Anyone Watching Dispatchers?

[M-i-t-c-h]

How doom and gloom is this!

I feel sorry for the people in the program but they are just mooning because they have borrowed to much money and when they miss there payments they get knobbled...

Got me thinking about the whole thing and the situation at the moment, how much are people going to be out of pocket? how will it effect me? what about the doubling of student loan interest and the long term knock on effect of the crunch?

Maybe its just me, but its quite scary, the amount of debt the country is estimated to be in, in several years time.

Edited September 22, 2008 by M-i-t-c-h

[Fish-Finger-er]

i think a lot of this is blown out of proportion. of course the housing markets going to fall, but it was never going to keep on going, its fell before, and been high before. people are going into debt, but they have been for years. the countries going to be in debt, but its just going to get it another way,(cutting back on the army, raising taxes etc)

call me a twat, but im actually sittin here, thinkin the credit crunch is probably going to benefit me. was looking at getting a house when i was 22/23. im now looking at doing it sooner. im still earning the same as what as i was last year, i dont really look like im going to be losing my job due to the "credit crunch", but house prices are falling. granted its going to be harder to get a mortgage, but meh, i dont think its going to be too much of an issue.

everyones saying no ones got any money, but i dont know, for me, its a brilliant time, im still earning the same wage, but am getting loads of stuff cheaper, because nobody else seems to have any money, im sat here typing this on a rather high spec pc, in my room, next to my xbox 360 and big flatsceen tv, with a load of camera equipment behind me, a feck load of designer/brand name clothes. theres 2 motorbikes in the garage, a decent car sat on the drive. dont really see how anythings going to change for me really, setantas still goin to show the boxing on a saturday night, bp's still going to sell diesel at a price i can afford.

[Tony Harrison]

I feel sorry for the people in the program but they are just mooning because they have borrowed to much money and when they miss there payments they get knobbled...

I don't sympathise with people who borrow beyond their means. That's half the problem. True, the overall result is that interest rates go up, affecting those with better judgement, but we're just a nation of debtors. And whilst people are encouraged at every opportunity to get into debt, sometimes the only way to learn is the hard way. That's how I learnt, but thankfully it was on credit cards as a student, with my debts only running to about £3,500. Now I just hate the idea of being a slave to APR, and whilst I now only have a small loan, with very manageable payments, I still hate the idea of taking on more debt (e.g. a mortgage). And so, when I lose my company car next month (I'm no longer working at a client site, so I won't be deemed an 'essential user' anymore ) I'm going to buy a new one with cash I've saved up for it. It's much more satisfying.

I don't have a TV so I can't watch that (Dispatches is usually good though), but I have this (link below) open in another window but I've only just finished page 1 as I'm meant to be cleaning my spare room out!! But it's a good read so far...

http://www.time.com/time/business/article/...1842123,00.html

Oh, and as far as affecting me... well, my rent hasn't gone up, and probably wont', but some things I've found are going up. Silly things, like I'm sure bread and beef are getting more expensive, and other stuff. The cost of living is on the increase. Trials_punk - do you pay energy bills? That's what everyone's bitching about at the moment. Whilst increases in fuel, energy and general cost of living will be seen by most of us, I like to think it won't cause any disasters for me!!

[bhups]

i think a lot of this is blown out of proportion. of course the housing markets going to fall, but it was never going to keep on going, its fell before, and been high before. people are going into debt, but they have been for years. the countries going to be in debt, but its just going to get it another way,(cutting back on the army, raising taxes etc)

call me a twat, but im actually sittin here, thinkin the credit crunch is probably going to benefit me. was looking at getting a house when i was 22/23. im now looking at doing it sooner. im still earning the same as what as i was last year, i dont really look like im going to be losing my job due to the "credit crunch", but house prices are falling. granted its going to be harder to get a mortgage, but meh, i dont think its going to be too much of an issue.

everyones saying no ones got any money, but i dont know, for me, its a brilliant time, im still earning the same wage, but am getting loads of stuff cheaper, because nobody else seems to have any money, im sat here typing this on a rather high spec pc, in my room, next to my xbox 360 and big flatsceen tv, with a load of camera equipment behind me, a feck load of designer/brand name clothes. theres 2 motorbikes in the garage, a decent car sat on the drive. dont really see how anythings going to change for me really, setantas still goin to show the boxing on a saturday night, bp's still going to sell diesel at a price i can afford.

