to think the current economic crisis is far from over

[Litchick]

I know that the Bank of England announced we were back in growth, but when I look around me things still seem pretty dire.

Two shops in my local town have shut down in the last month.
A friend recently closed her internet business.
The industires I know most about are in melt down. Publishers are ridding themselves of staff and taking on very few debut authors. DH tells me the city is dead and the start of 2010 has been the worst he can remember.

Do we really think there's going to be a turn around soon? Or are we in for a long hard slog?

Sorry, our parents! A 'y' crept in there!

It's so nice to be able to come on MN and be honest about the economic situation. Everyone at work is plastering on a smile and talking bravely about the amount of work coming in - which in reality is much lower than it has been in my entire career. And the work coming in, such as it is, is in restructuring (companies in serious shit) and tax (companies in serious shit) and employment (more companies in serious shit).

We've just had another round of redundancies announced last week - all pretty grim stuff.

'abride, not that many people have parents who own their own houses'

Yes, but that's not the entire point, it's not really all about individual families. It's about a substantial number of people in their seventies and eighties hanging on to their houses because they are fit enough to continue to enjoy them. And why shouldn't they?

Round here it's almost impossible to buy a family-sized house, even if you could afford one. And there are lots of elderly people living alone or as couples in houses that were designed for families with two children. And again, why shouldn't these elderly folk enjoy their homes: they've been through wars, etc? But it does mean that a lot of property is 'stuck' at the top, with a trickle-down effect all the way down the property market, right down to starter flats. There was an article about it somewhere, I don't seem to be able to find it now.

I just lost a freelance client I've had for 14 years. THey had to merge with another firm to survive and don't need me any more. I

i have had a company go into liquidation last week, and another one with a winding-up petition this week, and i expect another one to go bust soon also.

so, not great at the moment. It's sad, even though i know those people will probably go forth, start new busnesses, and be up and running again when things get better (history shows that this is generally what happens)

abride nobody I guess wants to turf old people out of their family homes (well I do sort of), but the natural law of the universe is that their pensions and fixed incomes will mean they downsize eventually or their houses rightly get sold to pay for their healthcare costs.
Either way the next generation shouldn't be forced to pay ridiculous prices for wanting a home to bring their families up in.
My parents bought a 4 bed detached on one persons income as an insurance salesman, oh for those days to return.

All the UK has done is transfer the private sector debt to an already, thanks to Gordon Brown, over leveraged public sector debt.

A hung parliament or Labour getting in again will ensure the uber public sector debt will not be paid down causing a politically chosen inflationary environment with a sterling crisis, possibly collapsing to almost parity with the dollar. This would cause interest rates to soar thus forcing the govt to pay tens of billions more than the 60bn it already pays in interest payments before it has a chance to start paying down its debt.

The stock market has performed incredibly well until one realises the bailed out banks which now know they are too large to fail have speculated like crazy with every penny of the tax payers bail outs and therefore tax payers taking on their debt.

I know, MillyMM. We couldn't afford to buy the house I grew up in. My father could afford it on one not enormous salary in 1966.

Excuse me: wrong country. I got it mixed up with the squatter rights where you acquire the property through long term residency.

That means then there is very little to militate against longer leases and the market would naturally adjust if the demand was there.

I just can't see how more regulation would help at all.

We could be moving into interesting territory here. Twenty years ago houses could be bought on one salary. Also twenty years ago the stay at home mother (usually) would not have been on the unemployment register.

This is another of my thoughts: I dearly want to go back to work. But while we are managing pretty OK, I don't want to take a job from a no income household to make ours a double income household.

I'm glad I'm living in Scotland. The house prices are much more sensible here. eg my 25 yo friend and her partner just bought their first home last year for £90k. It's a 3 bed end terrace 15 miles from the city.
I don't know how people in England exp London manage. I know there is a London weighting with salaries but it's usually just a few thousand, not nearly enough to bridge the gap.

I think the poster who said about the glut of old people in big houses is the key to things readjusting in the future. This equity will be released eventually and will bring a huge economic boost. Don't know how long it will take, though, maybe 12-20 yrs?

i don't think we need to look on the past as having been easier - buying a house might have been on a lower income:salary ratio but it was not more readily afforable necessarily (my folks first mortgage was at 8%) - getting a mortgage at all was difficult for many types of people (self employed, any previous bad debt, etc etc) and people used to spend a higher %age of their income on basics such as food

in fact i think it is easier now, but what the most dificult thing is has changed....

"getting a mortgage at all was difficult for many types of people (self employed, any previous bad debt, etc etc)"

And that's a bad thing because ?

