Can anything good come out of the financial crisis?

drc

Can anything good come out of the financial crisis? Does anyone think that any bygone values will make a comeback such as 'thriftiness' and being less materialistically orientated etc? I think that one aspect of the crisis - the fact that many young adults are staying at home longer, may, in some ways bring back some of the old customs, such as several generations of families living together longer and supporting each other, which in the olden days was quite normal and in many ways much better than the loneliness and isolation of so many people today. Could the social structure of society go back to those of 50 or more years ago? What bygone values will make a comeback if any?

ad9898_3

I think that once house prices come back to reality, society will be much better off, people paid too much for housing, so 2 people had to goto work, kids were left in child care all day (this is not good). Then when 2 peoples wage wasn't enough, out came the loans, credit cards etc... its all led to disaster for many.

Affordable housing will be much better for the economy, less money to spend on mortgages/rent, more money to be spent on other things. I've travelled quite a bit in the last few years, people seem more under pressure and much less happy in the UK than other parts of the world. (and some of those places I visited materialisticly had little or nothing). Of course in the short term this is going to be painful for many, but in the medium/long term, everyone will benefit.

brightonman123

burglary may come down, if more people are staying at home- no money to go out..

Cleaver

ad9898 wrote: »

I think that once house prices come back to reality, society will be much better off, people paid too much for housing, so 2 people had to goto work, kids were left in child care all day (this is not good). Then when 2 peoples wage wasn't enough, out came the loans, credit cards etc... its all led to disaster for many.

Affordable housing will be much better for the economy, less money to spend on mortgages/rent, more money to be spent on other things. I've travelled quite a bit in the last few years, people seem more under pressure and much less happy in the UK than other parts of the world. (and some of those places I visited materialisticly had little or nothing). Of course in the short term this is going to be painful for many, but in the medium/long term, everyone will benefit.

Firstly, I pretty much agree wholeheartedly with everything you say there Ad.

I just wonder whether the recession will actually bring affordable housing. I think we will see a short term return to affordable housing, but do you not just think we may have any even bigger boom followed by an even bigger bust for ever more? I just have a sneaky feeling that if we hit a bottom at around 40% off the peak we are going to see one hell of a long, quite quick massive rise following it. And with that rise we'll see all the sam behaviour we saw through the last decade. I may be completely wrong of course.

In terms of the 'good' we might see, I'd love to see a return to local shops, services and restaurants. I guess there's a place for the chains and multiples, but the balance is far too in their favour and I think there's a whole generation of people who will never have experienced that sense of local and community shopping and services. I also doubt the recession may bring this, but it may help.

Cleaver

brightonman123 wrote: »

burglary may come down, if more people are staying at home- no money to go out..

Well I think that fact alone makes the whole global economic crisis worthwhile.

Austin_Allegro

brightonman123 wrote: »

burglary may come down, if more people are staying at home- no money to go out..

Tell that to people in London - it was like VE night in the west end last night. The pubs were rammed with people sitting out on the pavements, and there was a queue about 60 feet long to get into Haagen Dazs ice cream parlour!!

I can only think it was a combination of foreign tourists exploiting the weak pound, and native Brits enjoying a last hurrah.

CLAPTON

Booms and busts are inevitable features of our system; once recovery is underway there will be a new world order that means a new bust can never happen again ..well until it does of course.

I can see absolutely no reason why the current situation will lead to more local shops (there're closing in droves)
or less crime (most views are that crime goes up in a recession)
and I don't really see that the long term demand for housing will decrease...indeed house building has all but collapsed so there will be a greater shortage in the future.

ad9898_3

Cleaver wrote: »

Firstly, I pretty much agree wholeheartedly with everything you say there Ad.

I just wonder whether the recession will actually bring affordable housing. I think we will see a short term return to affordable housing, but do you not just think we may have any even bigger boom followed by an even bigger bust for ever more? I just have a sneaky feeling that if we hit a bottom at around 40% off the peak we are going to see one hell of a long, quite quick massive rise following it. And with that rise we'll see all the sam behaviour we saw through the last decade. I may be completely wrong of course.

