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Credit crunch / recession

Discussion in 'The Lounge - Off Topic' started by Ryan, Jul 21, 2008.

  1. Ryan

    Ryan Byte Poster

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    couple of questions on this as ive heard people talk of it

    Firstly, what is it?

    Secondly, who will it affect and how?

    thirdly, which directions can it go in?

    fourth, should i be worried about it? as im looking to leave my job at a primary school to go and work for a company

    Cheers,

    Ryan
     
    Certifications: MCDST, MCITP:EA, Microsoft Certified Solutions Ascociate (2008), 70-662
  2. greenbrucelee
    Highly Decorated Member Award

    greenbrucelee Zettabyte Poster

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    Basically people have been allowed to barrow too much money too long at cheap rates, and because people have been getting it easy the money being paid back is going no where. Plus the US currency is ****e so the stock markets are having a bad day.

    Because of this the housing market is slowing and no one is buying, wage rises are not matching inflation and bills are going up. So everyone has less money.

    Because banks have lost money they are not as willing to lend unless you have avery good credit rating and even then the rates could be quite high.

    So employers are tightening their purstrings too, there is a current ban at my workplace to advertise jobs to the outside. Geting someone else from the inside is cheaper.

    Were are not in a recession yet but close to it.
     
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  3. tripwire45
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    tripwire45 Zettabyte Poster

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    I don't know what you call what we're in, but it's a pain and a lot of people are getting scared.
     
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  4. onoski

    onoski Terabyte Poster

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    In these times those in a seemingly secure job should sit tight as well as cut unnecessary spending like gadgets:) etc.
     
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  5. Arroryn
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    Arroryn we're all dooooooomed

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    Apologies if I repeat anything that GBL has said, but I may phrase a few things differently.

    1. What is a recession? It's explained quite well here. But in short, a recession is where the GDP (gross domestic product) of a nation decreases over consecutive financial quarters.

    2. Who will it effect and how?

    It will effect the entire country, and the level of impact depends on where your financial interests lie.

    SMBs are going to be hit quite hard. The housing market is suffering as some have already seen, but the domino effect of the housing market popping is quite mind-boggling. It's not just house builders such as George Wimpey or Barratts. These companies subcontract their construction work to smaller businesses, so you're going to find a lot of smaller tradesmen going out of work as their work dries up. A lot of attached businesses, such as accountants who deal with the transactions and lawyers who specialise in conveyancing are also going to find times hard.

    The way it is going in the UK at the moment, is it's an inflation based, and not deflation based recession. In short, prices are going up - and if wages keep rising to meet these price hikes, it will be a horrible catch 22 situation as the value of the currency and the goods themselves will be grossly misinterpreted. We have accelerated towards this potential recession mainly because of the relaxed period of credit, where the banks basically sell loans to each other. A lot of these investments were based in US banks. When the US bubble burst, the repurcussions here were immense. Add on to that the rising cost of oil as well as general fuel bills... it's a nightmare.

    3. Which directions? Prices can go up sharply, or down sharply. In this instance, prices are going up sharply (as far as domestic spending is concerned).

    4. That really depends on what kind of company you are going to work for. A lot of companies are being shy about hiring people now. But if you have been offered a permanent contract, then as long as you keep your head down and your nose clean, you should get through your probation period okay. What industry is the firm in that you're going to? Listen out to what your colleagues are saying, but don't let it cloud your thinking. If they're all doom and gloom then you may be too, but you want to maintain enough enthusiasm and 'can do attitude' that, if the sh*t starts hitting the fan, they'll see your name and say 'we want to keep him on board'.

    There. I think I didn't talk too much brollocks then :)
     
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  6. Bambino1506

    Bambino1506 Megabyte Poster

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    Good post Arroryn.
     
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  7. Crito

    Crito Banned

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    The central banks have a government mandated monopoly on printing money. The more they print the more they have to lend at low interest rates which increases borrowing and spending and stimulates the economy (increases the GDP.) Grow too fast and you get inflation as people compete to purchase limited goods with their abundant supply of paper currency, however. So, converesly, the central banks restrict the money supply, lend at higher interest rates, slow growth and inflation goes back down.

    That's the balancing act. It's all about the money supply. Too little and you get a recession. Too much and you get inflation.
     
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  8. richardw

    richardw Nibble Poster

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    The current inflation in the economy is not to do with the supply of money, it is based on rising energy prices, which affect everything.
    If petrol/diesel is more expensive, then it costs more to get food to supermarkets etc

    Energy prices have risen because we are becoming increasingly reliant on supplies of oil & gas from expensive areas of the world, ie it is more expensive to extract it, places like alaska, siberia etc, at the same time as demand is rising, due to China, India etc rapidly developing.

