Likelihood of UK double-dip downturn dwindles

lostinrates

Last night I was chatting to a group of solicitors from diferent firms. Lots of them were saying that the current figures of repos didn't reflect their personal work load. Some had been drafted from other areas of practise to support this workload. They all seemed pretty depressed. It was interesting to see what they thought of how different banks apporached this and the level of ''help'' and/or compassion awarded by different banks to their struggling mortgagors.

Really2

HAMISH_MCTAVISH wrote: »

Wow.

6 pages of pointless bickering.:j

Oh, so you are bearish on arguments now then.:mad:

purch

6 pages of pointless bickering

....and it wasn't even on a thread started by Hamish McFlameish !!! :eek:

StevieJ

Graham_Devon wrote: »

The question was, when the stimulus ends, as it will do very soon, unless they pump in more, will we be able to stand on our own two feet. I.e. without stimulus.

Part of the stimulus is low interest rates and this will be staying until it is no longer needed and growth returns, then a gradual return to normal rates (5%) will be required. In addition the BOE have stated if more QE beyond the £175b is required, it will be provided and the QE will certainly not be withdrawn early.

lemonjelly

chucky wrote: »

you come across as balanced because you listen to both sides of the debate and make a decision from there; instead of some who make a decision depending on who the poster is. i guess you have a personality and character which a couple of the most vocal negative posters don't.

there is always potential for things to get worse. the government stimulus has stabilised a lot of the issues and will be there to a point where it's no longer necessary and the economy is in a position to look after itself. the decision to do this will need very good timing. do the current incumbents have this in them - i don't know but they're in a better position than Mr Cameron or the Lib Dems (minus Mr Cable) who are just watching from the sidelines trying to get political brownie points instead of talking economic sense.

i agree the personal debt issue is a problem. i know it's being reduced slowly but until it needs to be paid it will just be an obstacle to get over rather than a Lehmans type issue for example.what i'm saying is that it is a problem and is one area that will curb the level of growth that we have instead of bringing us back into recession again.

commercial property is a bigger issue for many of the banks by the way

I typed a much longer response earlier today, & it got lost in the ether!

Firstly Chucky, my thanks for you to take the time to read & reply.

You make some very good points above. My worry is that people aren't (in the majority) paying down debt. I still think many are still making minimum/token payments. I fear that over the next 12 months we could see progressive increases in bankruptcy. It is the implications of increased write downs on the banks that cause a concern. (As a side issue, could this be an additional reason why banks are using QE money to build up their balance sheets?)

Generally, given the circs, I don't feel the current incumbents have done too bad a job, all things being equal. V Cable has made good points in speeches, but has dropped out of the picture somewhat.

Commercial properties is a very valid issue you raise. I don't know enough about it to comment thoroughly, but do anticipate it will, together with personal debt combine to be the major issue challenging the finance sector over the next 2 years (no 2nd lehman aside).

Once again thanks for the reply. Don't think my freinds would call me balanced, but there you go...:D

System

I always imagined the "stimulus" was filling a hole, now that it's filled it can be turned off and we just carry on.

The counter argument seems to be that the stimulus is filling a hole which has a leak, so when it ends we'll be back where we started eventually.

mr_fishbulb

Joeskeppi wrote: »

I always imagined the "stimulus" was filling a hole, now that it's filled it can be turned off and we just carry on.

The counter argument seems to be that the stimulus is filling a hole which has a leak, so when it ends we'll be back where we started eventually.

So you believe that the only problems the global economy had building up is that some sub-prime people in America couldn't afford their mortgage payments? Everything else was rosy?

chucky

lemonjelly wrote: »

You make some very good points above. My worry is that people aren't (in the majority) paying down debt. I still think many are still making minimum/token payments. I fear that over the next 12 months we could see progressive increases in bankruptcy. It is the implications of increased write downs on the banks that cause a concern. (As a side issue, could this be an additional reason why banks are using QE money to build up their balance sheets?)

Generally, given the circs, I don't feel the current incumbents have done too bad a job, all things being equal. V Cable has made good points in speeches, but has dropped out of the picture somewhat.

Commercial properties is a very valid issue you raise. I don't know enough about it to comment thoroughly, but do anticipate it will, together with personal debt combine to be the major issue challenging the finance sector over the next 2 years (no 2nd lehman aside).

the reason i mentioned commercial property was because if it does have an impact it will be at institutional level just like the sub-prime issues hit the banks.

the personal debt levels will probably only impact people personally as you say through bankruptcy or repos etc. this won't have the same mammoth impacts that hit us during 2008 and early 2009 with banks having to be rescued and propped up. personal and public debt will hurt the UK but not in the way that the credit crunch has hit us.

to put it really simply many banks basically lent too much and those that didn't lend too much lent it to over extended people or people with low credit rating.

taking this further using Northern Rock as an extreme example they lent approx 7 times what they had on deposit from customers. they made the rest of it up by borrowing it on the money markets (where mr monkfish gets his Libor rates from). the main problem was the securitisation done mainly by the US banks which was a liability for a bank but was not shown on the balance sheet. when it came to the crunch they could fulfil these liabilities and all hell broke loose.

it's all done at a very high level and there is much more detail to this so bear with my explanation.

kennyboy66_2

Joeskeppi wrote: »

I always imagined the "stimulus" was filling a hole, now that it's filled it can be turned off and we just carry on.

The counter argument seems to be that the stimulus is filling a hole which has a leak, so when it ends we'll be back where we started eventually.

I would say the stimuli are in this order of importance.

1) Low base interest rates - little change in prospect.
2) Weaker Sterling - little change in prospect.
3) Fiscal deficit - we will be still running an annual deficit for the next 4 years, although hopefully it will be less.
4) QE - won't be reversed for a while yet.

System

mr_fishbulb wrote: »

So you believe that the only problems the global economy had building up is that some sub-prime people in America couldn't afford their mortgage payments? Everything else was rosy?

I think you misunderstood my post, the 2nd analogy referring to "back where we started" was referring to going back to pre-QE, not pre-recession.