Europe heading into recession

[isaldiri]

jsf said:

That is the essence of why we have crashes. The person who calls out the issue when everyone else cracks on anyway, tends to lose their job long before the consequences of them being right hits.

Or...there's no shortage of people (Roubini say for one) who are forever forecasting the end of the world (or the end of the euro... ) in the hope of being able to say 'I told you so' if/when circumstances finally go their way despite having been way off the mark for yonks...

[stongle]

isaldiri said:

Or...there's no shortage of people (Roubini say for one) who are forever forecasting the end of the world (or the end of the euro... ) in the hope of being able to say 'I told you so' if/when circumstances finally go their way despite having been way off the mark for yonks...

Everyone has an idea for a great trade, timing the market bit more tricky.

We all know that the end of the euro, doesn't mean end of the euro; just what extra, extra, extraordinary trick they pull out the bag.

Unless Italy really does st it's pants. Then; all, bets, are, off....

A lot will depend on what Trump does next. He dial's back on trade wars - Europe gets a lighter recession. He doubles down, hmmmm.....

[Borghetto]

smifffymoto said:

In a crash you are a winner if you keep your family home,pay the car finance etc.You don’t win any thing,other than being able to pay the bills and sleep at night.

I think if/when a crash occurs, many people will think being able to sleep at night will be a major win. Old buffers like myself will remember when mortgage rates hit 15% and we were far less leveraged that people today.

[Shnozz]

Borghetto said:

I think if/when a crash occurs, many people will think being able to sleep at night will be a major win. Old buffers like myself will remember when mortgage rates hit 15% and we were far less leveraged that people today.

Yes, that day must have been awful.

[Borghetto]

Shnozz said:

Yes, that day must have been awful.

It scared the BeJeebus out of me.

[tumble dryer]

Borghetto said:

Shnozz said:

Yes, that day must have been awful.

It scared the BeJeebus out of me.

Still sends shivers... (At the time, I was the only person I knew with a £100k mortgage. That was a BIG figure back in the day. Stung a bit.)

[Borghetto]

tumble dryer said:

Still sends shivers... (At the time, I was the only person I knew with a £100k mortgage. That was a BIG figure back in the day. Stung a bit.)

Blimey mine was only 65k and it made me look into the abyss.

[loafer123]

Borghetto said:

tumble dryer said:

Still sends shivers... (At the time, I was the only person I knew with a £100k mortgage. That was a BIG figure back in the day. Stung a bit.)

Blimey mine was only 65k and it made me look into the abyss.

I was a student, owned my own flat and had a £75k mortgage.

Alot of baked beans were eaten that year.

[BrabusMog]

Borghetto said:

tumble dryer said:

Still sends shivers... (At the time, I was the only person I knew with a £100k mortgage. That was a BIG figure back in the day. Stung a bit.)

Blimey mine was only 65k and it made me look into the abyss.

I don't have personal experience of it but my old man told me he could only drink out at night because of expenses back then... Sounds crazy to hear when we all know how doss we have it now.

[Borghetto]

loafer123 said:

I was a student, owned my own flat and had a £75k mortgage.

Alot of baked beans were eaten that year.

Well i hope you had the good manners to sleep a bed without company.

[i4got]

BrabusMog said:

Borghetto said:

tumble dryer said:

Still sends shivers... (At the time, I was the only person I knew with a £100k mortgage. That was a BIG figure back in the day. Stung a bit.)

Blimey mine was only 65k and it made me look into the abyss.

I don't have personal experience of it but my old man told me he could only drink out at night because of expenses back then... Sounds crazy to hear when we all know how doss we have it now.

Mine was 79k. Wife was on maternity leave with first kid. Couldn't afford any more increases in the mortgage (went from around £600 to a max of £1000 a month on a take home of about £1700) so I gave up the perm job and went contracting. Ultimately took me into a far higher earning career.

[smifffymoto]

I was a boy in those days but it was strange being told I could have an ice lolly but not a corneto because they were expensive.
Much different times!

[Digga]

I bought my first house in the early 90's. On the housing estate I wanted to live on, on the two streets I favoured, I had about a dozen houses, of which I actually viewed the two best and bought one. To say it was a buyer's market is an understatement.

[Earthdweller]

Two things stick in my mind about that time..

I was working as a PC on the Division covering Epping Forest

Burning cars and hanging bodies

[anonymous-user]

Shnozz said:

Borghetto said:

I think if/when a crash occurs, many people will think being able to sleep at night will be a major win. Old buffers like myself will remember when mortgage rates hit 15% and we were far less leveraged that people today.