    They are also placing increased demand on raw materials, metals etc, & food supplies.

    Therefore, for almost anything you might buy, there are 2 inflationary pressures on the cost.
    This isnt going to go away either, it is likely that energy prices will remain high for many years to come, as demand continues to increase, & supplies reduce.
     
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  9. Arroryn
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    Arroryn we're all dooooooomed

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    Food is an important one to mention there, as that's often either the forgotten or unconsidered expenditure. I have a £100 per month budget to food shop for myself and hubby, and I'm coming close to the line now on that each month. Mind, I'm a frugal git and could easily spend £250... but that's not the point of budgeting!

    But basically another factor was that a lot of the food the UK produces, it exports. It's another way of making money. Countries such as Australia, who appear to be in perpetual drought, will always have a demand for that kind of thing (I gather... correct me if I'm wrong Blue et al).

    However, as we sell so much product, we buy it in from abroad at a supposedly beneficiary rate. So again, add in your fuel costs (for transporting the stuff) and seller rates, and the fact that across the world harvests have recently been poor and we have depleted food stores... the cost of food is set to skyrocket some more. Simple example I know, but I believe the price of rice has gone up somewhere in the region of 200%.

    Watch out for your local farmers markets - certainly get locally grown produce. It may well be cheaper, and it will definitely taste nicer than imported rubbish. Even better - grown your own! If I wasn't in rented accomodation, I would be.
     
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  10. UCHEEKYMONKEY
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    UCHEEKYMONKEY R.I.P - gone but never forgotten. Gold Member

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    :hhhmmm interesting thread!8)

    But we've only got ourselves to blame!

    After all we live in a throw away society? Why repair it when it's cheaper to buy a new one then buy the parts to fix it!:rolleyes: Everybody wants something in an instant so budgeting and saving goes out of the window!

    If you asked you Parents how did they save? Well they probably say they were always told to keep it because you might be able to use it again. hence the reason why so many peoples houses and Garages are full of cr@p:p

    Maybe if people lived by their means we wouldn't be in this mess?

    Before you buy something with your credit or debit card, just stop and think "Do I really need this? Can I live without it?" I ask this because there's a lot of people who do impulse buying

    Let's face it, if you can't afford it you can't have it? Right no because you can go to a bank and borrow the money. Even Llyords TSB bank was in the news recently for sending a credit card to a 11 year old without the parents knowledge!:x

    I think Arroryon has answered most of you questions, but the last one:-
    Fourth, should i be worried about it? as im looking to leave my job at a primary school to go and work for a company

    I would research the job or market you are going into before leaving, make sure you have secured the job first before handing in your notice! Also make sure your wages for the new job covers your incoming expenses and that also includes travel expenses!8)
     
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  11. Phoenix
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    Phoenix 53656e696f7220 4d6f64

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    Oh look
    a bunch of new speculators
    that's all we need ;)

    I impulse buy
    Just dropped $1500 on a plasma TV and an Xbox360 Elite
    life is good!
    now to find that job........!
     
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  12. Mof

    Mof Megabyte Poster

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    Well put GBL. You said you were thinking of changing your job, word of caution remember last in first out, be sure of the company you are going to change to well as sure as you can be, best of luck.
     
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  13. The_Geek

    The_Geek Megabyte Poster

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    I'm heading your way with food and cold adult beverages. :twisted:
     
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  14. greenbrucelee
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    greenbrucelee Zettabyte Poster

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    Gonna bide my time, especially when I am getting paid 23% more than usuall with a £500 bonus for the next 3 months :). No recession for me 8)
     
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  15. zxspectrum

    zxspectrum Gigabyte Poster Premium Member

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    If you shop around then you can stillkeep ahead of the pack, but if you just go to one shop then you will be taken to the cleaners, a lot of supermarkets at the mo are doing some good deals. One of the other reasons for food going up as well as the already mentioned , is because of bio fuels, that is being grown for fuelling cars, which in the end we all have to take the blame for.

    One energy boss said that to make sure we dont gbet cold this winter we should wear an extra jumper, now that may be easy for him to say smoking his big fat cat cigar, but i suppose he does have a point. I hate having the heating on in the house as i know its just money down the drain, unlike the other lad who lives here, as soon as it hits 15 degrees hes switching it on.

    As for banks, well im suprised they havent used crippling bank charges to get them more money, they normally do it, ba3456ds.

    Ed
     
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