10 years since the start of the financial crisis.
Discussion
Are we now out of the woods and safe from a repeat anytime soon?
'Regulators must remain "very very" vigilant about the risks to the economy, former chancellor Lord Darling has told the BBC - 10 years on from the start of the financial crisis. He said a rising level of consumer debt in the economy was a growing concern. Lord Darling was speaking on the 10th anniversary of the 2007 crash, which led to the government spending billions of pounds rescuing major banks.
'Regulators must remain "very very" vigilant about the risks to the economy, former chancellor Lord Darling has told the BBC - 10 years on from the start of the financial crisis. He said a rising level of consumer debt in the economy was a growing concern. Lord Darling was speaking on the 10th anniversary of the 2007 crash, which led to the government spending billions of pounds rescuing major banks.
BlackLabel said:
Are we now out of the woods and safe from a repeat anytime soon?
No. Nothing was allowed to fail. So the whole system just got would back up even harder and left to toddle on, hoping that the low interest rates and the property bubble would somehow pay it all off. And it won't. The next bang will be bigger.10 years ago I was in New York, meeting with a team of quant investor colleagues. I will always remember one of their former (real) rocket scientists telling me that what we had seen in the ABS market that day was a once in a thousand year event - the third such event in a fortnight. Told me all I needed to know about their models...
grumbledoak said:
No. Nothing was allowed to fail. So the whole system just got would back up even harder and left to toddle on, hoping that the low interest rates and the property bubble would somehow pay it all off. And it won't. The next bang will be bigger.
yes there is rumours of the car lease market possibly taking a hit as they mature and final payments not being met?(if that's how they work these days)also as wages are not rising in line with property prices does this mean an overdue correction for property?
plus all those that have 'chosen' to rent and not buy will need care as they age,where is the money going to come from for this?
I have lived through the boom and bust eras of the 80's and then the 90's and recently 08(of which I silently predicited to myself would happen
)and each one seems to be bigger than the last,if only I had known then what I know now.I was on a night out with a friend of mine who was the FD of a reasonably large insurance company.
On the night that it looked like BoS was going to go pear he had had a transfer out of many millions refused/delayed because of their situation.
We were in a hotel bar and this usually very urbane man looked like Lloyd Bridges in Airplane as we watched Gordon Brown on Sky News,
Will never forget that.
At this time my bankers were Kaupthing and having been to their head office several times I can't say I was surprised, but it was great whilst it lasted!
On the night that it looked like BoS was going to go pear he had had a transfer out of many millions refused/delayed because of their situation.
We were in a hotel bar and this usually very urbane man looked like Lloyd Bridges in Airplane as we watched Gordon Brown on Sky News,
Will never forget that.
At this time my bankers were Kaupthing and having been to their head office several times I can't say I was surprised, but it was great whilst it lasted!
The worst of the crisis was mitigated by printing money on a scale not seen since, well, ever. This artificial liquidity - known as 'quantitative easing' (sounds nicer than 'just printing money') is all that has kept us from collapse. Because it has devalued cash (more printed cash means that printed cash is worth less), other assets e.g. shares, air-cooled Porsche 911s, etc have become over valued. The problem is nobody has worked out how to stop the magic money machine (yes it does exist). When QE is eased back and reality returns, anyone who has a large mortgage will be in for a shock, and this may trigger a new wave of mortgage defaults and so the cycle goes on..
Does it have to be a crash or can it be a gentle slowdown?
I don't now the values but surely the car lease bubble doesn't involve the huge amounts that resulted in 08.
As for the property wage inbalance, isn't it manageable outside of London which itself is not so reliant on wage infrastructure due to foreign investment.
Runaway interest rates would no doubt be a big shock for many but would 0.25% per year be a big issue?
I don't now the values but surely the car lease bubble doesn't involve the huge amounts that resulted in 08.
As for the property wage inbalance, isn't it manageable outside of London which itself is not so reliant on wage infrastructure due to foreign investment.
Runaway interest rates would no doubt be a big shock for many but would 0.25% per year be a big issue?
The economy is already anaemic to the point of being moribund... surely a ''gentle slowdown'' would effectively be a crash?
And the property-wage imbalance isn't just a London issue, there are whole towns in the North where I suspect the average wage is little more than half the supposed UK average of £26k... so even if the average house price in these areas is only a 'mere' £120k or so that still represents 10x local average wage
And the property-wage imbalance isn't just a London issue, there are whole towns in the North where I suspect the average wage is little more than half the supposed UK average of £26k... so even if the average house price in these areas is only a 'mere' £120k or so that still represents 10x local average wage
Edited by mike74 on Thursday 10th August 06:05
Edited by mike74 on Thursday 10th August 06:33
garagewidow said:
grumbledoak said:
No. Nothing was allowed to fail. So the whole system just got would back up even harder and left to toddle on, hoping that the low interest rates and the property bubble would somehow pay it all off. And it won't. The next bang will be bigger.
yes there is rumours of the car lease market possibly taking a hit as they mature and final payments not being met?(if that's how they work these days)also as wages are not rising in line with property prices does this mean an overdue correction for property?
plus all those that have 'chosen' to rent and not buy will need care as they age,where is the money going to come from for this?