Yes, that day must have been awful.

I personally think there is more chance of interest rates going negative than going higher by any significant degree. Look at the rest of Europe, they are so desperate for people to borrow money that they are offering it at negative rates now.

Once they kicked the can down the road in 2008 by reducing rates from 5.25% to 0.5% it's pretty clear this is the only option available to them again this time.

Print lots more money and lower interest rates to negative figures.

[Borghetto]

On a personal note, I hope we never see rates in double figures again. The damage it will do to the youngsters would be terrible. They were enticed in by low rates, to see them soar would be a betrayal.

[tumble dryer]

Joey Deacon said:

Shnozz said:

Borghetto said:

I think if/when a crash occurs, many people will think being able to sleep at night will be a major win. Old buffers like myself will remember when mortgage rates hit 15% and we were far less leveraged that people today.

Yes, that day must have been awful.

I personally think there is more chance of interest rates going negative than going higher by any significant degree. Look at the rest of Europe, they are so desperate for people to borrow money that they are offering it at negative rates now.

Once they kicked the can down the road in 2008 by reducing rates from 5.25% to 0.5% it's pretty clear this is the only option available to them again this time.

Print lots more money and lower interest rates to negative figures.

I think Joey, that my current apprehension has less to do with which particular mechanism caused the effect, than the rapidity on the actual effect.

Today I'm not expecting raging interest rates, but my 60+ years of (slow, admittedly) incremental learning has left me, at least considering, there's another one coming.

Edited by tumble dryer on Thursday 31st October 20:44

[stongle]

France posted a better than expected 3rdQ gdp figure today, mainly due to fiscal drop into French households - response to the yellowvests torching half of Paris.

If hard BREXIT comes off the table, another downside risk is removed; but inflation will still undershoot ECB target.

I don't think the EUROZONE has enough fiscal capacity spare to fire inflation, so think they have a tough ask ahead. Extra, extra, extra, extraordinary with a touch of Lagarde fairy dust or arm twisting - whom knows.

UK is different, by and large lowering BoE rates has stimulated asset inflation and consumer activity. We need to look more towards the FED that cut yesterday. I'd expect us to follow in short order as global and BREXIT uncertainty add drag (note uncertainty - not BREXIT itself). Going negative is a massive issue for banks as they generally can't pass it on to depositors. It eats Net Interest Margin, so a lot of the Central Bank stimulus gets eaten by bank margin. Its even worse in the EU when the excess cash they can't give away; they pay the ECB to take back. Banks are so long cash in the EUROZONE the EUR bid is around -60bps with equity as collateral. If you were giving Bunds as collateral you might be bidding around -75bps. Going to a bank and saying lend me EUR 500m and pay me 0.75% to take the cash of your hands is a madness - some in the city still grapple with. We roll over 12bn of client trades a day where the cash lender pays for the cash to "go away".

If they persist in the current ECB policy, they are likely to have to look at nationalising banks. Especially as they made silly loans to stay afloat.

Trump would probably like to go negative, but @ 1.5% think they have enough space to stay in +'ve territory. It would have to be pretty grim if we went into negative territory, but its a possibility.

Oh, I ought to add its the US banks offering EURs cheaper than the ECB (or paying more to get rid of em)...

I'll tell you why, they morphed and industrialised repo 105 so the ECB eventually shelters their balalnce sheet. If that don't boil your cannister; nothing will..

Edited by stongle on Thursday 31st October 21:48

[NRS]

Borghetto said:

On a personal note, I hope we never see rates in double figures again. The damage it will do to the youngsters would be terrible. They were enticed in by low rates, to see them soar would be a betrayal.

It'd wipe out almost anyone with debt surely? From 0.75% to 10% is a 1233% increase on interest rates. Anyone with a mortgage of any size would surely get destroyed by that. It'd also absolutely destroy house prices as no one would be able to pay anything like the monthly interest payments at current day prices with those rates. The issue with the low interest rates is that you're not eroding the loans much these days. With the 15% rates it was tough to afford, but if you made it then it got rid of the mortgage much quicker. Add in a shrinking population making it more top heavy for pensions/healthcare, the huge public debt taken on during the crash etc and youngsters are basically screwed anyway.

[gizlaroc]

With German banks offering 30 year fixed rate mortgages at 1.3% and 10 year fixed at 0.9% surely in todays small world they can't whack the rates up too high as people will just use a German lender?