UK house prices will fall almost 20pc in next two years By Angela Monaghan Last Updated: 11:34am BST 25/04/2008 http://tinyurl.com/693xge UK house prices will fall by almost 20pc over the next two years, according to analysts at Capital Economics. The economics consultancy has slashed its forecasts for UK prices and now expects them to fall 8pc this year and 10pc in 2009, down from its original expectation of a 5pc fall in 2008... If there is one graph I could ask you all to spend just 30 seconds looking at and considering it would be this one: http://www.housepricecrash.co.uk/for...e=post&id=8574 You see clearly here that the sequence of events is thus. A big increase in the ratio of earnings to house prices. Then there is a correction. This correction brings on a recession. The steepness of the rise in house price to earnings ratios roughly correlates with the length of the recession. Now look where we are today. The average house price is at 7 times average earnings (much higher than the USA and anywhere else). House prices have fallen for 6 months in a row (and are accelerating). What bit comes next based on the graph above? Starts with an R. I'm trying to paint with a slightly broader brush in this debate. There's not a great deal of point in getting hung up on this months stock rally/slump or this weeks job losses/gains etc etc. But Wannabes need to be able to stand back and survey the horizon. I believe firmly that this time will be no different to the last times and that the last times are clearly illustrated in the graph above. If this is true then Wannabes need to carefully plan in order to prosper. Which is what we all want at the end of the day.. WWW |
The FT headline is just the opinion of the guy who wrote it (just as I noted the statments by an MP are his) but if it was left to you none of this fact would have been made this thread.
The FT says a 10% drop in house prices so one more time you take the blackest report. All you seem to want to post is graphs that start at the top left and end at the bottom right. We all know that the economy is slowing but a bit of balance is needed to show that it is all not as black as you paint it or as bright as Nick-Av sees it. I,m just sitting some place in the middle living my no credit life and trying to keep balanced view of things. |
Having a balanced view is precisely the point. On the one hand you have the entire flight training industry, the government and the house price industry all pumping out a relentlessly upbeat spin. I'm sure you're old enough and ugly enough to come to a balanced view but this site is used by an awful lot of younger Wannabes. For them to get some balance they need to consider the risks, the evidence of risk and the possible outcomes of risk. Which is what this thread does and which is fairly unique.
I've posted one graph showing personal savings rates that went from top left to bottom right. And another that doesn't do that but which illustrates a really important lesson from history which informs us in the present going into the future. You seem resentful of this. I don't know why. I'll put the bear argument - you and others put the bull. I won't censor you or be offended. This is early 1990 though. WWW |
So you're an eighteen year old wannabe, just finishing A levels. You've got no life experience but good exam grades, and you want to be an airline pilot. Researching the industry, you read the flying magazines - particularly articles on how to become a commercial pilot. And what will the advice be? "There's never been a better time to train", "retirement bulge", "growth in Asia", "pilot shortage" etc etc. By an amazing coincidence, the magazines' back pages are chock full of flying school adverts, inviting you to get into massive debt to follow your dream. Phone any of the schools for 'advice' and you'll get the same message; "pilot shortage", "90% of our graduates get jobs within six months" etc etc.
