My Bankruptcy

was_bankrupt

I think that degrees will still be valid. On hind sight, especially considering my bankruptcy, I would question whether I would go to university again! It is so much more expensive now with the additional fees and general living expenses anyway.

ZTD

Pobby wrote:

A recession!I really hope we can miss that.

Well, in my semi-official role as "bag of misery" I would point out that the yield curve is currently flat/inverted and has been for some time. Now you can't say that it is a 100% accurate indicator, but it is the No 1 indicator (by miles) of a looming recession.

Of course, the State has done various funky things with the measure of inflation, which by inference does various funky thinks with the measure of GDP, so we may be a recession for some time, and quite deeply, before it shows up as "official".

It seems the various car-workers are feeling this one first.

Pobby wrote:

I remember the last one

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very stressful.My mortgage on 58k went nearly to £700 a month,I was building up a new business.Seeing folks loosing their houses/business,interest rates relentlessly increasing

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!

Interest rates needn't rise. This could be a low interest-rate recession. Like the early '70s or the late '20s.

Pobby wrote:

Agreed,things do look strange globaly.I think we are entering a time of change in unchatered waters.

Naah, I'll bet you whats going to happen will have happened before. It just depends on how far you want to go back.

People and money have remained the same for thousands of years. We'll make the same mistakes people in the past have. Nothing ever *really* changes...

Pobby

ZTD---you clearly are well informed on the subject.When I mentioned uncharted territory I had in mind the levels of debt versus GDP.Has there been a time when these levels have benn so high historically?

was_bankrupt

I sometimes can't help get the impression of some inevitable downsides given the current economic conditions:

1. The government is burying their heads in the sand. They seem to think they have re-written economic theory by ridding of boom and bust. I think dream on. It is simply causing a bubble and constant change is simply delaying the burst and inceasing the potential impact. Those with debt problems will be hit the hardest (over £1 trillion worth of us!)

2. The rich poorer divide is getting bigger

3. Even the high money earners are going to be hit this time. I know of someone who earns in excess of £200,000 pa and is currently looking for £1m mortgage (When house prices are at their potential max).

4. Property may be many peoples downside. That will affect a large number of people. As interest rates rise and house prices fall we could begin to see the negative equity for those who have stretched themselves. The media sure have a part to play in this and will continue to play when they start to fall. Then watch the frenzy.

I'm not an economist and this is simply my view. Does make alot of sense though - don't you think????? Especially if there was a recession!

Pobby

was_bankrupt wrote:

I sometimes can't help get the impression of some inevitable downsides given the current economic conditions:

1. The government is burying their heads in the sand. They seem to think they have re-written economic theory by ridding of boom and bust. I think dream on. It is simply causing a bubble and constant change is simply delaying the burst and inceasing the potential impact. Those with debt problems will be hit the hardest (over £1 trillion worth of us!)

2. The rich poorer divide is getting bigger

3. Even the high money earners are going to be hit this time. I know of someone who earns in excess of £200,000 pa and is currently looking for £1m mortgage (When house prices are at their potential max).

4. Property may be many peoples downside. That will affect a large number of people. As interest rates rise and house prices fall we could begin to see the negative equity for those who have stretched themselves. The media sure have a part to play in this and will continue to play when they start to fall. Then watch the frenzy.

I'm not an economist and this is simply my view. Does make alot of sense though - don't you think????? Especially if there was a recession!

Hey was-bankrupt,that could be me saying all of that.I seem to remember many years ago governments controlling the amount of credit coming into the system.There was a thing at one time called a credit squeeze,where,as I recall,you had to put a deposist of 25% down on any goods you wished to purchase.

I fully agree that the uber rich are getting richer.Imho it`s those,myself included,in the middle ground that are feeling under attack.Trying like mad to save as we see retirement looming and the private/company pensions are amounting to a little better than diddly squat.No tax credits for us I`m afraid.

We think we may be forced out of this country because we may,come the time,be unable to afford to live here.

Have to say that I felt a degree of hope when Blair came to power.Having looked down the sharp end of the 90`s recession I did hope ``that things can only get better``.Well I think to a degree they did but we are now on a downward path.How does Gordon Brown think he has put an end to boom and bust .We have had the boom.Now what

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?

was_bankrupt

I'll kindly answer that one:

THE BUST - unless there is a miracle!

The sad thing is people of all ages are threatened by debt. It's going to be an unfortunate burden for them as things possibly get worst.

I know many people in their late twenties who are in seek of a better lifestyle abroad.

Pobby

Well I do hope it can be avoided at all costs but unless it is government spin i havn`t yet seen any arguement that persuades me any other way.I have a very small business and turnover has gone down a fair bit since 2004.Most other people i know in business are saying the same.

ZTD

Pobby wrote:

ZTD---you clearly are well informed on the subject.When I mentioned uncharted territory I had in mind the levels of debt versus GDP.Has there been a time when these levels have benn so high historically?

Now unfortunately, that question opens up a whole set of cans of worms... (what's the collective noun for cans?) I'll just run through them briefly - take cover now...

GDP - how do you measure it?

If GDP was £100 last year and £105 this year, what was the growth? If you said 5% then you'd be wrong. If inflation was 5%, then there was no growth. You apply a correction factor called the GDP deflator to the new GDP to get the growth of the economy. This deflator is based on the inflation rate. For any given set of figures, the smaller the deflator, the bigger the growth rate, and so the better the government looks. No incentive for cheating? On average, the deflator is smaller than the inflation rate.

The inflation rate has changed over the years (how it's measured) from RPI to HCI. We now have what's called "hedonistic adjustment". If a mobile phone comes out with the same price as last month's model, but with more ring tones, a value is given to those, and the phone is entered into the inflation model as being that much cheaper (not the same price). The smaller the inflation, the better the government looks. No incentive for cheating?

What is debt?

Secured debt? Unsecured debt? Gross debt, or perhaps nett debt? If it's nett debt, how much are our assets worth?

What about Government debt? Financial services debt? Or the biggie, derivatives. Which are about £1T, or ~100% of GDP. Apparently. But they are valued by the people holding them, which means they don't have a market value because most derivatives have no market to value them. They could be worth anything, both positive and negative.


So the short answer is: It's impossible to tell. Probably deliberately so.

The break point is when the increase in debt plus the increase in earnings is less than the interest due on the accumulated debt. That's when the bad stuff starts to happen. But of course, that needn't happen everywhere simultaneously, it can happen in one part of the economy, and spread as is the nature of financial crises. When I say "economy" it needn't be in the UK.

I hope that makes sense. I bet you wished you'd never asked now... :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl:

was_bankrupt

WOW - and to think I just asked for comments on my bankruptcy. V. Impressive.

ZTD

was_bankrupt wrote:

WOW - and to think I just asked for comments on my bankruptcy. V. Impressive.

Well your problems are a sign as well. According to Gov stats, we've never had it so good. Economic growth for longer than the eye can see. Generationally low unemployment.

Lenders have always lent. Interest rates and repayments are enshrined back at least 4,000 years to the Babylonians.

Borrowers have always borrowed. Some have always borrowed too much. But not record breaking numbers of them.

So why are so many people - such as yourself - going bankrupt? Not just a few, but a record-breaking amount.

Maybe, just maybe, things aren't as good as advertised. And maybe people are making decisions based on what they're told, and are then finding out the reality is somewhat different.

The only questions to ask are: What is the reality? How bad can it get from here?