The Credit Crunch

[Scarlet Pimpernell]

...in your line of business and industry?

The car industry has seen a huge fall in new registrations: SEE HERE

But how bad is it in your line of business??

[TheDon]

we have been more busy as the price of scrap etc has droped meaning the pikiey scum wont be getting such a big pay day so more cars will be brought into us as a legitimate company, along with people needing more spares etc has seen profits double over that of previous months.. more abandoned vehicles and more un-insured vehicles also.. tyre sales are also up a fair but as people are buying part worns over new.... plus i can lower buy in prices as people dont have another option... so for me at least... this are looking quite good for the crunch (touches wood)

[omega]

The true extent is not being told to the public. It has been downplayed.

[Mark W]

Slightly but I heard on the radio just about Detroit in the US - Due to the # of reposessions - house prices have plummeted - $250K houses now selling for less than $40K - plus others are being given away for $1 - as the banks just want the bad debt off their books

Hopefully similar will not end up happening here

[omega]

Slightly but I heard on the radio just about Detroit in the US - Due to the # of reposessions - house prices have plummeted - $250K houses now selling for less than $40K - plus others are being given away for $1 - as the banks just want the bad debt off their books

Hopefully similar will not end up happening here

Oh i hope it does because this is the area where this country :tsktsk: up 10yrs ago when house prices rocketed way beyond the stipulated 4% rate.

Plus i am in the market to now buy.

Edited October 6, 2008 by janey
evading profanity filter

[Thommo]

Work in the oil industry so no affect yet.

[DJ Wozza]

In the Bars/Nightclub industry slow steady decline over the last 10 years, but with survival of the fittest, the

strongest have managed to survive. However over the the last 6-8 months has seen that steady slow decline

in business turn into a steep cliff face

I'm seriously looking at other lines of work from this week, many well respected & established (in the industry)

DJ friends are really struggling, as are the Bars/Nightclubs we work in. The public is cutting back on disposable

income spending on a massive level. Bars that would have 400-500 people in them on a Friday Night just a short

period of time like 6 months ago are now getting (crowds :duh:) of 50 people instead.

Something has gotta give :tsktsk: cos Bars & companies that own them are going under.

BTW Anyone know of any free courses to become and Electrician, Driving Instructor etc ?

[WylieCoyote]

NHS is pretty stable so that's cool.

Photography wise I haven't noticed a particular downward trend.

[jsj24uk]

In the Bars/Nightclub industry slow steady decline over the last 10 years, but with survival of the fittest, the

strongest have managed to survive. However over the the last 6-8 months has seen that steady slow decline

in business turn into a steep cliff face

I'm seriously looking at other lines of work from this week, many well respected & established (in the industry)

DJ friends are really struggling, as are the Bars/Nightclubs we work in. The public is cutting back on disposable

income spending on a massive level. Bars that would have 400-500 people in them on a Friday Night just a short

period of time like 6 months ago are now getting (crowds :duh:) of 50 people instead.

Something has gotta give :tsktsk: cos Bars & companies that own them are going under.

BTW Anyone know of any free courses to become and Electrician, Driving Instructor etc ?

I just thought I would let you all know about becoming a driving instructor. JUST DON'T!!!!!!

Every driving school I know of is starting to be hit, and sometimes quite hard, with the present economic downturn. People just havn't got the money anymore to do it. Neither do alot of people have the inclination to drive either. When one friend passes the test, they can drive three or four other round and share the petrol money.

You have probably seen the adverts which run on the discovery channel from a certain driving instructor training organisation about earning £30,000 a year and being able to fit your career around what ever you want to. Nothing could be further from the truth. Most people who can afford to learn to drive will be working full time so your hours will be between six and nine in the morning and five till ten in the evening. You can certainly fit the instructor training around your current job but once qualifying, the hours are very unsociable. Also, you probably will never find the amount of pupils needed to make £30,000 a year. Also, you need to take your running costs out of this figure and of your really frugal, about £15,000 is going to be your anuall take home wage.

The course will be around £3,000 to do and you probably have a 20% chance of actually passing the qualifying exams.

The driving instructor industry has been saturated by people qualifying and there are not enough people wanting to learn to drive out there. Learning to drive is not a young person's priority any more with more and more people going to university. A vast majority of which will be getting jobs in cities such as London where there is no need for a car.

