Reply to: Global recession coming

[ratewhore]

US producer prices have jumped by more than analysts forecast in February.

According to the latest Labor Department figures, prices climbed by 1.3% in February compared to last year. In January, prices dipped by 0.6%.

The driving force behind the increase was a surge in the cost of food, energy and toys, the Department said.

The figures underline fears that US inflationary pressures are still strong and will need further interest rate rises to bring them under control.

doomed etc...

[oraclesmith]

Footsie's like a fiddlers elbow today. Up over 100 points though. Another dead cat hitting the deck maybe?

[Diestl]

Ever heard of Fixed Rate Mortgages?

[Buffoon]

Now this may be a load of old bollo, but it will make SASguru very happy.

The Dow Jones Insdustrial Average ($INDU) is 95% correlated for the period oct-2005 -> Mar 2007 with Oct 1927 -> Mar 1929.

Chart

What happened later in the year?

[milanbenes]

less of it you cheeky monkey

granted, I missed the sub prime mortgage lending in the US from
my explanation, however, the sub prime mortgage lending is not the whole story or the end of the story

it is not the sub primes going bust which has caused a sell off across the markets

Milan.

[sasguru]

look lads,

I've told you before, leave the business to the grown ups
and get back to your visual studio .net pc support jobs

in an nutshell, what has triggered the sell off, if the Japanese
raising interest rates and therefore knocking the Yen carry
trade on the head, making credit more expensive and consequently
carry trade borrowers have been selling to then buy Yen and pay
back their loans and this has given them a double whammy, the
share prices are falling and the Yen interest rate is rising and the Yen
is rising against other currencies, Yen carry trade was great while
it lasted but like everything had to come to an end at some point

interesting to see has been the fall in the price of AU but this can simply
be explained by people cashing everything they have to pay off their debts
and get out before the market falls further, ultimately AU will become the natural safe haven for riding out the storm

good luck all

franko you plonker, you need to finish that Mr Men's guide to economics book

those of us with property and without mortgages and with cash and au will have fun watching this perfect financial storm brew up

all the best

Milan.

And you think this has nothing to do with the sub-prime US mortgage market?
Make yourself useful and change a tape will you?

[milanbenes]

look lads,

I've told you before, leave the business to the grown ups
and get back to your visual studio .net pc support jobs

in an nutshell, what has triggered the sell off, if the Japanese
raising interest rates and therefore knocking the Yen carry
trade on the head, making credit more expensive and consequently
carry trade borrowers have been selling to then buy Yen and pay
back their loans and this has given them a double whammy, the
share prices are falling and the Yen interest rate is rising and the Yen
is rising against other currencies, Yen carry trade was great while
it lasted but like everything had to come to an end at some point

interesting to see has been the fall in the price of AU but this can simply
be explained by people cashing everything they have to pay off their debts
and get out before the market falls further, ultimately AU will become the natural safe haven for riding out the storm

good luck all

franko you plonker, you need to finish that Mr Men's guide to economics book

those of us with property and without mortgages and with cash and au will have fun watching this perfect financial storm brew up

all the best

Milan.

[cykophysh39]

Personally I think this current slide in the markets is all the all investments houses, and trust etc, selling off over priced shares in order to have liquid cash in preparation for the next bear market. In a Bear Market those you have Cash are king.

[lORD lUCAN]

Not the ones who spent all their savings on a house whose value is halved.

Quote of the decade, good economics SAS

And renting SAS !, i thought you would have moved to the third wing ??

[sasguru]

Not the ones who spent all their savings on a house whose value is halved.

I'm currently renting. Got gazumped. So still have the mountain of cash.
As Spacecadet says wouldn't matter anyway...

[Buffoon]

In the US they have some falling prices. It may well get worse. Biggest problems will be the supply of credit for house purchases if the lenders get frit. There is some oversupply and this could push down prices in certain areas. This will be patchy, mainly at the bottom end of the market.

The same fears by lenders could indeed happen here. It would be one, maybe the only, way to get UK housing inflation down. If the lenders were to be stricter on the creditworthy status of the lenders and only lent, say, 80% or less, then that would cool the UK market.

However, nuLieBore rely on the wealth effect of extreme house price inflation to keep the voters thinking they are rich and voting labour.

[Spacecadet]

Not the ones who spent all their savings on a house whose value is halved.

er no

No mortgage means that you aren't effected by interest rate hikes so you can sit tight and wait it out

[Francko]

Winners: Cash rich, no mortgage

Not the ones who spent all their savings on a house whose value is halved.

[sasguru]

Yep, I definetly think it is coming.
Funny I was just saying this same the other day at a dinner party, and I was told not to worry as the Chinese are going to emerge as the Dominant economy ??

The US is China's major export market. The US acts as the world's consumer - if it goes down everyone goes with it.

[sasguru]

Current Fed Chairman says no, but the previous one says there is a 30% chance of one.

I'm not saying that you are wrong, but I think ** at the moment ** the doom and gloom might be a bit over done.

US housing market falling - Same problems there as in the UK.

Stock markets decline - yes there has been a sell off but it hasn't done more that take the US indices back 6 months.

Dollar falling. Yes - Dollar index (chart) is very low.

As always, time will tell.

In terms of housing, the US is actually falling while prices continue to rise here ...that's a huge difference, once the downwards drift starts it triggers a feedback loop - no one buys as they wait for prices to fall further which cause prices to fall further and so on.