You might be earning the same amount of money, but in terms of real income you actually have less than before due to higher inflation. The prices of goods are up around 4.8% (the rate of inflation) and your income has stayed the same - meaning your income is now only able to purchase fewer goods and services compared to last year when inflation was lower.

Also the products you are talking about are more luxury type goods and so arn't really the goods of which increasing prices are a concern. Its is the basic necessitates (such as food and energy) that have been increasing in price; contributing to the high inflation rate and why so many people are finding it financially difficult.

The goverment and bank of England also have a catch 22 ; If they increase interest rates and reduce spending to combat inflation the failing housing market will also suffer. If they lower interest rates (which is happening in Japan i think) spending will increase adding to inflation but soothing the housing market.

Edited September 22, 2008 by bhups

[Tomm]

I know what Kev is on about though - I've been listening to Radio 4 recently and the last week has been like a stuck record - all you ever hear about is banking news, opinions from former executives about how the whole system is going down the pan. But then I look around me and my life is the same as it was a month ago. My rent is the same, I still have the same amount of cash in my pocket, petrol has actually come down in price. If I didn't listen to the news, I wouldn't have a clue that the whole country was self-destructing.

My girlfriend's brother-in-law worked for Lehmann though, he hasn't done very well out of this crunch thing...

(I find the news becomes much more interesting if you imagine that credit crunch is actually a new brand of cereal)

[Dr. Nick Riviera]

(I find the news becomes much more interesting if you imagine that credit crunch is actually a new brand of cereal)

[anzo]

Again, this hasn't changed my lifestyle or spending - consumer spending will increase over the next couple of months into Christmas so that may help out a bit. The only factor that has bothered me is the price of fuel, but again, its hardly noticable.

For those of us without property, its going to be a bit of a pain in the future depending on how the housing market develops. I don't know many people than can afford the desposit (even with a loan!) let alone the bills, repayments and all the other fun stuff that comes with property. Renting houses/flat/apartments seems to be the way around this at the moment; how ever you're paying money into a blackhole with no real outcome at the end of it all.

The media play this up an awful lot; its irresponsible. I'm a reader of Have Your Day (on BBC website) and during the HBOS take over by Lloyds TSB they had written an article in such a way that it made it sound like this was a government bail out using taxpayers money.

[munkee]

I think most people here are kind of missing the point of the credit crunch because they are still living at home (even though some may be paying some small amount to parents). People are f**ked because of the increase in cost of living mainly down to bills escalating. Say someone 3 years ago earnt 22k a year, after paying their bills etc they have say £200 a month to spend on whatever they want (shitty figures but who cares). 3 years on to present day they are still in the 22k a year job or infact have move on to even 26k they now find that due to the increase in petrol prices (their drive to work), the increase in food prices, the increase in gas/electricity bills and their constant mortgage payments that they are still at £200 a month if not less. Looking in to the future now when the crunch really takes hold their £200 a month will be decreasing rapidly, they will have less and less disposable income to spend on their wants. They are only just about covering their needs. They will start to feel the "pinch" as people call it and in general just complain about how shit the country is, but they will still survive.

Now, imagine someone who is earning considerably less, they were in the person aboves situation present day scenario 3 years ago. They were just about covering all of their needs (bills etc) with their £200 a month left over. However now at present day with price of actual living increasing they suddenly have very little disposable income (the £200 a month) or even negative...which is negative equity. They are constantly losing money, so whats their choices? loan? credit cards? or downgrade their house so they can afford mortgage repayments?

Realisticly people will need to downgrade their homes in order to get a much more manageable mortgage for their income or even remortgage their house which is going to just lead to longer debts. Only problem is the housing market has fallen on its tits there are like 5 people selling houses to every 1 buyer. People arent wanting to take the risk of buying houses and applying for mortgages whilst sellers arent willing to sell when buyers are looking for the best deal they can get out of people (offering up to 15% under asking price). At the end of the day, the seller is losing out on a lot of money and are downgrading their home too, a giant kick in the nuts for most. Theres not really a good scenario and it can even be seen in industries, such as airlines etc going bust. The small companies working to tight budgets cant handle recession, they simply have to stop and go bust and start over again. Even large companies are really vulnerable, they have to make the choice between laying off a bunch of inexperienced staff and rely on their more experienced workers to multi task over multiple disciplines or they can lay off some of their high waged and bring in young graduates/tradesmen to do the same job (even if shitter) at a much lower cost in order to reduce outgoing wages. Eitherway there is in an increase in unemployment which then escalated the scenarios i put at the start. Without a income they are f**ked.