Besides, working alongside the Driving Standards Agency which is run by a lady by the name of Rosemary Thew who has no other driving qualifications other than the basic standard driving licence who is constantly making bad and quite damaging decisions about this industry, I strongly recomend you look elsewhere for a job.

People treat you so bad when your taching people to drive. I've had one driving school car compleatly written off by some burk hitting me up the back full pelt on a roundabout, all of my driving school cars have been hit by other motorists hitting me as I will never let my pupils hit anything, you get abused, shouted at, screamed at, spat at, driven at etc. Basically your on the bottom rung of a ladder which you will never climb.

Stick with being an electricion or plumber but being a driving instructor is somthing which I now am starting to regret. BIG TIME.

[coolrides]

Work in the oil industry so no affect yet.

me too fingers crossed we keep needing to pump oil out of the ground but could be knock on effect if people start using less oil, petrol trying to save pennies

[dave1]

Slightly but I heard on the radio just about Detroit in the US - Due to the # of reposessions - house prices have plummeted - $250K houses now selling for less than $40K - plus others are being given away for $1 - as the banks just want the bad debt off their books

Hopefully similar will not end up happening here

I think you will find that the housing market is not going down much more. If they do drop to silly lows then I for one would be happy, £250k houses for £40k each....time to buy 3 or 4 and hold onto them.

[Parthiban]

Slightly but I heard on the radio just about Detroit in the US - Due to the # of reposessions - house prices have plummeted - $250K houses now selling for less than $40K - plus others are being given away for $1 - as the banks just want the bad debt off their books

Hopefully similar will not end up happening here

I think you will find that the housing market is not going down much more. If they do drop to silly lows then I for one would be happy, £250k houses for £40k each....time to buy 3 or 4 and hold onto them.

Yep the stuff in Detroit is amazing, wish I had the time to go over there and have a look to see what the areas they're in are like.........a lot of them look like pretty nice houses so can't see the downside to buying a few of them............

[LexusIS200Sam]

i work in the motor trade, this time last year we where fully stacked out with work.. but for the past month its slowly died into no work at all... ive had days showing up at work and standing around as theres no work in. The main downside is we work on a bonus scheme... so no work...no money. Needs to pick up soon or i can see my workplace going out the window and us out of jobs.

[Dave-Ellen]

My day job is OK (Local Government IT consultancy) but market is shrinking with Councils trying to knock you down on daily rate......

[legendswraith]

Aero industry is plummeting in the civil side cost of avtur and airport fees, boeing and airbus getting it soooooooooo wrong on their super liners and generally people cutting back on their spending, less holidays less flights less hours on the ECU (engine change unit) less overhauling.

However my side which is military is doing great we are looking at expansion due to a few things.

This is a 10 year cycle though and aero industry see it alot more than anyone else so we can kind of predict the downturns . Don't know what it is but there always seems to be something every decade that does for the economy, nevertheless people should really have seen this one coming and all the banks, goverments and estate agents have been hugely irresponsible in letting this occur.

Personally i think there will be a 33-35% reduction in the house prices, i may get sneered at but then i predicted the credit crunch and got told it would never happen and i should go buy a house. In a way i want to be smug about it because i stand to gain alot should it really bottom out, but i have friends who bought houses at the peak and i can see them struggling which isn't so good. Think the best thing to do at the minute is hang in and take solace in the fact the wheel will turn again

[omega]

This is a 10 year cycle though and aero industry see it alot more than anyone else so we can kind of predict the downturns . Don't know what it is but there always seems to be something every decade that does for the economy, nevertheless people should really have seen this one coming and all the banks, goverments and estate agents have been hugely irresponsible in letting this occur.

Personally i think there will be a 33-35% reduction in the house prices, i may get sneered at but then i predicted the credit crunch and got told it would never happen and i should go buy a house. In a way i want to be smug about it because i stand to gain alot should it really bottom out, but i have friends who bought houses at the peak and i can see them struggling which isn't so good. Think the best thing to do at the minute is hang in and take solace in the fact the wheel will turn again

In at least 18-24mnths (thats being liberal) perhaps even then the overall impact will be felt for approx 5-10yrs.

A lot of ppl will have to start learning janitorial and lavatorial skills to make ends meet.

Some interesting figures:

heres a list of banks with the worst CDS(credit default swap) ratings in April, next to them is what has happened to them recently...