Quite possible, but this is where the authorities could actually earn their money. A cap on mortgage lending (both LTV and salary multiples) could be put in force there by capping house price growth to wage inflation. A ban on IO mortgages unless a proper investment vehicle is provided by the buyer. Mandatory 10% minimum deposit required (although I've mentioned this with the LTV cap)

All these measures, which could be enforced quite easily and would put the brakes on any future HPI. Also a proper measure of inflation to set IR's wouldn't go a miss either, unlike now where we use CPI to set rates when inflation is going up, and RPI to set rates whe inflation is going down.

It's either one or the other, you can't use both.

Cleaver

CLAPTON wrote: »

I can see absolutely no reason why the current situation will lead to more local shops (there're closing in droves)

I more meant that there could be a change in attitute towards cultures and habits around shopping (although being realistic, I don't think it will happen). It would be nice for people to see the importance of local places to a sense of community and belonging and find happiness and satisfaction in that, rather than just spending the day buying pointless cr*p at a retail park. And thinking this makes them happy.

As I say though, can't see it happening.

Cleaver

ad9898 wrote: »

Quite possible, but this is where the authorities could actually earn their money. A cap on mortgage lending (both LTV and salary multiples) could be put in force there by capping house price growth to wage inflation. A ban on IO mortgages unless a proper investment vehicle is provided by the buyer. Mandatory 10% minimum deposit required (although I've mentioned this with the LTV cap)

All these measures, which could be enforced quite easily and would put the brakes on any future HPI. Also a proper measure of inflation to set IR's wouldn't go a miss either, unlike now where we use CPI to set rates when inflation is going up, and RPI to set rates whe inflation is going down.

It's either one or the other, you can't use both.

Again, I fully agree with you as it's a good theory. But using your knowledge of how governments work don't you just think they'll encourage a boom? For example, if Mr Cameron and is elected PM in 2010 (which is probable) and he suddenly found that the economy was taking off at the end of 2010, do you reckon he and his chancellor will:

a) put in sensible plans, similar to yours above, to ensure that the growth is steady, gradual and sustainable

or

b) proclaim himself the greatest polititian since the last one, bang on and on about Labour's failures and encourage growth as fast and as strongly as possible

I reckon option b. Which will last ten or fifteen years until it all collapses. At which point we'll bemoan the Tory party, vote Labour back in, the economy will rise and... etc. etc. etc.

Jennifer_Jane

[quote=Cleaver;19055113]Well I think that fact alone makes the whole global economic crisis worthwhile.[/quote]

Sorry to disagree, Cleaver, but I think the global impact will be terrible for poor people in poor countries, who have had US/UK:

A global economic crisis
The global economy is experiencing a sharp downturn, spreading from developed to
developing countries. Its origins lie in macroeconomic imbalances of an unprecedented
scale. An accumulation of debt by firms and households in some countries has been
matched by an extraordinary rise in export earnings and savings in other regions.
Behind these flows are millions of savers and lenders, linked through a financial
architecture of such complexity that neither accounting standards nor regulatory
oversight have served their intended purposes: prudential banking rules have been
overwhelmed by folly and fraud, masquerading as financial innovation.
This is a cycle that has played itself out periodically – economic historian Karl Polanyi,
sixty-five years ago, provided a classic account of how a utopian faith in self-regulation
has led repeatedly to exuberances of this kind in the rise and fall of market economies.
The consequences are felt everywhere. If the balance sheet of a bank shrinks, its
capacity to lend is eroded. If its lending is curtailed, businesses and households have
to reduce their spending. If demand falls in Birmingham, factories close in Beijing. If
production lines in China slow, demand for commodities from Africa dries up. The
vegetable shop next to the mine closes, and the drivers of the delivery vehicles are
asked to work short time, on half pay, and if the driver cannot pay his mortgage, the
bank forecloses on his bond, and the bank writes down its balance sheet again...
When a global motor company cuts back on making cars, it cancels its orders for
catalytic converters. Madam Speaker, this firm making catalytic converters is not in
Detroit or in Shanghai, it is here in the Eastern Cape. The mine producing the platinum
that goes into that converter is near Rustenburg. The worker in the factory in Uitenhage
and the mineworker in Rustenburg are now without work. And the woman who runs the
little stall selling vegetables outside the mine is making less money each passing week.
And their families, all of them, face a future made more precarious by the vagaries of
global finance. Trevor Manuel Extract from 2009 South African Budget Speech

Sorry for the long post, but I think Trevor sums up the global domino effect in a very personal and simple way. There is true poverty at the end of this chain.

Jen
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