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Financial Crash

Community Veteran
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Financial Crash

How close are we to a financial crash ? Sure they happen from time to time but are we closer than we think ?

The last one happened due to the financial sections of the large banks and the government bailed them out with our money, if there is a repeat then no chance of a government bailout as we owe more money on credit than ever  and clearly more and more people are finding it difficult or impossible to pay back money they owe.

 

15 REPLIES
Luzern
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Re: Financial Crash

TBH we will not know how near we are until it has happened, but personal debt is too high. In my mind the responsibility for that lies both with financier and borrower. I'd say the former more than the latter. TBH I think the banks are so expansion minded that they'll lend without full consideration of a borrower and means to pay, especially if penalty fees can be obtained. Credit scoring too is a good aid that helped widen the clientele to which banks would lend, but it isn't a god. My feeling is that sooner or later restrictions, voluntary or official, will have to be imposed, and earlier mnemonics that were kept in mind for lending proposals brought back to mind,

The borrowers too need to get back to counting the cost before borrowing, leave behind current attitudes of I want, must have TODAY.

No one has to agree with my opinion, but in the time I have left a miracle would be nice.
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Re: Financial Crash

@gleneagles

It will start going down the pan when interest rates begin their inevitable rise. They have been far too low for far too long. People are borrowing vast sums to buy new houses at relatively low interest rates. My new neighbour and his partner have borrowed £300k at about 4%. Neither have especially well-paid jobs so they must have got far more than the traditional 3.5 x combined annual earnings that it used to be when I was a lad! I understand that around London people borrow amounts of about 6 x annual earnings.

As soon as interest rates start going up (in line with inflation, which is bound to take off) lots of people will find themselves in the clarts. Add to this the fact that around 45% of new cars on the road are obtained with personal contract plans which can only just be afforded - well, there will be an awful lot of really surprised individuals around!

That's why the Bank of England is putting off interest rate rises. Same for the Fed Reserve. UK inflation (CPI) is currently 2.6% per annum. RPI is 3.6%. Both are rising.

I would estimate that it will be about two years. You can get an idea of what might happen by checking longer-term fixed saving rates, such as 2,3,or 5 years fixed term. The longer you fix the return the more you will get back, so Banks and Buildos are expecting an interest rate rise. In the mean time, don't get a mortgage you can't afford and don't get a new car on PCP.

 

"The last one happened due to the financial sections of the large banks"

It happened because they were lending large amounts to people who couldn't afford the repayments and so the loans were effectively written off as interest rates rose. Sound familiar?

Community Veteran
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Re: Financial Crash

Crash? the government will just rig the market again and shake the magic money tree Theresa claims doesn't exist (of course that'll be after lots of people lose a lot of their houses / cars).

I need a new signature... i'm bored of the old one!
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Re: Financial Crash

@nozzer

That is a very accurate reply the contents of which I fully agree with.

Could we even reach a position where a percentage of money is taken from savings accounts, current pension rates reduced and a number of essential services cancelled ?

Sure you could devalue the £ but that pushes up the cost of things and end up with a currency which is almost worthless.

@7upMentions the loss of jobs, houses, cars for many which is also true but can the younger generation cope or accept such a outcome which they will consider was the fault of others such as the government, financial institutions and the rest ?

Anonymous
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Re: Financial Crash

@gleneagles

Devaluing the Pound is not an option and hasn't been for many years since we abandoned fixed exchange rates.

https://www.newyorkfed.org/aboutthefed/fedpoint/fed38.html

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Re: Financial Crash

@notinmyname

Fair comment, perhaps it would have been more accurate for me to say the value of the pound against other major currencies on the financial market has gone down.

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Re: Financial Crash

Did anyone ever believe that the Bank of England really had a set plan about when to raise interest rates?

With the government setting a fine example with sky high borrowing beyond their means any plan has long since gone out the window.

All that remains is a firm set of puppet strings from number ten straight to the "independent" bank.

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Re: Financial Crash


gleneagles wrote:

 

@7upMentions the loss of jobs, houses, cars for many which is also true but can the younger generation cope or accept such a outcome which they will consider was the fault of others such as the government, financial institutions and the rest ?