Its a lot more complicated but thats the general problem..

edit:

all this mortgage shit can be applied directly to those people who are renting houses/apartments. At the end of the day, if you are paying a mortgage you dont own the house, you are buying tiny bits of it back with every repayment its only going to be yours when its paid off. Cash buyers are the only people who truly own what they have and can take advantage of the decline in house prices around now.

Edited September 23, 2008 by munkee

[thefletch]

I'm with Trials Punk. Should benefit me, I'm 20 looking at buying house with a mate about April time. If it works out perfectly we'll buy when the market is at its trough, and then once the markets bouys again we should have accrewed some equity. hopefully. But then yeah energy bills are rape, but then I'm a trainee so my pay-rises are way above inflation

[MadManMike]

Food prices are shooting up, even if you earn a lot Meat prices and stuff are ridiculous.

[thefletch]

Get a veggie patch going on in the garden...maybe some cattle...

[Papa Manual]

To be fair you'd fairly short-sighted to buy a house at the moment (or even in April). Wait until the market bottoms out. There could be a long time to go yet, and you don't want to go paying a mortgage on something that's worth far less than what you borrowed. I've got soooo much to say about the "credit crunch" and the actual cause behind it, but I'd end up going on forever and getting fired for spending too much time on TF hehe. Although, this is a post I made in a related topic last week in the SM forum:

Buying property in the UK at the moment isn't a sensible thing to do. The financial markets aren't looking set to get any better for some time. Over the past few years prices have risen disproportionately to people's earnings (in most sectors anyway) and this makes the market top-heavy to the point where it begins to fall in on itself. Additionally, the "subprime crisis" and other related financial upsets are not covered well by the media. There's a lot of hype about banks selling off debt in bonds that aren't matched (this gets the debt of their balance sheet making the company look a lot healthier). This is very true to some extent, but a lot of it has to do with the fact that America has been printing its own money for years due to the trading of oil being in dollars. It's called petro-dollar recycling and leads to a false view of how their economy looks*. The recent turmoil is less of a "crunch" and more of a market correction. When America sneezes, the rest of the world gets a cold.

Anyway, point being, the worst thing you could do is work your balls off to afford to put a deposit down on a flat/house, then work your balls to pay the mortgage off, then see the value slipping down. Some analysts aren't expecting house prices to start going up again for as much as three years! Other more optimistic ones are stupid (in my largely-unqualified opinion).

I spend a good deal of my day working with Private Real Estate big-bods and the private finance industry has jumped ship when it comes to the UK property market. Where they go, the public usually follow a few months later with their tails between their legs. If you rent for a bit (rental prices will come down to some extent) and then wait for the right time, you'll be able to buy a lush flat a lot cheaper than what you'll be paying for it now. You'll be able to use it as an investment too if you ride the prices right.

* Counties build up massive stores of USD to buy oil

[Sneakers O'Toole]

All i know is the price of breakfast at Uni have risen from £1.85 to £2.50 and the pizzas at the corner shop have risen from £1.89 to £2.29.

Hard times...hard times

[Extreme_biker0]

Now, imagine someone who is earning considerably less, they were in the person aboves situation present day scenario 3 years ago. They were just about covering all of their needs (bills etc) with their £200 a month left over. However now at present day with price of actual living increasing they suddenly have very little disposable income (the £200 a month) or even negative...which is negative equity.

That's not what negative equity is. That is a budget deficit. Negitive equity is where the asset (the house) over which a liability (mortgage) is securitised is worth less than the liability itself. It is a serious problem for banks and owners because if the person starts to struggle to pay the mortgage, what can the bank do to get the money back which it lended to buy the house? It cannot sieze the house and sell it and get the loan money back because it is worth less than that.

This is what sent Northern Rock under. Rule changes for accounting for instruments such as mortgages say that they can only be valued up to the value of the securitised asset (house) and not the full amount of the debt as this is not guarenteed past the price of the house. This took a huge chunk out of NR's balance sheet and it's liabilities were therefore more than its assets, making it technically insolvent. It was rescued by huge loans from the govornment. These loans aren't of your taxpayer money though (you think the govornment has £12,000,000,000 lying around lol?) it is money borrowed into existance (as all money is, believe it or not). This pushes up inflation massively, but it takes a while.