What no-one tells you is that when this industry hits a downturn, as it does every 7-10 years or so, there are virtually no jobs for newly qualified pilots, nor will there be for a couple of years. Some airlines will go bust, flooding the job market with experienced pilots. As a newbie, you'll be lucky to find a job instructing - never mind flying a 737. And - unless you have extremely rich parents - you'll be trying to service a massive debt and struggling to stay current. It's not a nice situation, and it has happened before - most recently in 2001, and 1990 before that. But as a youngster you won't know any of this. Chances are you'll be a little bit green and trusting, and when flying schools tell you what you want to hear, you're likely to believe them. That's why WWW's message is so important. People need to understand what they're getting into, and the implications if it all goes wrong. Personally I don't believe the prospects are quite as bad as WWW thinks, but the potential is certainly there for the aviation industry to catch a cold. Wannabes - particularly those whose memories don't stretch back to the last downturn - need to carefully consider their 'plan B'. Unpalatable as it is, they need to hear a bit of pessimism, because they sure as hell won't hear it from the flight training industry. |
G SXTY
Amongst the general speculative press cutting's, G SXTY adds a post that is worth reading to a Wannabe! The message here is correct and spot on. That and redsnail's Remember, there's no recession if you're in a job (and don't have crippling debt). I got made redundant in the 90's from 2 charter airlines no-longer in business (they won't be forgotten though, best times ever). I slowley trained for an ATPL in 2001 to 2003, very nervously I might add...and here I am, possibly under threat from redundancy in 2008...the point is i'll still be here in 7 to 10 years time still loving taking a Boeing into the skies, day or night. I am just one of thousands who have been in the UK industry for more than 15 years - the world keeps turning and we just keep living and earning...it sort's itself out! Always has, always will... To Every Wannabe; Welcome to Aviation, this is now your life, get used to it! An injection of Glass Half Full...how can it not be any other way, we are paid to fly... |
WWW
If I may pick your brains? Why is it that big companies always try and maximise profits and squueze every penny out of you until something gives, and we go into a recession. ie a boom and bust economy cycling every seven years or so. Would it not be better for banks and other big companies to plan for a more moderate sustained growth that could continue for years and avoid the bust. I suppose human nature and greed makes us want the big bucks now, but a slower more sustained expansion may avoid the "bust" and over time would probably even itself out. I,m probably talking rubbish but its just an idea I had. |
Smith,
Yep, you're talking rubbish. Market driven economies are always cyclical between boom and bust. It's better than marxist economies, which are all bust and no boom except the guns of the secret police. I'll take the cyclical job shortages over the continuous ones any day. To think banks and corporations could moderate the the cycles or that government would be capable of moderating anything is a bit gullible and naive. |
Its the force of creative destruction. In boom times there is easy capital and its relatively easy to start new businesses develop new markets and to expand existing ones.
Who could ever say when the optimum is reached? So there is always a period of recession and this squeezes out the excess. It supresses the inflation and it kills of the weak sectors, the poorer ideas and the mismanaged. Like a forest fire it has the effect of removing the dead wood. The strongest and fittest survive - both on the person and enterprise level to go into the next period of growth. Such is market evoltion as opposed to natural evolution. Booms and busts are a feature of free market capitalism. Nobody has come up with a better system despite centuries or effort and millions of lives exploring the alternatives. WWW ps I'll find a working link to that graph - its a killer. |
Cheers G SXTY, a very good post. Thanks to everybody to their input in this thread, it has given loads of new thoughts! And please continue:ok:
"If the Wright brothers were alive today Wilbur would have to fire Orville to reduce costs." - Herb Kelleher, founder, Southwest Airlines. (1994) ;) |
As far as the housing market is concerned, the real indicator is in new build.
The house builders are really pulling back and many have stopped strating new developments and finishing of current developments. The reasons for this are that a) Mortgages are hard to come by and people have less money because of rising living costs. Just because interest rates are not at 15% does not mean things are better. Thats political spin. when things were at 15% people borrowed less because the payments were so high and people borrowing are guided on what the monthly repayments are not the amount you could borrow. A change of a couple of % when rates were 15% did not seem that much extra cash to pay out or have back. If you have borrowed when rates were say 4% and have rates go up to 6% then that means a 50% increase in payments. A significantly different scenario. when rates were 15% you might have borrowed £20,000. with rates at 4% you would have borrowed £120,000. Now go figure. |
To think banks and corporations could moderate the the cycles or that government would be capable of moderating anything is a bit gullible and naive. I have no training in economics or finance but at the moment I work in the retail sector, I remember asking my area manager the same question during the last down turn and our company had let a lot of people go. His reply was, at any one time there is a finite pot of money available and big companies compete with each other for as big a share of that pot hence trying to get us to spend as much money as possible. My theory is that when all that money was available, if credit card companies, banks etc had made it more difficult to gain credit, the pot would have been smaller and hence a more sustainable growth would have been achieved, and this could have been achieved by the government and the banks. In no way am I trying to rewrite the economy books, just trying to fathom why we have boom and bust cycles. To me it seemed like a greed cycle, everyone wanting instant gratification. Now I understand that the boom and bust sorts out the fittest and streamlines the survivors it makes sense, but probably not to the guy whose just bought his first home, has two kids and a car and has just been handed his P45. I'll get me hat and coat now :bored: |
And the chilling part of it is that as of yet we haven't had the UK subprime crisis and still the UK banks have lost billions. There are tens of thousands of UK households who 2 years ago took out a 95%+ mortgage on a two year discount or interest only who are today in negative or neutral equity. Their discount or fixed mortgage is about to reset from 4.2% to 6.6% and the new mortgage has a £1,500 set up fee, Sir.
