johnh009

Countries that rely on natural resources have stifled inovation. When commodity prices drop they go into severe recessions. Countries such as Switzerland and Luxemburg that rely on finance/banking, high technology, research and development, etc, have much more stable economies.

Look at Australia, even Rolf Harris had to get out.

Tableland

LOL. Not sure I agree with your analysis 100%, because the Australias and Canadas of this world can create finance industries, but Switzerland can't start exporting gold and uranium. And the reason Britain is in such a mess right now is because its whole modus vivendi is financial speculation - it has nowhere to go when the credit tap turns off.

sinope

Tableland - there was an article in the Saturday Torygraphs business section about the massive debts British households are running up. I can't find the article online, but here are some choice quotes for you:

'Families in the UK now owe a record 173% of their incomes in debts...the ratio of debt to income is higher than any other country in the G7 leading industrialised economies...'

'...the debt burden is even higher than Japan's when it peaked in 1990, before more than a decade of deflation.'

Michael Saunders of Citigroup: 'Not only are we the highest in the G7, we are the highest a G7 country has ever been.'

Jonathan Loynes of Capital Economics: 'We now expect GDP growth to slow to just 0.5% in 2009, with a real chance of a technical recession.'

I'm sure you'll understand the implications better than me.

Tableland

Hi sinope, hope all is well. I read it, thanks anyway! Staggering figures, I agree. The highest indebtedness ever recorded is in the UK right now, and personal household debt there is astronomical. We know it has to fall down because if it doesn't then it stands up, and that means people can live on credit for ever without ever paying it back. Well, we know that is impossible, so it has to end, and that ending looks like it is getting close. Technical recession refers to two quarters of decline in GDP, and it seems the chances of this happening in Britain are good. The Japan analogy is worrying as well. They still have not recovered from their last crash.

This is an interesting article on the issue of recession/depression etc. You might find it of interest, but remember it's just one man's opinion! It's written by Jack Rasmus who has published books on politics and economics.

http://www.zcommunications.org/zmag/viewArticle/17793

sinope

Thanks for the link, I'll read the article when I get the chance (my daughter is desperate to go to the park so I'm on borrowed time right now). The debt thing is scary. I don't really know what happens - mass bankcruptcies? Then all the debt is written off, but someone has to absorb it, so it would be the credit card companies and banks which presumably would make borrowing even more expensive and must have an effect on the economy as a whole?

I'm guessing that the 173% is down to people taking out 5x mortagages at the top of the market? Though the 173% must be an average across the nation, so some people must owe significantly more than this. How on earth do these people sleep at night - it must be hell for them.

minimeeze

I confess to not having read all of this thread, but...
We have just had an estate agent round as it's time for us to sell up. He was here only 6 weeks ago when he valued the place at £230K (but it wasn't the right time to sell then). Today, he said we'd struggle to get £220K for it I can't believe that £10K could be wiped off the value of our home in 6 weeks. Fortunately, we have quite good equity in our home and it would have to drop drastically in value for us to be in negative equity. The estate agent was saying that a few people who bought in the last two years are really struggling to actually get anywhere near what they paid for their homes.

DebbieK

Minimeeze, that sounds about what the estate agents everywhere seem to be saying. I can't help but feel that they are generating part of the problem by scare mongering. I know the market is slow, but hey, there has to be some reality surely!

Good luck with your house sale... we are not even getting people to view, and have been told there is no point in reducing further, the house is already on the market for less than its value, but there are simply no people wanting to view anything that is not a three bedroomed terrace at the moment.. they are too scared to commit in case they lose money before they even move in!

One of the guys on a thread here was saying that they had a buyer and on the day of exchange and completion (the same day) the buyers turned round and said they would only complete if the price was reduced a further £12,000!!! I would not be able to sleep nights if I did that to somebody! Maybe I am a sucker, but would prefer to think I am just honest and honourable.

Tableland

You are lucky if you have equity as you can undercut local competitor houses on the market and make the sale. The way I see it is that Estate Agents are only ever going to talk up the market, because it's in their interests to do so, and when they start talking negatively about it you know something's up. I was very interested to read your two quotes that were only six weeks apart. I guess this shows just how much confidence has slipped in the last month or so. Also, remember Nationwide bring out their report tomorrow. This should have been out last week but for some reason they delayed it.

CarolineW

[QUOTE=Tableland;6509411]Australian house prices are IMO the most over-valued in the English-speaking world and in dire need of a correction. /QUOTE]

I think you will find Ireland will take some beating!

Tableland

[QUOTE=CarolineW;6518316] Thanks, I hadn't looked at Dublin. I just looked it up and they say it is "severely unaffordable" with a median multiple of 5.7, which is pretty bad........