I have lived through the boom and bust eras of the 80's and then the 90's and recently 08(of which I silently predicited to myself would happen
)and each one seems to be bigger than the last,if only I had known then what I know now.I also worked for a large property company at the time, and they really did see it coming just before but happened. Investment was scaled back and projects put on hold. Our share price was still decimated though.
grumbledoak said:
No. Nothing was allowed to fail. So the whole system just got would back up even harder and left to toddle on, hoping that the low interest rates and the property bubble would somehow pay it all off. And it won't. The next bang will be bigger.
Note for anyone who's as daft now as I was In 2000: I listened to advice exactly like this and declined to buy a 4 bed detached house for £110k that recently sold for £475k.PBDirector said:
Note for anyone who's as daft now as I was In 2000: I listened to advice exactly like this and declined to buy a 4 bed detached house for £110k that recently sold for £475k.
But would you now buy the same house for 475?Do we believe it can hit 800k or more and society continue to function. Those kind of prices mean future generations will literally be homeless.
PBDirector said:
Note for anyone who's as daft now as I was In 2000: I listened to advice exactly like this and declined to buy a 4 bed detached house for £110k that recently sold for £475k.
I bought then. The 6% interest rates had quite a lot of room to drop. Now, not so much. House prices are now being limited by the allowed multipliers, wages are stagnant, and the interest rates can only go up.grumbledoak said:
PBDirector said:
Note for anyone who's as daft now as I was In 2000: I listened to advice exactly like this and declined to buy a 4 bed detached house for £110k that recently sold for £475k.
I bought then. The 6% interest rates had quite a lot of room to drop. Now, not so much. House prices are now being limited by the allowed multipliers, wages are stagnant, and the interest rates can only go up.menousername said:
PBDirector said:
Note for anyone who's as daft now as I was In 2000: I listened to advice exactly like this and declined to buy a 4 bed detached house for £110k that recently sold for £475k.
But would you now buy the same house for 475?Do we believe it can hit 800k or more and society continue to function. Those kind of prices mean future generations will literally be homeless.
The wealth accumulating older generations will eventually pop their mortal coil and that wealth will be left to younger generations.
Whatever happens the only certainty in life is death, and you can't take it with you.
grumbledoak said:
I bought then. The 6% interest rates had quite a lot of room to drop. Now, not so much. House prices are now being limited by the allowed multipliers, wages are stagnant, and the interest rates can only go up.
Interest rates could stay at this level for decades that's why there are 5 and 10 year fixed rates out there they don't have to go up at all. jonnyb said:
I disagree.
The wealth accumulating older generations will eventually pop their mortal coil and that wealth will be left to younger generations.
Whatever happens the only certainty in life is death, and you can't take it with you.
A common theme on here is that the country's OAPs all have vast sums of wealthThe wealth accumulating older generations will eventually pop their mortal coil and that wealth will be left to younger generations.
Whatever happens the only certainty in life is death, and you can't take it with you.
I know a few will and I know one or two people who never had to worry about taking care of themselves let alone their parents
But i suspect the majority have very little to pass on
The way things are looking that will increasingly be tapped for healthcare, IHT etc. I doubt much will filter down.
Who knows what the future looks like but there have been several threads about the winter fuel allowance and the general consensus on here is that OAPs dont need it due to their vast wealth - juxtapositioned against the thread on energy prices increasing.
Then the thread on the state pension being next to worthless or not even existing, retiring age increasing, yet the economy almost certainly contracting, hence the thread here.
Brexit, inflation and the difficult decision re. interest rates.
The future does not look very bright right now
jonnyb said:
The wealth accumulating older generations will eventually pop their mortal coil and that wealth will be left to younger generations.
I'm not sure a continuous cycle like this would actually work. Inheritance tax and stamp duty may well strip wealth from the cycle faster than wages can replenish it. You also need fresh 'bodies' in the system to replace those who died and those new bodies will need the financial means to buy the now unoccupied house. Ten years, where has it gone? I remember taking a lunchtime stroll down Moorgate towards the Northern Rock branch. As I approached I could see just four or five people queueing outside. Not too bad then I thought. Then I realised that the queue turned down the adjacent alley and along the street that ran behind Moorgate! Must have been 200+ people. Crazy times.
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