The wife has just had her hours at work cut, the gas bill is up £300 so is the council tax and it just cost the husband £72 to fill his car. The new mortgage payment will be an extra £350 a month and the 0% deal on the credit card only has a fortnight to run. I think we can wave bye bye to one of the holidays this year. All this before we even start the recession and get to the job loss stage. On the other hand it is a beautiful day out there and the Webber is warming up for those sausages. :) WWW |
On the other hand it is a beautiful day out there and the Webber is warming up for those sausages. Anyway, I though the sun never shone in your world WWW.:O |
Eos ceases operations
Eos has just announced that it is ceasing operations.
http://www.eosairlines.com/ |
Thats the fifth US airline bust this year. The US is about 9 months ahead of where we are with the the house price crash and subprime crisis.
This really is very serious for Wannabes. Protect yourselves - avoid debt. WWW ps The Weber has done its usual excellent job thank you. Do not mistake my views on the economy as being in any way reflected in my personal demeanor. I call it as I see it but its largely other peoples problem - not mine. pps My condolences to anyone who has lost their job at EOS - its a terrible thing to happen to anyone and I think you had a wonderful product. |
Closed shop USA
The USA is closed to most Europeans and most Americans can't or won't work in Europe so an American airline closing is not much of a problem in Europe when it comes to jobs.
However the fallout in loss of confidence in the sector I likely to have more effect than the reality of an American airline failing. I am always sad for the employees when an airline shuts, having done that thing I would not wish it on anyone. I do agree whole hartedly with WWW on one thing, a lot of peope are going to cut back on the second holiday, the weekends in Amsterdam or Budapest will be the first thing to get the chop. However the last thing the British working class will give up is the two weeks in the sun mid-summer. It would seem to be those airlines most commited to the "weekend away" market that are most likely to be hit the hardest. And now for the good news today I did the first flying lesson for a guy who is intending to go for the ATPL by the modular route.............. his presant job is a trader for a big bank in the city, at least someone sees a bright future in aviation! |
However the last thing the British working class will give up is the two weeks in the sun mid-summer.
On March 8th 1991 the then second biggest UK Charter airline, Air Europe, went bust in the midst of a serious recession. Dan Air (largely holiday charter) lost £35m which ultimately sealed their fate the year after. Providing package holiday flights is no particular safe haven in a serious recession. I don't see any airline sector being immune. From Fractional through Legacy to Low Cost and Charter - less discretionary spending and less business travel will hurt them all. The failures in the USA are merely indicative of what will happen in Europe as the US house price crash and economic recession are replicated here. Wannabes need to protect themselves. WWW |
WWW
You seem to quote lot of economic history and the USA today Europe tomorrow is a thread that runns through your thinking.
The US economy is not as dominant as it was in the late 80's & early 90's, the rising economic stars are in the far east and the world economy is far less dependant on the USA, In the UK we don't have three million unemployed. I to would issue a word of caution to wannabes but it would be a word of caution not tails of economic imploision. Yes there is a an economic downturn but what better time to start a modular ATPL course, Keen prices from the training providors, keep your current job to help pay for it all and in two or three years you will be ready for a job just as the market picks up. This time next year we will see who is right but I would guess that at least one UK lo-co won't have enough pilots and will be parking aircraft & cutting routes all because they have had a panic and stopped recruting now. |
Inflation
I'm sure we can all agree that there has been a considerable rise in the cost of living in the UK in past couple years. I am no expert on economics and was wondering if anyone could shed some light on how the government claim that inflation is something like 3% pa and is only about 0.2% (or something like that) above what their target is?
I tend to look at simple things like household energy bills being almost double what they were 2 years ago, petrol being up as much as 30% and some food products being double. Keen to get an insight into this! |
Lies damn lies and statistics
It all comes down to the above. From my limited university level understanding (and can't be ar*ed googling) of inflation you have a kitty of what the government determines that the "average family" consumes each month. Each of these items are then given a weighting as a proportion of the total kitty. Some items might get more than their own representative share in the kitty. How they get the average monthly prices for each I have no idea. What is in the kitty I have no idea. Is the kitty representative of what you or I may consume each month - probably not. But like all things it gives them a benchmark. So long as the goal posts don't move each month then they have a yardstick.