You're missing the point.

The young do not matter in political circles. They are simply expected to work, pay tax and be grateful for the barrage of abuse that goes their way about not wanting to work hard etc. In reality many young people DO work very hard - often for ungrateful employers (and their shareholders) who want nothing more than fast returns while paying their young employees a pittance. For so long there was nothing the young could do to defend themselves against this.

The tories have relied on this working for them for so many years and with Cameron being just as bad and stiffing the young even more it is no surprise that Canterbury fell - a safe conservative seat for so long that they thought it was unthinkable to lose it - especially to students!

Since the fall of Canterbury the conservatives will have to start considering the plight of the young. Theresa Maybe has had her shot at putting things right, she made the right noises about scrapping rental fees etc and then abandoned it all because her frail little brain couldn't cope with anything other than Brexit. Bye bye Theresa..

I've never been a big fan of Labour and / or Corbyn but I do think he's the best chance we have of giving back some hope to our younger generations. The tories just want to screw everyone and then pretend to be all righteous and church going.

I need a new signature... i'm bored of the old one!
St3
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Re: Financial Crash

Im under 40 and i dont really give 2 shits what any party says, like my vote matters i mean look at this eu leave [-Censored-].... we are all given the right to vote in an offical voting system and when we vote leave some party memebers dont agree and want it changed or stopped this clearly shows that no matter what we all think we dont really have any say in [-Censored-]! So i dont give 2 craps.. i work and pay my bills and get by .... i dont give a [-Censored-] about pm`s or the royal family ... its dog eat dog to survive!

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Re: Financial Crash

Don't worry fellas, Mrs Maybe has just said she'll stay in charge forever! Huh

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Re: Financial Crash

Oh thats just brilliant news isn't it.

I wouldn't mind if she actually did something productive but all she seems to talk about is brexit because her frail little mind can't handle more than one issue. How on earth did she fulfill her previous roles?

When she came to power and got rid of George I had high hopes for her and thought she might actually be genuine. When the ban on rental agency fees was announced i felt even more optimism for her. Nothing happened there though did it.

She just seems to do nothing. She keeps harping on about strong and stable yet she's weak and feeble. Don't get me wrong I appreciate a prime minister that can hold her hands up and say "Hey i got it wrong, lets do what YOU folks want instead"... but she doesn't even do that does she. She just quietly changes her plans and hopes the fools of the nation won't detect it.

Mind you.. this is the woman that started her new job with a 6 week holiday...

I need a new signature... i'm bored of the old one!
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Re: Financial Crash


St3 wrote:

Im under 40 and i dont really give 2 shits what any party says, like my vote matters i mean look at this eu leave [-Censored-].... we are all given the right to vote in an offical voting system and when we vote leave some party memebers dont agree and want it changed or stopped this clearly shows that no matter what we all think we dont really have any say in [-Censored-]! So i dont give 2 craps.. i work and pay my bills and get by .... i dont give a [-Censored-] about pm`s or the royal family ... its dog eat dog to survive!


That's true but when has there been a time when it was any different.

I suspect we only got a vote on the EU as most were very certain what the outcome would be except they were wrong bit like TM being certain of a big majority.

Jonpe
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Re: Financial Crash


nozzer wrote:

Don't worry fellas, Mrs Maybe has just said she'll stay in charge forever! Huh


That was scarily like Mrs Thatcher in Paris on 20th November 1990 https://www.youtube.com/watch?v=v_84HM1e7RY ( at 4:25) "... I confirm it is my intention to let my name go forward for the second ballot."  Two days later she resigned.

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Re: Financial Crash

I reckon we're very close to a financial crash in the UK. Very low interest rates has allowed housing prices to go above affordability. The stock market is grossly overpriced against historic markers. Personal car leasing is effectively out of control. The media bleating about Brexit "uncertainty" leads to loss of domestic and foreign investor confidence.

The central bank has effectively lost it's main tool for influencing the economy, namely the Bank Interest rate and sterling is over-valued as a consequence of the money printing process of QE. National Debt is approaching post-war levels and the Government is spending billions more each month than it receives in taxes. Deferred taxation, such as the Student Loans are also increasing public debt.

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