I'm with Trials Punk. Should benefit me, I'm 20 looking at buying house with a mate about April time. If it works out perfectly we'll buy when the market is at its trough, and then once the markets bouys again we should have accrewed some equity. hopefully. But then yeah energy bills are rape, but then I'm a trainee so my pay-rises are way above inflation

It will benefit the typical person on here. Houses will be no more affordable (prices lower but interest rates higher). But you will be paying it off for a lot shorter period of time. Also with negligable savings, the inflation will not erode your wealth.

With regards to buying a house: When interest rates are high, houses are cheap. When interest rates are low, houses are expensive (everyone has access to more credit pushing prices up) (this is where we are now).

Interest rates vary. The debt, once you've bought, does not. So buy when interest rates are high, not low, like they are now.

Another reason we will all benefit is we are all workers. We will work our way through this. Pensioners will be hit becasue as property and shares tank so do there pension funds.

Top and tail is it will be pretty bad in the not too near future but if you can work and bring in a wage you're ok.

Edited September 23, 2008 by Extreme_biker0

[Mark W]

Assuming that the job you're working in remains, at least. My sister's an architect and people are being made redundant in her firm because no-one's wanting stuff designed any more, and there are plenty of labourers/workers who are losing their jobs for the same reason. So although if you can work you're fine, a lot of people are finding themselves in a position where they can't any more.

In related news, I picked a really shitty time to attempt to become a freelance photographer

[Extreme_biker0]

Assuming that the job you're working in remains, at least. My sister's an architect and people are being made redundant in her firm because no-one's wanting stuff designed any more, and there are plenty of labourers/workers who are losing their jobs for the same reason. So although if you can work you're fine, a lot of people are finding themselves in a position where they can't any more.

Your sister is victim to the shift in patterns as we enter the recession, but it is temporary.

In times of high interest rates (early 90's last time, then they reached >10%) a lot of govornment construction takes place (credit doesn't affect them and what with all the builders out of work it's the cheapest time).

So tell your sister to keep a keep eye on public sector ops as thats where the market will open up for her.

[Papa Manual]

But surely with the governement in rather a pickle when it comes to debt (not so much as the US government obviously), surely they still need the capital to put into projects?

EDIT: I'm not saying it's borrowed from commercial firms, but they can't just keep throwing cash they don't have into stuff can they?

[Extreme_biker0]

But surely with the governement in rather a pickle when it comes to debt (not so much as the US government obviously), surely they still need the capital to put into projects?

Hehe it's quite complicated. Our currency is not backed by any kind of asset. All money is produced by the govornment*. The money in your pocket was simply created by the govornment, at the request of banks (at the BOE base rate) from where it circulates around the system. It's called a Fiat currency, like the car.

More money in existence = more money chasing after the same goods = inflation.

The more money the govornment produces in a year, the higher inflation is. So to reign in inflation the govornment increases the BOE base rate so it's more expensive for the banks to borrow. And therefore they borrow less; inflation is reduced.

Another way money gets into existence is through public sector wages, for example (remember the big news about public sector wages being reigned in? This is because again more money = more inflation, and they're trying to get it down). But basically no, public sector wages will always be paid. The money is basically created to pay them. As this increases inflation, so interest rates will be increased to compensate.

They don't need the money to pay for such projects; they sieze the opportunity of cheap labour to carry such projects out, and the cost of higher interest rates, but at the same time stimulating the economy by keeping people in work.

*bank of england is supposedly independent blah blah blah i'm aware of all this i'm just simplifying to explain...

Edited September 23, 2008 by Extreme_biker0

[Papa Manual]

I understand what you're saying, and I can imagine the balance being very hard to find. However, surely if the government embarks on numerous construction projects, it's paying more money out to public sector workers (ie creating more money) thus driving up inflation. Are they not damaging the country by doing this (not just the private sector)? And by raising interest rates surely then unemployment in the private sector continues to rise.

[Extreme_biker0]

I understand what you're saying, and I can imagine the balance being very hard to find. However, surely if the government embarks on numerous construction projects, it's paying more money out to public sector workers (ie creating more money) thus driving up inflation. Are they not damaging the country by doing this (not just the private sector)? And by raising interest rates surely then unemployment in the private sector continues to rise.

