The reality of the 'Great Recession'...

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I reckon it's only another 6 months before we see the same pictures from the UK - mind you there is plenty of deserted building sites round where I live.

http://www.boston.com/bigpicture/2009/03/scenes_from_the_recession.html

...and all for the sake of owning a 'property'. Great!

And no, quantitative easing and/or debasing the currency will not help much, the US tried it long before the UK did.

Was destroying the wealth really worth it? As a former 'Tory', I never thought I'd see myself writing that!

Enjoy

 

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And a great vid on Quantitative Easing:

http://www.youtube.com/watch?v=ohKQP_wSO9k

But regardless of QE, Barry the bank manager is still too scared to lend: US and Japan.

 

Another good 'un on how/why we're in this mess:

http://www.youtube.com/watch?v=eb_R1-PqRrw&feature=related

Common misconception is that we're in this mess because of sub-prime lending in the US. In actual fact, we're in this mess because governments allowed the natural barrier's to home ownership to be eroded i.e. 90 to 120 percent mortages and also the sweeping away of 3.5 x salary with 15 to 25% deposit and good credit history thus creating a huge boom! Also a lot of home 'owners' MEW'd on their home value thus destroying the wealth of the nation by way of consumption i.e. holidays, cars, wooden floors, plasma screens etc. I'm sure most of you have attended the 'demonstration of debt' house parties over the years? You'd go home after and ask your partner "how the f*ck can they afford that?".

You can probably tell that this gets my goat up, well it does!

 

Good thread.

I was thinking about when I was a student the banks were falling over themselves to give me cash.

 

I'm now waiting for the Student Loans Company to go bust! Now that the 'Great Degree Scam' is coming to an end, with graduates being unable to find a job, it won't be long before chinease and middle eastern investors pull out of that ponzi scheme. You'll note that our once great polytechnics are now looking into the abyss...if the SLC goes under then so do they! All that'll be left is the 'real' universities for the rich kids!

The grant system was not abolished because the govt couldn't afford it! It was abolished because it made no-one, apart from the student, any money! Very sad!

 

I'll break the reason for this recession down in one simple paragraph.

Mr & Mrs Miggins (net income £22k pa from working in Lidl/Asda/Iceland/Netto) +
125% mortgage of £300,000 on property worth approximately £180,000 =
Recession

Seriously - I'd love to find everyone who when, five years ago when I said we were heading for enormous amounts of negative equity, tens of thousands of home reposessions, 3.5 million unemployed and dole queues heading out of the office & down the street, laughed in my face and called me a fool and told me I knew nothing about the economy and that it could never happen like the eighties again. Unfortunately, most of them are currently being bailed out by stupid, gullible prats like me who saved, lived prudently and thought that they should be a bit circumspect with their money - so if I did meet them I'd have to restrain myslef from throttling them with their own smug self-satisfiaction.

 

Good post there Zeb. I remember an IT co-worker of mine who quit his job in 2004 to be a mortgage adviser for the Natwest. I remember saying to him that we're heading for sh1t creek and his response was "They won't let it happen!" LOL!!! He also added in "It's different this time". Well he was right about the latter, this recession/depression is going to be very different from the others i.e. it's going to be worse!

Another guy that I was associated with used to make a big deal about how he was on the property ladder and that I should "get my act together" and "invest". Oh how things have changed now! He tried selling a few months back but has MEW'd his equity so much over the years that his house is massivly over-valued (in reality he's in massive negative equity). He's now moved into the house he wants to buy and has rented his house out...the owner of the house he's moved into is also renting the house that they want to buy and so on etc. Even in this climate the greed is still there as we now have this mortgage swap/rental chain. The idea is that when the house sells then they will all be able to buy the house that they are reluctantly renting. Terms such as 'the spring bounce', 'the upturn' and 'the recovery' are used by this guy in an effort convince himself that all will be ok very soon. They seem to think that the paltry billions that banks (taxpayers) are now offering in mortgages - about 20 billions - will kick start the market. But they seem to forget that at the peak in 2007 the mortgage market was in excess of 200 billions. So as you can see they're fooked!!!!

On another note, Mr Businessman of the Year Local Estate agent owner in a nearby town was arrested the other day on charges of money laundering, fraud and theft!

 

You dont have to pay the student loan off if you:

You reach 65 and it was taken out before September 2006.
After 25 years if it was taken out in September 2006 or later.
If you have a disability and are declared permanently unfit to work.
Earn under 15,000k a year
or ... Die

So is it really true if the SLC goes bust you dont have to pay your loan back? and if yes it is the case, how is it possible?

 

If the SLC went bust you would still have to pay it under the same T&Cs. The only reason the SLC would go bust is in a high unemployment situation. When investors realise that the chances of graduates getting a job over 15k are remote then they'll simply pull out and buy debt from elsewhere i.e. govt gilts etc. My student loans come under the old rules and I was shocked to find that in 2000 2 were sold to a German bank and the other to Natwest? The SLC still administer and collect the money for the loan, but the debt itself was sold on as an ABS, Asset Backed Security. So what happens if they go bust? Well the owner of the debt will take control but most likely under the same T&Cs as the SLC.

 

Apparently if you leave the country for 5 or more years the debt also gets cleared.

Dont know how true this is but....

either way, your gonna have to pay the damn thing off!

 

I never knew that, thanks for that info.

The old Student Loans that were in use before 1998 don't have to be paid back if you gross less then £2180 per month...so now you can see why they swapped it over to this £15K a year stuff. What 'investor' would invest in debt that has a high probability of not being paid back. At least with the 'newer' system HMRC ensure that investors get their money!