This week, I have mostly been losing money due to...

[JPreston]

...
Sure a recession is a bad thing, but if you know it's coming you can take steps to protect yourself- pay off debts, sell risky assets, look for a job that's likely to be secure etc. My own personal thinking is that in a recession more people will be forced by straightened circumstances to sell their cars and take the bus, hence a continued demand for my services.

It wouldn't take much for me to be certified and licensed as an insolvency practioner - beat that

[Funkstar]

if 5-7 is realistic then thats a bit far out for me, i would be looking at the next couple of years to be honest.

[badass]

I'd say it'll be 5-7 years, maybe even 8-9 before the next bottom of the cycle. Last time the bulk of the drops happened from '91-'94, with smaller drops the following two years, with the bottom being in '96. This time they have further to fall. The housing market is far less liquid than the stock market, and prices are sticky downwards.

It will most likely be that long here before prices start rising after the correction, I'll just wait until they start actually rising and things look like thats the new trend for them. None of my plans are set in stone, either time wise or the plan itself.

Sure a recession is a bad thing, but if you know it's coming you can take steps to protect yourself- pay off debts, sell risky assets, look for a job that's likely to be secure etc. My own personal thinking is that in a recession more people will be forced by straightened circumstances to sell their cars and take the bus, hence a continued demand for my services.

The other thing is once you've reduced your debts, even made some savings, you can invest the money in the type of investments that make moeny when shares go down in price.

[Rhyth]

I invested in death, and it's going rather splendidly I have to say.

Slow and steady wins the race.

[Rave]

It's starting again:

http://news.bbc.co.uk/1/hi/business/

As I post, the DOW is down 242 points, or approx 2%. Batten down the hatches, because FTSE could well take a battering tomorrow.

[kalniel]

Heh and why's it down? US housing problems

World market will get pulled down by this, they'll stave off any interest rate rises and UK house prices will remain high

As far as I can tell there's no correction at all. Everyone keeps saying one *has* to occur, but it's just not happening. I think it'll take something like what's just happened in the states for there to be any big effect on the silly prices at the moment.

[simonfitba]

Damn, my work sharesave scheme just finished this month.... and I decided to take SHARES and not cash. D'oh!

[JPreston]

I'm back up, £100 in the black! TOP OF THE WORLD, MA

Yo Rave that rubber-faced pundit with animatronic eyebrows - Evans or something - presented quite a good programme on Radio 4 this morning about house prices, maybe you'd like to 'listen again' on the BBC website. Turns out they are a bullet-proof investment after all ...

[TiG]

House prices keep rising, bank will rise interest rates again to try and keep this housing inflation under control as its crazy. We keep going this way interest rates will get to the point were we will break the camels back so to speak.

Soon as repossesions start on mass it will break the market, in my opinion it is getting crazy out there and its going to blow up sooner or later, that much i am now sure about.

TiG

[kalniel]

I don't think they will increase interest rates - they'd rather the prices kept going up than have what happened to the US

[Rave]

House prices keep rising, bank will rise interest rates again to try and keep this housing inflation under control as its crazy.

No, I say again- it is definitely not in the bank's remit to target house prices. They target the CPI rate of inflation, which does not include housing costs.

I'm not sure whether interest rates will continue to rise- opinion is divided, although I tend to think they will- but I don't think that'll matter, as house prices will crash anyway. It's well underway in the USA, Ireland is now definitely going awry, we are next.

[Kumagoro]

Crash to what level though.

[IBM]

What I'd like to know is what happens if an underwriter for some of this huge amount of debt that seems to out there decides they need to get their hands on some capital?

Is it all just promises and IOUs? Where does it stop? Do they just on making money to cover the increasing debt? If some major name wants to get hold of ten billion quick, and suddenly can't find anyone to give them it on credit, and they actually have to recall some of the money THEY are owed, what happens?

The crash in the US was 'prompted by concerns over the US sub-prime mortage market' i.e. lending money to people who couldn't afford to borrow it...how much of the debt in the UK is the same 'sub-prime' type?

[JPreston]

Crash to what level though.

'Crash' to where they were about four months ago...

[badass]

The crash in the US was 'prompted by concerns over the US sub-prime mortage market' i.e. lending money to people who couldn't afford to borrow it...how much of the debt in the UK is the same 'sub-prime' type?

Jusging by the totally irresponsible way your average UK person is getting into deeper debt, I'd say we have our fair share of those.

[Rave]

What I'd like to know is what happens if an underwriter for some of this huge amount of debt that seems to out there decides they need to get their hands on some capital?

Is it all just promises and IOUs? Where does it stop? Do they just on making money to cover the increasing debt? If some major name wants to get hold of ten billion quick, and suddenly can't find anyone to give them it on credit, and they actually have to recall some of the money THEY are owed, what happens?

The way the mortgage market works now (especially in America, though I assume it's much the same here) is that a company grants a load of mortgages to homebuyers, then bundles a large number of them into a bond, which they sell to other financial institutions on the open market. If everything goes to plan, the people who have taken out the mortgages make their payments and the bond holders get their capital back with interest. The lender is simply a middleman taking a small percentage cut (on a vast amount of money, hence decent profits).

The bonds are sold with a number of conditions attached- one being that if a sufficient number of the mortgagees fail to make their payments in the first month (or maybe two?), the bond buyers can force the company that sold them the bond to buy them back. This is what has caused the current problems in the market. The second largest Subprime lender, New Century, has been asked to repurchase a billion or two worth of bonds. They have around $32m of liquid cash. They are, not to put too fine a point on it, insolvent. Barclays hold something like $2bn of New Century bonds. All the uk banks have taken a hammering in the recent selloff.

So, after the waffle, to answer your question about how the banks would lay their hands on quick money if they needed it- well they'd simply sell on the bonds they hold. If those bonds have become much less valuable because people have defaulted on their mortgages though........

The crash in the US was 'prompted by concerns over the US sub-prime mortage market' i.e. lending money to people who couldn't afford to borrow it...how much of the debt in the UK is the same 'sub-prime' type?

It depends how you define 'sub-prime' (sorry to state the obvious, but it's true). There's no defined cut off point, I suppose a 'sub-prime' loan is one made at a slightly higher than average level of interest to someone who's less likely than average to be able to repay the loan. Some of the real doomsayers say that any interest only/more than 4x multiple/90%+ LTV martgage in this country is subprime, and they make up a sizeable proportion of the mortgages granted in the last couple of years. If people lose the ability to make their mortgage payments, then the banks have problems. If interest rates rise, or unemployment increases, then obviously more people can't make ends meet every month.