I think that in times of economic difficulty other more frivilous areas of govornment spending, like community support officers, crap like that, are cut back to compensate? But i'm not sure about this. Kind of makes sense.

Edited September 23, 2008 by Extreme_biker0

[Papa Manual]

I think that in times of economic difficulty other more frivilous areas of govornment spending, like community support officers, crap like that, are cut back to compensate? But i'm not sure about this. Kind of makes sense.

Having read both incarnations of that post, I can see what you're saying. The only thing is that the UK is becoming more of a welfare state (not just welfare, just all things fluffy and nice) and this costs bare £££. These are things that people have become used to (such as CSO's etc) and political groups would rather overspend in order to get re-elected than do what's right and become unpopular.

I'm more legally/politically minded than economically, so I may well be way out of my depth here hehe.

[Extreme_biker0]

Having read both incarnations of that post, I can see what you're saying. The only thing is that the UK is becoming more of a welfare state (not just welfare, just all things fluffy and nice) and this costs bare £££. These are things that people have become used to (such as CSO's etc) and political groups would rather overspend in order to get re-elected than do what's right and become unpopular.

I'm more legally/politically minded than economically, so I may well be way out of my depth here hehe.

You're definitely right about the conflict of interest for those in power; what is right is not what will be popular and get them re-elected. The only way I can see there being enough pressure to cut back is if there is total economic collapse. When you have millions homeless, food shortages, and power black-outs, employing CSO's will then seem outrageous, and will no longer be politically a good move.

We are a long way off this yet. And it seems crazy to all of us, who haven;t lived through it before, who've grown up in constant economic growth. But it's happened in the recent past. There is nothing to stop it happening again.

Coal mines were a large part of our economic activity once upon a time. When they closed it was chaos.

Over the last decade or so, it has been the expansion of credit that has been the main driver of our economy. And now, with the credit crunch, that credit is dissapearing. It could be bad.

Edited September 23, 2008 by Extreme_biker0

[Papa Manual]

I just don’t understand the mentality behind most modern political groups. They screw themselves over to get re-elected and leave themselves in even more shit. Their popularity begins to wobble when the masses (who basically believe anything that makes it in any semi-reputable newspaper or on the television) suddenly realise they’ve been conned into supporting a group of people who are only interested in staying in power without taking into account the damage they are causing the country. They’re just in power for the sake of being in power, limiting the scope of anything they can change with every round.

Articles like this are indicative of how cushioned people feel (/felt) because of the false sense of security a given government lures them into. Personally, I profited out of Lehman Brothers quite nicely. Towards the start of the year when their share price initially tumbled (same time as Bear Sterns), I gambled that they had enough assets/insurance etc to recover. Even though in the long-run I was wrong, I made back 50% on top of the initial investment in 24 hours – completely tax free (Guernsey is good for something hehe). I think I may have to declare some US tax or something somewhere along the way, but pfffft I’ll wait for them to get to me. I’m sure they’ve got bigger things to worry about. Glad I didn’t get greedy and try it again last week.

Either way, I’m staying the hell out of debt and away from buying property for a long while yet. Very few people understand the underlying causes of “the crunch” (behind the “sub prime” bollocks, which is just a knock-on effect), let alone how to fix it. I heard some lawyer quoted on newsnight the other day saying "There's a hole in the markets, everyone knows that. No one knows where it is though." The majority believes everything is on the up and up. Weren’t they saying that six months ago? And nine months ago?

[Simpson]

I understand what you're saying, and I can imagine the balance being very hard to find. However, surely if the government embarks on numerous construction projects, it's paying more money out to public sector workers (ie creating more money) thus driving up inflation.

Not nessassarily, because lots of average construction jobs are being lost, i doubt many people are building extensions to add to the value of their house for example, and i expect many property developers have sacked their jobs in an stopped employing anyone (although the leasing market is very strong at the moment.)

And dont forget with every empolyed person you get a multiplyer affect, hence why the government controls public sectors wages so much.

[Extreme_biker0]

Articles like this are indicative of how cushioned people feel (/felt) because of the false sense of security a given government lures them into.

Lol at Brett Wood. Hopefully he didn't take his own advice or he'll be pretty much bankrupt when his mortgage resets come around.

Nice find! Shows how people who were once raking it in in capital appreciation, got it so wrong. They were making so much money that the wool was over their eyes!

Got to feel sorry for him though.