Incidentally I seem to remember a story a few years ago in the UK that the treasury discovered that they had been excluding something that should have been in the kitty but wasn't and therefore all their statistics were wrong! Can't remember the exact reason but fills you with confidence in the ability of the entrusted. Mind you if they can't keep hold of a CD or laptop then how they can do a inflation calculation is beyond me:) |
In order to keep the house price boom running and thus maintain a feelgood factor allowing Labour to win the 2005 General Election, Gordon Brown changed the MPC inflation target from RPI to CPI.
CPI excludes housing costs. You know, that little bill each month called the mortgage. So whereas portable sat navs and DVD players were falling in price houses could boom and the official inflation target would be low and it would be met even though real Interest Rates were too low. The house price bubble was stoked quite deliberately by the Chancellor. If you want a full breakdown of the official CPI basket it can be found in detail in the link below, note the basket is constantly being changed, brie cheese removed - probiotic drink added etc etc. http://www.statistics.gov.uk/elmr/04..._Wingfield.pdf A&C I know we don't have 3 million unemployed. Would this because we have 2 million on Disability Allowance and 1 million Unemployed? There may not be so much of a spike in the official unemployment figures this time around. If you are one of the 2,000 Northern Rock staff about to lose their jobs would you: a) Sit around for 12 weeks doing nothing until you are allowed to sign on. Then do so to claim your £44 a week for which you will be required to attend any job interview they arrange for you even if it is as night shift meat packer? b) Get your backside down to McDonalds/Supermarket and start earning £44 a day which retains some dignity and allows you to keep pretty much all of it through the tax credit system plus other allowances now you are a low paid worker. Your CV will show continuous employment and you've never shirked work in your life and don't want to start now. It'll be b) nearly every time. Despite employment being strong for now, don't expect that to be the case by the end of the year. If you look at the raw unemployment figures during the 1990s recession, the number of unemployed people was actually falling right up until May 1990, a good year or so after house prices started to fall. It then rose sharply from about two million to reach a peak of just above three million in January 1993, before starting to fall again. WWW House prices are opinion, the debt it real. |
How i see it
Thanks for the explaination WWW, makes a lot of sense. 'If you can't score a goal then change the goal posts!'
I can think of 5 reasons for less people flying: 1) You get a lot less for your pound in Europe. 2) Less money is being lent and hence less money going around to be spent on holidays. 3) Fuel prices are up and the cost of travel will increase. 4) The cost of living is up relative to income, hence less disposable income. 5) There is a 'fear factor' about the economy which influences peoples' discretionary spending. With all these factors combined i can see a lot of operators going down and the market being flooded with experienced crew, which will make a fresh minted fATPL like myself a lot less attractive! I just hope the expert opinions about 'the industry bouncing back quicker than before' will mean i will have a prime position next time round, especially as less new pilots are likely to qualify due to lack of funding (i hope). |
WWW
Do you know the number of people that claimed diability allowance in the early 90's?
During that period I had few personal friends who were unemployed now I know on one who is! I would like to see the numbers to see if your line on this issue is valid. |
According to figures from the Department of Work and Pensions, as at 31 May 2004, there were 1.5 million people in receipt of IB. Some 7% of the UK’s working age population claims IB, compared with 2.1% in Germany and 0.3% in France. The average amount paid is £85 per week.
Todays figure is for 2.6 million Incapacity Benefit claimants... In April 1992 the Unemployment claimants stood at 2,645,115. Funny how as a society we are getting healthier, living longer and work has become less manual - yet somehow - there as many Incapable of work today as were Unemployed 15 years ago... Of course Incapacity Benefit pays £20 a week more than Job Seekers Allowance AND you don't have to attend those pesky job interviews all the time. I think the numbers speak for themselves. The government reclassified the unemployed and then let a couple of million Poles in to do all the work. Its really that simple. WWW |
Dear WWW - please try to avoid epic levels of thread drift and restrict yourself to more modest forays.
Thank you, WWW |
Its late. I've deleted that. No harm done.
WWW |
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