1. Kaupthing 833.3- Are safe at the moment, recently had some injection from quatari investors but CDS ratings were quoted at 1500(2x that of lehmenn brothers before they went)

2. Kazkommerts 766.7 -Kazakhstan has set up a 6bn distressed asset fund for the countries banks, CDS rating is now at 1400-1500

3. Glitnir Bank 757.5 -Nationalised

4. IKB 612.4- 8bn Govt bailout

5. Landsbanki 604.6- Company assets sold to Straumur

6. Banca Italease 397.0

7. VTB Bank 332.5- Share value has lost 80%, Russian govt has stepped in to support the shares.

8. Anglo Irish Bank 322.7 - Govt has guarenteed all deposits in irsih banks (valued at £500bn)

9. HBOS 236.7 -Merged with Lloyds

10. Sberbank 221.3- will supposedly sign a 1.3bn loan today to bail themselves out

11. West LB 212.5- Nationalised

12. UBS 209.0- Have announced major restructuring to cut costs, just today they have said 1900 people will lose their jobs

13. Natixis 205.0- shares have plummeted over 70% this year.

14. Bank of Ireland 202.5- See anglo irish bank, irish govt have guarenteed all deposits

15. Allied Irish Banks 195.8

16. Dexia 195.0- Nationalised

Notice anything in that list?

[Mike_B]

This is a 10 year cycle though and aero industry see it alot more than anyone else so we can kind of predict the downturns . Don't know what it is but there always seems to be something every decade that does for the economy, nevertheless people should really have seen this one coming and all the banks, goverments and estate agents have been hugely irresponsible in letting this occur.

Personally i think there will be a 33-35% reduction in the house prices, i may get sneered at but then i predicted the credit crunch and got told it would never happen and i should go buy a house. In a way i want to be smug about it because i stand to gain alot should it really bottom out, but i have friends who bought houses at the peak and i can see them struggling which isn't so good. Think the best thing to do at the minute is hang in and take solace in the fact the wheel will turn again

Well I won't be sneering at you for having those views - I think you're spot on. Two things drive house prices - demand, and available credit. Strong demand and too cheap/badly regulated credit forced them far higher than they should ever have been.

Demand is dropping for two reasons; firstly large numbers of temporary migrants going home (eg Polish workers) because of better wages back home, and secondly because a lot of the demand was people buying second/third properties as an investment rather than somewhere to live.

Available credit is dropping through the floor because mortgages are much less widely available; with property prices so high, decent deposits are much harder to save up for, and with the reduction in 90%+ LTV mortgages there will be a crash of the first time buyers who fuel the whole market from the bottom up. Suddenly they need to save £20k instead of £5k, and that takes time to do.

Unfortunately what has happened over the last ten years, and the last five or six especially, is that people have been using cheap credit to live way beyond their means, and now that the interest rates have increased on all those discount mortgages have shot up, are suddenly feeling the pinch big time which will have a knock-on effect on the wider economy. Once that starts to drop, job losses will rise, and the situation becomes self-perpetuating with more unpaid mortgages and credit card bills etc etc.

It's only partly true to blame things on the US sub-prime situation, the simple fact is that people took on far, far, too much debt that they couldn't really afford, ignoring the warnings on their mortgage applications that say things like 'consider whether you will be able to pay this back if your circumstances change or interest rates rise' - instead, they took affordability to mean the cost of 'servicing debt' rather than 'repaying debt', thus leaving themselves open to real problems when the interest rates rose.

Things will get better, but not any time soon. The longer the boom the bigger the bust, and this boom has been going since 1992 when we came out the last recession.

[Parthiban]

Totally agree with everything above, and the 30% mark is what I expect the house price drop to be around - that didn't mean you couldn't buy a house, I bought a place 4 years ago and in the summer was valued to be worth 75% more than what I paid for it..........obviously it isn't really anymore but even if they fall 30% most people will be safe as long as they can afford to pay their mortgages. You are absolutely right though, for those that can afford the payments, there isn't really a problem as things will turn around, but there are so many that are right on the brink of financial ruin, so a shift in interest rates, etc could cause a massive problem.

As Mike says, for some reason people bought houses using the maximum they could afford as the interest payment.........and brokers let them, ok not as bad as the US (at least over here people are paying the interest due) but it's still not great.

I've got to say although I expected there would be some form of decline but never such a catastrophic blow up!

The worst part is it's so hard to predict what's going on with the banks, so where are you supposed to put your money!

[dave1]

Well I won't be sneering at you for having those views - I think you're spot on. Two things drive house prices - demand, and available credit. Strong demand and too cheap/badly regulated credit forced them far higher than they should ever have been.

