Reply to: For sasguru

[Platypus]

I despise debt and can't understand why people take on so much of it.

Aspiration > Income

Simple.

[BrilloPad]

Unemployment hasn't risen massively yet so people still have to get work. And they will always need the essentials.
But there is plenty of evidence that non-essential spending has fallen off a cliff. Eventually in a consumer driven society like this, that will lead to companies laying off people/going bust.
We still have to go through the unravelling of the credit card/loan debt IMO.
It's a kind of madness - people buying things they didn't need with money they haven't got.

I have been thinking that for 20 years. I despise debt and can't understand why people take on so much of it.

But there seems to be a culture now where a certain amount of debt is fine. Will people get back to being debt free? Will a certain amount be accepted?

[TheBigYinJames]

Labour will be long gone by the time the upswing starts.

And you'll have an extremely skint Tory govt desperate to make some money to fund their promised tax cuts for the masses.

[Diver]

Spoil yourself sg and lavish a bit of cash on that discarded make-up. You won't frighten so many young children when out scouring Help the Aged bookshelves for that elusive Mills and Boon.

[shaunbhoy]

I put most of those ideas into practice years ago. Which is why I'm rolling in it now. It's time to spend, spend, spend on all those luvverly cheap assets.

Spoil yourself sg and lavish a bit of cash on that discarded make-up. You won't frighten so many young children when out scouring Help the Aged bookshelves for that elusive Mills and Boon.

[Moscow Mule]

Thanks. I'm put off a bit by providers that have PAYG schemes that actually involve paying a monthly subscription though, or even a charge of £1/MB if you don't 'PAYG every month'

All of this "fair-use" bollocks should be outlawed IMO. Either it's unlimited, or it's capped you can't have it both ways by saying "fair-use policy applies".

[TimberWolf]

http://www.three.co.uk/personal/prod...nd_/detail.omp

Basically, they are saying ditch you landline.

It isn't a bad idea if you don't rely on a fast and robust internet connection at home.

Thanks. I'm put off a bit by providers that have PAYG schemes that actually involve paying a monthly subscription though, or even a charge of £1/MB if you don't 'PAYG every month'

[sasguru]

**if** oil prices drop then most things will cost less so interest rates will drop. Though I agree the bigger effect at the moment is the difference between libor and base rates.

But there has not been a massive effect on economy - yet. The shopping centres still seem full(or is it my imagination?). The roads still seem choked with cars. Where are people getting the money?

Maybe at the moment people are maxing out credit cards and overdrafts? When will this really start to bite? I can see alot of sense in your 2 year reasoning - in fact there is an outside chance of another depression?

As an aside - I find it incredible that inflation is **only** at just under 4%. food up 10% - but offset by falling cost of cars (who can afford one with petrol so high?) and DVDs and eating out.

Unemployment hasn't risen massively yet so people still have to get work. And they will always need the essentials.
But there is plenty of evidence that non-essential spending has fallen off a cliff. Eventually in a consumer driven society like this, that will lead to companies laying off people/going bust.
We still have to go through the unravelling of the credit card/loan debt IMO.
It's a kind of madness - people buying things they didn't need with money they haven't got.

[BrilloPad]

Oil prices are just one side of the doom.
The main problem as I see it is debt caused by poor lending practices. Currently we are seeing a credit crunch caused by poor lending on mortgages in the US. This debt was sold on to the world banks who have suffered as a result and withdrawn credit. This has led to a destruction in the housing market and hence confidence. This in turn will lead to a contraction in spending, which will lead to companies going bust/and or poor results, which will lead to rising employment. That will lead to the fallout from people defaulting on their massive credit card debt and a second round of pain in the financial industry. (Credit card debt is sold on just like mortgage debt). All the while the housing market will be falling like a stone. The whole pack of cards is collapsing.
Oil prices and hence higher costs for everything are just accelerating the process.

**if** oil prices drop then most things will cost less so interest rates will drop. Though I agree the bigger effect at the moment is the difference between libor and base rates.

But there has not been a massive effect on economy - yet. The shopping centres still seem full(or is it my imagination?). The roads still seem choked with cars. Where are people getting the money?

Maybe at the moment people are maxing out credit cards and overdrafts? When will this really start to bite? I can see alot of sense in your 2 year reasoning - in fact there is an outside chance of another depression?

As an aside - I find it incredible that inflation is **only** at just under 4%. food up 10% - but offset by falling cost of cars (who can afford one with petrol so high?) and DVDs and eating out.

[Moscow Mule]

What's 'dongle' is being described here?:

http://www.three.co.uk/personal/prod...nd_/detail.omp

Basically, they are saying ditch you landline.

It isn't a bad idea if you don't rely on a fast and robust internet connection at home.

[ChimpMaster]

£5,000?

You mean there are people out there who don't have £5,000 to hand?

[TimberWolf]

What's 'dongle' is being described here?:

2. Get cheaper broadband with a dongle
Annual saving: £243

More than 15 million homes now have broadband, with the average household spending more than £200 each year on its connection (plus an average £159 for the BT line rental). Consider ditching your landline telephone and buying a "dongle" for your mobile instead. It plugs into your USB port and allows you to get high-speed internet access at home and on the move, via Bluetooth. The major mobile networks, including Vodafone, 3, T-Mobile and Orange, offer dongles and monthly subscriptions from just £10.

[DimPrawn]

Doesn't alot depend on oil prices? Well energy prices in general? Nationwide are lowering some interest rates - so its not all doom?

It's not about interest rates, it's about easy availability of money. Will they lend it? Will they only lend it to 1000 people and then withdraw the product? Will they demand 30% deposit?


Where have all the 125% mortgages gone that lent over 50 yrs with no proof of income? Gone and this is what pushed property prices through the roof.

[sasguru]

Doesn't alot depend on oil prices? Well energy prices in general? Nationwide are lowering some interest rates - so its not all doom?

Oil prices are just one side of the doom.
The main problem as I see it is debt caused by poor lending practices. Currently we are seeing a credit crunch caused by poor lending on mortgages in the US. This debt was sold on to the world banks who have suffered as a result and withdrawn credit. This has led to a destruction in the housing market and hence confidence. This in turn will lead to a contraction in spending, which will lead to companies going bust/and or poor results, which will lead to rising employment. That will lead to the fallout from people defaulting on their massive credit card debt and a second round of pain in the financial industry. (Credit card debt is sold on just like mortgage debt). All the while the housing market will be falling like a stone. The whole pack of cards is collapsing.
Oil prices and hence higher costs for everything are just accelerating the process.

[BrilloPad]

They will indeed. And I don't expect to get the bottom exactly right, whether it be shares or property. However roughly right will do, and I expect we won't hit bottom for a couple of years yet - all that debt will have to be unwound causing loads of shocks to the financial system. It's a prefect economic storm.
My favourite investment had got to be property - worked last time.

Doesn't alot depend on oil prices? Well energy prices in general? Nationwide are lowering some interest rates - so its not all doom?