Is reccession in America about to start?
 

Hi all :)

I've been watching this for quiet a few months now in America about there economy.
They've been warned on numerous occasions about a looming recession and today everything has gone to pot :(
There's a guy in the U.S.A called Cramer some of you might of heard about him?
He's been warning of this for well over 6 months now.
Scary thought's indeed.
Don't forget once America goers into recession we won't be far from it we will all be hit hard money wise:(
This Bush guy needs to be removed seriously the trouble he's caused is mesmerising to say the least.Cramer here's his clip by the way from this morning.
http://www.cnbc.com/id/15840232?video=625518469
Warned everyone about it nobody listened and everything he's said has happened.
He said the dollar in the next few days if it doesn't get no fix will lose 2 maybe 3000 points.
That will spark a world resesion in certain country's 'im not sure about the uk but it doesn't sound very good at all :(
Bush and his government needs to be removed and quickly.
Madness.

Re: Is reccession in America about to start?
 

I think it's already happening, all this sub-prime nonsense is coming home to roost both in the US and unfortunately for us here.

Re: Is reccession in America about to start?
 

Is America full of recessives?


Probably.



Especially at the top....


The market tumbling has begun... as the biggest debtor in the world is the good old US of A...

Re: Is reccession in America about to start?
 

So what happens once we are in resesion?
Call me a mong if you like but I'm hardly an "ecconemist"

Re: Is reccession in America about to start?
 

interest rates go up. If you cant afford to repay your house gets taken away.

because of the interest rate increases people spend less in shops, so shop owners need less staff so make redundancies. That makes people able to spend even less making the problem worse.

Is a very simplistic overview

Re: Is reccession in America about to start?
 

In a recession demand for goods and services falls.
In retail because people want to save more or because other costs have gone up giving less disposable income, these costs could be their mortgage payment because of rising interest rates or could be petrol, energy costs (electricity and gas), commuting etc. Also as companies realise this is occurring salary increases are likely to be low or none again reducing the available disposible income.

At a company level recession means there are less people buying the goods or services the company makes leading to cutbacks in workforce and more significantly a reduction in capital expenditure for the future either in research and development or buying new machinery or general expansion, again leading to a reduction in purchasing from their suppliers.

This keeps going through the entire purchasing chain creating a vicious circle that is difficult to then escape from.

Re: Is reccession in America about to start?
 

If it leads to a collapse in the housing market and brings prices down to something vaguely resembling reality then it might not be all bad for some.

Re: Is reccession in America about to start?
 

you bet it is :(

Re: Is reccession in America about to start?
 

If Iran secure continue with the plan for soem arab states to trade oil in euros rather than dollars that would definately tip the scale. Interesting to see what the US do to prevent that.

Re: Is reccession in America about to start?
 

Apart from all the house owners who have recently purchased their property and who will face losing everything they own. Apart from that, the job losses, increased poverty etc .... not all bad obviously.

Re: Is reccession in America about to start?
 

The problem a recession leads to in housing is not as either of you put.
Negative equity in a property is only a problem if you need to move. Negative equity will prevent that move until the market improves back to the level you bought at.
This means a lack of mobility. Say you lose your job in Bristol and find a new one in Newcastle, however you can't easily accept it as this will mean selling up in Bristol to move to Newcastle and that has the acompyning headache of the negative equity that you cannot afford to realise.

High interest rates are not a requirement for recession or a cause or effect. In fact in recession interest rates are often found to be lower as this discourages spending and makes investment more affordable for companies and borrowing cheaper for governments.

Interest rates are a very blunt tool for managing an economy though, it takes a good while for a change in interest rates to filter through the conciousness of the population and change their habits.

Re: Is reccession in America about to start?
 

What about us people who have no chance of getting on the property ladder while the currently house prices are as they are? Isn't it about time we had our turn at property ownership? I sympathise with the people you describe but there are plenty of others who are currently forced to pay over-the-odds in rent would welcome a downward change in housing prices.

You need to look at the bigger picture Paul.

Re: Is reccession in America about to start?
 

A fall in house prices will not increase availibilty as it will mean many are unable to move due to negative equity, this could mean more buyers chasing the houses that are available sustaining prices. The moving pieces in such a puzzle are not so black and white (to mix metaphores)

Re: Is reccession in America about to start?
 

cruise misiles ....high level bombing...cut them off from the rest of the world. sound familiar

Re: Is reccession in America about to start?
 