Unfortunately what has happened over the last ten years, and the last five or six especially, is that people have been using cheap credit to live way beyond their means, and now that the interest rates have increased on all those discount mortgages have shot up, are suddenly feeling the pinch big time which will have a knock-on effect on the wider economy. Once that starts to drop, job losses will rise, and the situation becomes self-perpetuating with more unpaid mortgages and credit card bills etc etc.

It's only partly true to blame things on the US sub-prime situation, the simple fact is that people took on far, far, too much debt that they couldn't really afford, ignoring the warnings on their mortgage applications that say things like 'consider whether you will be able to pay this back if your circumstances change or interest rates rise' - instead, they took affordability to mean the cost of 'servicing debt' rather than 'repaying debt', thus leaving themselves open to real problems when the interest rates rose.

Things will get better, but not any time soon. The longer the boom the bigger the bust, and this boom has been going since 1992 when we came out the last recession.

I tend to agree with this point of view BUT mortgage providers were extremely irresponsible with some of the products they offered. 125% mortgages,5.5 x salary were typical examples of providers being irresponsible and actually helping to fuel the unsustainable rise in property prices by making finance all too easy to obtain.

I am just thankful that for some years I repaid double my specified repayments and now don't have to worry about interest rates etc.

[dave1]

The worst part is it's so hard to predict what's going on with the banks, so where are you supposed to put your money!

Just move it around so that you have no more than £50k with any one bank etc. bearing in mind that many banks/building societies are linked. We have joint accounts so can have £100k with any bank etc. Not earning a lot but prefer 5% net to risk of losing it.

[Parthiban]

Just move it around so that you have no more than £50k with any one bank etc. bearing in mind that many banks/building societies are linked. We have joint accounts so can have £100k with any bank etc. Not earning a lot but prefer 5% net to risk of losing it.

Yeah we're not worried about the interest anymore, just keeping the money safe! We had a fairly large amount at Halifax that we had to remove sharpish when they ended..........

Can you have a 3 way joint account raising the limit to £150k or is it just for couples?

[dave1]

Not sure on 3 way. We have moved money so that 3 accounts are safe. Found it so easy to just open accounts and transfer funds but kept to £80k rather than £100k to allow for interest accumulating over next 3 or 4 years. Just needed to keep some immediately accessible in our original accounts as well!

[Parthiban]

Not sure on 3 way. We have moved money so that 3 accounts are safe. Found it so easy to just open accounts and transfer funds but kept to £80k rather than £100k to allow for interest accumulating over next 3 or 4 years.

Yep will have to do the same, the hassle of opening 2 or 3 accounts is totally worth at least knowing the money is safe :)

[Mike_B]

The £50k thing is all very well, but if more than one of the big banks go under, there is no way there will be anywhere near enough money to pay everyone up to their £50k limit. The government has spent every last penny it had from the good times, and will only be able to afford it by either borrowing tens of billions at the current high rates in the global money market (and require swinging tax rises to pay for it), or otherwise by just printing money which will cause a huge spike in inflation (and thus depressing the value of everyone elses money at the same time).

Good old Gordy - 'an end to boom and bust' he said, back in '97... arrogant berk!

[maneesh]

Slightly but I heard on the radio just about Detroit in the US - Due to the # of reposessions - house prices have plummeted - $250K houses now selling for less than $40K - plus others are being given away for $1 - as the banks just want the bad debt off their books

Hopefully similar will not end up happening here

I think you will find that the housing market is not going down much more. If they do drop to silly lows then I for one would be happy, £250k houses for £40k each....time to buy 3 or 4 and hold onto them.

Yep the stuff in Detroit is amazing, wish I had the time to go over there and have a look to see what the areas they're in are like.........a lot of them look like pretty nice houses so can't see the downside to buying a few of them............

Not really amazing at all. Now America's poorest city, where of the 850,000 residents, 80% are black. White flight has hit the city for the past 40 years, heading for the suburbs. In fact, 1,000 people a week are leaving Detroit for the suburbs. Downtown developments have been frozen due to lack of funding. The big houses selling for less than 40k are in nice neighbourhoods (such as Boston Edison), but you walk two blocks in any direction and you are surrounded by poverty, and crazy crime levels. Detroit's mayor got jailed for perjury. You'd have to be pretty brave to invest your cash in a town that has basically been abandoned.