Is this the start of a global financial crash?

Post by **mikepepler** » 28 Feb 2007, 09:10

OK, here's your chance to vote, and we can look back in a few months and see how clever we were at predicting the future, or else how dumb we were!

MacG · Post by **MacG** » 28 Feb 2007, 09:53

Well, we will see in a couple of weeks or so. Soon a lot of rabbits can be expected to be pulled out of a various hats. This thing with "finance" has more of Joe Labero than science over it. I'm pretty certain that the entire stage will come crashing down some time, but I dare not make predictions. They got to much smoke, mirrors and trapdoors for that.

Post by **clv101** » 28 Feb 2007, 09:56

I vote no and expect things to muddle on for a few more years yet. Much depends on ones definition of "crash" though. I'll quantify by saying FTSE 100 will end the year above 5500.

This just looks like froth blowing off the top, prices increased too much recently, +14% since June 06, +10% over the last 12 months (FTSE 100).

ianryder · Post by **ianryder** » 28 Feb 2007, 10:00

I think there is going to be a lot of volatility...which could end in a big slump but could go up and down for a while. Whichever way, there are some really serious triggers waiting to be pulled. If they do it really is bad - the credit crunch, US housing dropping, inflation worries, the cary trade in Japan, the US dollar slide, US/UK trade imbalances...I think investors are nervous because they know all these together could whip up the absolutely perfect storm. I think the carry trade might actually be the trigger for the whole house of cards but we'll see. Interesting to watch...shame it probably won't be the big fat investors that suffer if it does go pop.

GAZ · Post by **GAZ** » 28 Feb 2007, 23:20

I think this is just China putting a shot across the U.S.'s bows re:their sabre rattling with Iran.

GD · Post by GD » 28 Feb 2007, 23:42

I vote yes. We're early days into the greater depression.

Bozzio · Post by **Bozzio** » 01 Mar 2007, 09:46

I vote no because I've just increased my mortgage and therefore do not wish to see such an event! Besides, I think the markets are fairly resislient. There will always be winners and losers and so the market will continue regardless of any shocks.

rs · Post by rs » 01 Mar 2007, 11:44

From moneyweek:

Global stock markets tentatively recovered yesterday from Tuesday?s ?Shanghai Surprise? as The Telegraph dubbed it.

But it?s becoming more and more apparent that the country we really need to be worrying about is the US, not China. Fourth quarter GDP growth was revised down sharply from 3.5% to 2.2% - and there?s more evidence that the sub-prime mortgage meltdown is steadily getting worse?

I tend to agree, I think it's the housing market that is going to kick this all off. Reckless lending over the past few years is going to bite us all in the ass. While there are differences between the US and the UK housing situation, banks over here have been just as enthusiastic to lend to those who cannot afford to borrow.

stumuz · Post by **stumuz** » 01 Mar 2007, 12:50

Quote rs;
While there are differences between the US and the UK housing situation, banks over here have been just as enthusiastic to lend to those who cannot afford to borrow.

Agree, but the supply problem is not going to go away, if you have Mr and Mrs financially incompetent who have purchased their two bed terrace for 190k and the crash comes, money supply shrinks, interest rates rise and the house now is worth 100k. Most people now in work will be out of work, so cannot buy it, most people in work will not be able to move.
The government and banks will club together to change laws so everyone stays where they are, it is in no ones interest to see the couple flung onto the streets where the LA/GOVERNMENT have a duty to house them.

We are in a different era to the 1990?s, more single childless households, more separated people living on their own, and the demand will still outstrip supply.
Where will all the new housing come from to house the people who have recklessly over committed themselves and lost their homes?

Andy Hunt · Post by **Andy Hunt** » 01 Mar 2007, 13:11

U.S. stocks plunge to worst 1-day drop since 2001

http://www.marketwatch.com/news/story/u ... F007426%7D

After sliding all day, U.S. stocks seemed to fall off a cliff in the afternoon, as data providers failed to keep up with selling programs, noted Stephen Sachs, head of trading at Rydex Investments.

"There's not even a flight to quality into gold or the Swiss franc, which tells me that we're closer to the beginning than to the end of this," Sachs said.

Ballard · Post by **Ballard** » 01 Mar 2007, 13:12

Um,

Where will all the new housing come from to house the people who have recklessly over committed themselves and lost their homes?

How about I buy them cheap, and rent them out to the naughty debtors.

stumuz · Post by **stumuz** » 01 Mar 2007, 13:14

Unless you've got the cash, remember money short supply= no mortgages!

SunnyJim · Post by **SunnyJim** » 01 Mar 2007, 15:15

stumuz wrote:While there are differences between the US and the UK housing situation, Where will all the new housing come from to house the people who have recklessly over committed themselves and lost their homes?

How about all those second homes that people will be selling off? Half of Cornwall is sat empty all winter.

Post by **clv101** » 01 Mar 2007, 15:21

stumuz wrote:Where will all the new housing come from to house the people who have recklessly over committed themselves and lost their homes?

Lost their homes? Where did they go? Whatever happens there is likely to be roughly the same number of people and the same number of houses in the country. I seriously doubt we'll ever get to a stage where there are 3 million empty houses and 10 million homeless people.

stumuz · Post by **stumuz** » 01 Mar 2007, 15:24

No!!
the point I was making is if you evict 50,000 people from their homes,where are you/me/we going to put them ?