Well to be fair I did say it might not be so bad *for some*. As you rightly say some might be stuck in negative equity but the scenario I've been mentioning is of those in my situation - currently renting as house prices are just too high. Should prices fall to within my price range I'll be in an ideal position to buy as I'm not part of any chain. For years I've been priced out of the market - if this leads to me being given a chance then it's not something I'd consider to be all bad.

Re: Is reccession in America about to start?
 

What you need is correction, not recession. A housing market correction is highly likely due to the credit crunch that is currently occurring as affordability of mortgages gets scrutinised and lending requirements get tightened.
I'm in a similar situation but the NY and surrounding area seems to currently be very resilient to the mess over here.

Re: Is reccession in America about to start?
 

Aye ok, that'll do then :D

Re: Is reccession in America about to start?
 

It's started according to SKY news, the dollar on the Asian market has slumped to an all time low, it's even slumped below the 9/11 level. My boss who is well up on the money markets said this reccession is going to be a bad one.

Re: Is reccession in America about to start?
 

It does not look good: Hong Kong -9%, FTSE -4% @8:07...is today a holiday in Germany?

FTSE just turned positive! @9:01!

Re: Is reccession in America about to start?
 

Nein. Last one was Epiphany, next one is Good Friday (21st March). People forget how religious Germany is - you are asked to state your religion to decide where some of your taxes goes - either Catholic or Evangelical. Not sure what the large Turkish community do, fill in another form I suspect, being Germany. I'd be tempted to put 'Jedi' and see where they sent the money ('Herr Lucas? Ve haf a cheque for you').

The US economy is 'phenomenal' according to Fox News, though.

Years? I'd suggest that if prices fell low enough for you to buy a *lot* of people would be in negative equity. You'd have to have a correction going back to roughly when you could last have bought with your current income, which is presumably tens of percent.

Recessions are funny things - most companies survive them and not many people are affected, but those who are are affected very badly. Also, stock markets aren't remotely a good way of measuring recession likelihood. So many things affect them other than forecast economic growth - mergers, confidence, dividends, profit forecasts, interest rates (people moving money in and out of shares into other instruments, exchange rates)...

Re: Is reccession in America about to start?
 

Unfortunately we left capitalism and entered bananaism ('Labour era of boom 'n' Bust') a few years ago or so, so yes the correction in many markets globally may well be quite a nice downhill slide. Savy economists were laughed at then but there we go, at the end of the day everyone knew it has to go down sometime and the longer its propped up the bigger it will drop in the end. Tomorrow will bring a new boom that will end in more bananaism because we cannot learn from past mistakes and our markets as a whole rely on profiting from the misery of some.

Risk avoidance strategy: 'Dont buy during a high'.

Re: Is reccession in America about to start?
 

Loaners can't loan if savers don't save... usually.

But then the loan companies started to loan more and more off each other... buying debt.... and once that debt turned bad (when people who had loaned beyond their financial means were unable to make repayments) the stuff hit the fan.

Voila Northern Rock.

The banks are taking too big a cut of the profits and not rewarding the savers enough, so their cash supply is drying up.

Re: Is reccession in America about to start?
 

Thanks, my Dax index was not updating...it works now...

Re: Is reccession in America about to start?
 

The US Federal Reserve has cut interest rates a colossal 0.75%, biggest cut since 1982. Seriously big. One problem with this is the Monty Python Messiah Theory - if there's nothing to worry about ('I'm not the Messiah') why are you panic cutting interest rates ('Only the true Messiah denies his divinity')? Could have the opposite effect, but it will also drop the dollar right in the doo-dah, and thus reduce relative oil prices. On that note, it increases the incentive for oil nations to move to the nice, stable Euro, where you only have to deal with Sarkozy'n'Merkel, not the fag-end of the Bush disaster.

Re: Is reccession in America about to start?
 

Well, the Dow Jones futures were pointing to a 500 points loss, he had no choise...

So far the actual loss is 135 points, NASDAQ -3%, ftse positive, dax and cac negative.

Disappointing....

Re: Is reccession in America about to start?
 

Not quite how Northern Rock panned out.
Northern rock had savers and it had lending. There was a gap between these that it funded with short term borrowing, like you or I using an overdraft, thing was they had a GBP24Bn Overdraft with other banks.