We now have cheaper food but at what price, I hope we return to the days where Tesco's is gone and you know your food didn't fly for 24 hours before it hit your fridge.

its a bad thing because, someone with a previous CCJ like my husband, would have been eternally prevented from ever getting a house, even when they were a grown up respectable accountant....now bad debt plays against you if it is recent, but not forever.

and to imply that self-employed people necessarily have a less reliable income than employed people is blardy ridiculous!

i think many people forget that the economic crisis was not caused by bad mortgage debt in this country, it was bad mortgage debt in the states....

the price of food has been lowered by many things..efficiency savings being foremost among them. you can prety sure the vast majority of food you see in a supermarket has not travelled by plane at any stage - that's one hell of an expensive way to shift freight!

our mortgage is just about 2.5 times our joint salary, which I guess isn't too bad. We couldn't afford this place on just one wage though. Am dreading interest rates going up, although we do pay a higher fixed rate still atm - whereas our friends who are on trackers all pay less. Our mortgage product ends this summer, I wonder if the rates will already have gone up by then? Am not even sure what this house is worth anymore - not many round here are selling. It certainly isn't worth more than we paid for it (5 years ago, we did get quite a bit knocked off the original asking price)

In answer to the OP (not read whole thread), I think we're in for the hard slog. There will be spending cuts and rate rises. It'll take years to turn around, imo.

Quattrocentro wrote
"It's so nice to be able to come on MN and be honest about the economic situation."

Hmm 144 posts about this since last wednesday would suggest many MN'ers are unaware or denial about how utterly dire the situation is in the economy. I mean a thread about being offended by by advert has had 200 odd posts in one day. Maybe many people cannot bear to face the horrible reality. People in my family who have a lot to loose are certainly in denial.

DP and I are not. WE have both become avid lurkers on housepricecrash, wincing with each nail going in the coffin. We are battening down the hatches. We will shorly move from a 3 bed rented property into my 2 bed property, I bought it 10 years ago and have a "comfortable" amount of equity. This will reduce our accommodation costs. I am selling one of the cars. We will reign in our already tight spending. We will use the 2 bed property to ride through the coming storm. Even if interest rates rose to 15 we would be able to cope.

Alouiseg wrote
"A hung parliament or Labour getting in again will ensure the uber public sector debt will not be paid down causing a politically chosen inflationary environment with a sterling crisis, possibly collapsing to almost parity with the dollar. This would cause interest rates to soar..."
Precisely...
the currency speculators are already circling our dead in the water currency. I fear things will turn very ugly indeed maybe even before the election, as none of the above inspire confidence in the markets.

Bravo ElenorRigby!

The 8% thing is still not getting through is it? 8% of 50k does not equal 5% of 200k.

Food is on the up chaps and anyone who thinks otherwise is in for a rude awakening!

I was talking to my parents earlier about when they bought houses, as they were arguing that things were just as hard, if not harder when they were first married 30 idd yrs ago. The loan to salary ratio was the same, but interest rates were 12-15% on that mortgage.

I did point out that while things may have been very, very hard for them when starting out they bought our family home (beautiful house, seafront etc) for £74k. When they sold just over 10 yrs later they sold for £370k...that sort of capital growth just won't be seen again. They bought the home they have now retired in for £250k cash back in 2000, and when it was valued in 2008 it was up to £740k, now at around £650k. (Very nice area on Isle of Wight where prices have boomed for this kind of house so quite unusual.) I can't see that ever happening to DH and I.

Riven- I meant to type esp (especially) not exp London, sorry for the typo.

ElenorRigby- I think the reason some people aren't so worried about the economy is that there is a huge chunk of the population who have always been broke, haven't benefitted from the noughties boom, and are in the same dire financial situation they have always been in. eg students, people on benefits, the people who are low paid work and are/were never going to be homeowners.

MrsC2010- I think you are ultimatly going to be better off than your parents. Care is expensive but it's not going to cost £650k. Therefore you will be left with a hefty inheritance to use as a deposit. A priviledge I am assuming your parents didn't have.

Hmm, maybe. Hadn't thought about it like that. I don't feel any resentment towards them for the property rises etc (I hope my post didn't sound like that), yes they have had some luck by buying well, but then they worked very hard and stretched themselves when they first bought their houses...£74k was a lot of money back then! And you're right, with my rgandparents still around there were no inheritances, my dad went to sea at 16 and started earning hefty sums as a captain which he squirrelled away to buy their first houses. He has certainly worked harder than me! (So far.)

my point is that if you look at wide ranging markers such as what is now considered essential (meals out, foreign holiday, car that works, tv, laptop, etc etc) people are hugely better off than the early 80's or 90's...(on average) housing is one expense in the household budget (a pretty sizeable chunk) - other essentials used to take a larger share -

i very much doubt that you ask anyone who bought 20 years ago and they'll say 'oh, it was very easy..'

i reckon much more likely to say 'bugger me, that was difficult'