The Recession is Over

StevieJ

thegibdog wrote: »

It's not valid to say everyone who has a certain point of view must have a vested interest though.

True, I have no vested interest

ruggedtoast

Joeskeppi wrote: »

It's a sad, worthless, pathetic existence some people must find themselves in when they want unaffordable housing to continue for their own benefit.

Fixed.

Nitha

MORPH3US wrote: »

Seems like some people on here want the UK to be in recession and actually enjoy it....

Are these bitter / jealous non home owners perhaps? Have people struggled in this recession so far or lost their jobs and now they are bitter that things *might* be starting to look just slightly positive again?

Hmm I think the recession negatively impacts more than just homeowners :rolleyes:

And simply getting out of a recession isn't going to mean suddenly homes will double in value and employment will hit an all time high.

No one wants to be in a recession, homeowner or not, but unfortunately there have been too many unfulfilled promises regarding the end of this one so it's difficult to believe it's 'ended'.

Davesnave

StevieJ wrote: »

It is valid to question why some people have extreme views and what their V.I. is.

My point was that we all have VIs, but it isn't simple, because different interests can work against each other, producing a more complex situation.

For example, as someone who's buying now, I might benefit if prices rise. As someone who sells things, I might do better if more money is in the system.
Conversely, as a parent, I can't see houses and rents being affordable to my kids any time soon. As a member of society, I don't think high house prices are good for the community. Being someone who looks ahead, I also don't believe that a relatively painless UK recession will benefit us long term, as other nations are likely to take difficult decisions that we fudge, so they may emerge leaner & meaner as a result.

Put that lot together, and the situation's far from clear cut. I'm not sure others would be much different.

Thrugelmir

julieq wrote: »

Redundancy does take a while to filter through, not least because people can live on their pay offs for a while and redundancy takes a while.

For some maybe. For the majority statutory redundancy pay is not. Companies that go bust don't pay their employees anything and it can take time to get owed money from the receiver.

Capped at £350 per week though you get 1.5 times that if you are older. The maximum under the scheme is £8,925. Not a huge sum if you out of work for a lengthty period of time.

sabretoothtigger

Conrad

Why do people like rising house prices?

Because thats thier primary wealth store, given they no longer trust the city / pension providers to provide for them.

sabretoothtigger

Because its tax free ! The politicians liked that bit too, no wonder they didnt think it was a problem
Houses should be boring, the fast rises were an anomaly

Thrugelmir

julieq wrote: »

Bear in mind that the resources applied were to fix one problem, which was the collapse of the banking system due to bad debt. That has more or less been fixed in my opinion.

The other half of this is what was going to happen anyway because of uncontrolled consumer credit, a boom due to inflated house prices, outflow of capital eastwards, and oil price inflation. Even had there not been a banking crisis, something bad would have happened, and probably that would have been founded on high interest rates to cool down the inflation in house prices with stagnation or moderate drops.

You essentially now have two big perturbations slightly out of phase with each other. The bank crisis was a short sharp deep shock which has been addressed essentially by increasing public debt massively, the corrective action being equally quickly applied to the rate the problem developed at.

Underlying all of this is the other perturbation. This is being affected by the original problem and attempted solution in many ways, many of the things that might have been done to counter that have been reversed so instead of high interest rates we have low rates. The result is a highly volatile and complex situation which frankly no-one can predict except on a very high level basis. It's like two waves adding together and producing interference patterns. We may well overheat the economy because of what's being done to fix banking.

Fundamentally though, we have to get back to sustainable public debt. That means cuts. Cuts mean redundancies and less money in the economy (bear in mind that the public sector buys things and its staff spend money). That will work to tend to cool the economy. So I think we'll be bumping along the bottom for years to come.

I never believed, and don't believe, the apocalpyse scenarios for house prices and I've explained why many times - essentially I see arguments from the doommongers in the US being extrapolated here in a way I can't see working. But that doesn't mean that things are going to recover any time soon. I think the banking crisis is over more or less, but I do think that was a complication factor, not the only cause, for a recession that was on the way anyway.

Thanks for an interesting post.

Why do you believe that the banking crisis is over? Whilst toxic debt has been provided for to an extent. And the outcome of the liability is unknown as it will take many years to unwind.

Both consumers and corporates have borrowed huge sums of money to leverage up and pay for assets at inflated prices. As assets are returning gradually to a lower sustainable market price and the debt still has to be repaid. The banks themselves have vast unquantifiable exposure to bad debt we may yet cause problems in the future.

Maybe the risk is low. But as you say the economy could bump along the bottom. So we may some way from resolving the fundamental issues.

ruggedtoast

Apparently in polls over 70% of the British public do not want rising house prices.

This is totally ignored by a tidal wave of media and government spin.

Why?

Well high house prices mean loans, loans mean money for Finance and money for Finance means...

money for a relatively small number of people who run Finance who conveniently are also in, or very influential to...

Media and Government!

Throw in a few clips of hard working families who had to sell their cat when their home "was valued at less than it was worth" and you got yourself a rootin tootin rollin logic defyin bandwagon.

WMDs will be showing up soon in Iraq too I hear.