The other banks decided they wanted that money back but NR could not go to it's mortgage customers and ask for it back so it ended up in the pickle it is in.

Re: Is reccession in America about to start?
 

He had no *good* choice. The Bush adminstration are good at leaving themselves with no good choice, of course. Anyway:

Re: Is reccession in America about to start?
 

I suggest we all panic large, led of course by the trusty media - that'll help the situation.... :rolleyes:

Re: Is reccession in America about to start?
 

Why would anyone want to panic, no one has allowed the banks financial and mortgage advisors to talk them into placing themselves into the position where by their secured debts and any associated payment protections are costing them more than 1/4 of there net income while being on or below the national average wage have they ?

If so then I suspect the FSA may be getting a lot more calls, the potential for similar suits to the ednowment ones maybe in order, meaning banks could end up footing some seriously large bills for their folly, which they would then of course have to pass those costs on to everyone else to remain profitable, meanwhile the tax payeres also end up footing the bill for all the associated legal fees and in which case we may as well all spend the last of our moolah on the renting of a bulldozer and then tell the banks to take the house back. :D

One does have to wonder as overall crime wave trends tend to follow in similar oposite lines to economic state trends of which does of course stand to reason, whats going to happen if this is a more serious downturn and the prisons are by all accounts bursting at the seams now that they are having to let out some who it would be prefered to not allow premature ejaculation from being behind bars ?

Re: Is reccession in America about to start?
 

Remarkable insight and perfectly true - an leaked Home Office report said much the same thing, no matter how tough you are on crime the figures follow the economy. Which rather begs the question as to how come we came to lock so many people up that the prisons budget eats up the money that should be providing court and probation services and do the project prisoner numbers figure include an allowance for recession crime wave (no, I've looked. The DfT's projections for transport costs, which ruled out railway electrification, projected an oil price of $20 a barrel...).

In stable-door-horse-bolted news, Gordon Brown is discovering the wonders of effective bank regulation with his Euro chums, having spent years (prompted by his, er, banking mates) telling them about the wonders of laissez-faire deregulation and a light touch. Northern Rock is a hefty dose of clue, really.

Re: Is reccession in America about to start?
 

'railway electrification'

Is that a new term for 'death row'. :D

Re: Is reccession in America about to start?
 

Can you, hand on heart, say that if they took off the myriad warning signs about 25kV AC electric wires, the kind of person who would go 'that's all right then' and go for a swing on them would be missed? Death Row for muppets, perhaps, but evolution abhors a muppet.

Re: Is reccession in America about to start?
 

:confused: They will only lose it if they stop making the payments. The collapse in price doesnt stop them making the payments. Most people that move house these days have made profits on the previous houses so its only a pricing correction.

The only people that its a concern for are new buyers who default

---------- Post added at 12:32 ---------- Previous post was at 12:29 ----------

I was 10 years younger than you are now when i got on to the property ladder. Was a hard decision (NOT), did i want the millstone or did i want to rent for life.

Re: Is reccession in America about to start?
 

Default risk is higher for new buyers, especially those who are on mortgages with introductory rates. If wages stagenate and borrowing facilites are tightened then moving it to a good rate in x years time will be tougher and at that point the default risk may increase significantly. This is the biggest problem in the US, people buying 4000 ft homes because they could afford the initial repayments and being advised they could remortgage (refinance) when the introductory part was up only to find now a big lack of refinancing options.Right now is the first time I have not had a mortgage (because I don't own any property, not because I am mortgage free) since i was 21. I'm kinda feeling my timing was not far from perfect.

[MERGED] World Economy
 

http://news.bbc.co.uk/2/hi/business/7208316.stm

Anyone want to break down how this might actually work, for me? Having a little problem fully understanding this :S

Re: Is reccession in America about to start?
 

According to what I've just heard on the BBC financial news it seems that the timing and magnitude of the huge US rate cut could well have been in large part due to the serious fallout from the Soc Gen debacle. It appears the French and European authorities didn't think it at all necessary to let the Federal Reserve know about the problem and the Fed may have panicked just a tad....

Re: [MERGED] World Economy
 

If public spending increases, profits go up, businesses grow, employment goes up. Happy Economy for all!

Thats how I understand it