Is the uk heading for a recession?

[holmesp]

on e obvious question, troubling economists, is the uk heading for a recession, it is clear that yes the u.k is in the middle of an economic slowdown.

Will the credit crisis get any worse?

Will the uk housing market continue to slump?

Has consumer confidence been shaken to a point, that a recession is inevitable?

or

Are we back to the old boom and bust model?

and finally

Is it just a turbulent ride, which we will see the end of?

Please leave your views

Regards

Holmesp

[w14]

The UK economy, along with every economy on this planet, is not heading for a recession. The recession is already here; it's heading for a depression.

The debt we are carrying is impossible to repay - mortgage debt is only the tip of the iceberg. