Bear Stearns - anyone else worried? Any thoughts or predictions?

[Callisto]

I must admit that this has got me quite worried and the effects are being felt globally as the Asian stock markets have fallen. What does everyone else think?

Yes, its top of the iceberg.

I'm slightly concerned

It is concerning that this is because these investment houses have proceeded to sell large amounts of credit to those who had no intention/means to furnish these debts all in the name of chasing a buck...

It just means that the credit worthy are just going to have to dig deeper to finance their lifestyle...

The more worrying thing is that there are people who have made money on the back of this disaster...

I agree Fairymum - I am really worried that this is the beginning of a very bad global recession, nut I don't really know what that will actually mean to live through.

nut? I meant 'but'...

can't say I'm that surprised.

The economy has been running on fantasy money for so very long- basically since the 80s.

The property 'boom' was unsustainable. Greed ain't good clearly

& I say this from the position of someone who's probably going to be in negative equity v. shortly!!

Bear Sterns has been wobbly for months, but no one knew the extent of the problems because the financial products and sub=prime stuff is so opaque. When confidence goes in a financial institution, it goes suddenly, like that

They are playing with our money ultimately. Things will get worse, but there is no way to predict or ocrrect this because you've got inflation on one hand and commodity proces going through the roof against lower interest rates to keep consumer spending high.

They have been teetering for ages as all their business is lending and they have no deposits so they have been getting money from all manner of unreliable risky sources.But I think this week will be the big turning point globally

In Jan 07 the american press were taling about a downturn By the summer this had become a recession and recently they have been comparing it to the depression

Do you think it isn't as bad as the media is making out then Noddy?

what's your prediction for the next few months, Noddy? Probably a recession in the UK will be apparent from June as houses fail to sell and people stop spending in shops, meanwhile more banks and funds are going to totter.

I have a friend at Bear Sterns and another at JPM, so it's interesting talking to them and what will happen. Lots of job losses at BS

I think there are going to be a lot of financial sector jobs on the line - somehow, I think it will be more people let loose from the operations/debt side of things as companies try to cut back on costs and continue to outsource..

Some companies are just better at hiding their losses...

No more cheap mortgages or 100% mortages ... banks will nail those loyal customers once again..

I hear the signs of recession are already apparent Gryffin to those who wanted to know about them?? (you may know better than me, am no longer a finance type!)

The City is going to be hit which is bound to affect London 'high end' property prices and cause trickle down of chains breaking etc. Which is not necessarily bad news for those priced out of the market.

However, the idea of mass unemployment in our cities is frightening. Things are bad enough in some places already.

I think it is worse than they say!I only really know about property as I have been developing for years and on the advice of someone in teh city who was selling all tehir properties I sold mine and went into rented.This person actually told me about northern rock in feb!(2007)There is no credit available and we are all in debt to the eyeballs and it has to crash.I know lots of agents where I live and only one will tell me the truth because they don't want to accept that its over.this particular guy says they have never had so many on teh books and none are selling.He thinks that after easter doesn't provide the annual boost he is going to advise sellers to discount or stay put.We are in for a rough ride thats for sure.

Also this agent says the sellers are setting their own prices in the main and are blind to the fact that the good days are over!

Blimey.

Is this why house prices haven't really fallen yet?

I really don't understand anything about economics. I can see there might be a recession - what will this mean for those of us with loans etc?

very worrying

people are so naive about economics, generally, and Britain has even worse debt mountain than the US, so it'll be a zillion times worse in the UK when it hits (everyone is in denial, we are already in the midst of recession)

yeah noddy, I can totally see that.

Was vaguely househunting north of London in the New Year. The estate agents were really bullish. All asking prices that would set a precedent for the area.

Around Feb one of them said she was selling quite a bit. But recently she has been ringing me a lot- basically the story is all her chains have collapsed. Everything seems to be coming back onto the market at lower prices.

People have invested everything into this fantasy house price thing, I think. It's too much to accept that it was all a massive swizz and overvaluation.

I am worried and very pessimistic.

One thing that scares me about the Bear Stearns debacle is that the investors did not seem to know untilvery recently
The stock price plunged on Thursday - were those with the money not picking up on the risks until announcements were made?

It also makes me really that the governments have allowed the city wide-boys to make such a killing in the past few years, when it was obviously not sustainable and now the tax payer will have to bail out the ones who got us into this mess.

Something needed to be done about the moral hazard before the situation became so volatile

I knew nothing about economics before last year apart from buying and selling and renovating houses.When my friend advise me at smas 2006/7 that prices would peak in summer 07 and I should sell up dp was unsure and so i spent months online and with the FT and some books and taught myself before i decided.Dp trusted me as i could see how things were going and we sold .It is definitely the people who are keeping prices artificially high agents know they are over priced but a lot of people have re mortgaged to the max and can't afford to reduce.I would think interst rates are going to rise in the next 18 months as the banks try to re coup their losses and the govt tries to keep inflation down.Loans will be harder to get without higher rates and big fees I think we will see a return to saving for things rather than instant gratification.

xmas not smas!

'agents know they are over priced but a lot of people have re mortgaged to the max and can't afford to reduce'

absolutely. I couldn't believe the rudeness of agents who laughed at me when I said 'but the market's falling isn't it?' and mooted the idea of taking offers on things. I think you're right- it's desperation.

Probably the whole credit house of cards is about to collapse. It will just take another 10 years to manufacture another artificial boom, I presume.

Except with the new Eastern pressure for food and fuel resources, who knows how easy that will be for the West to achieve.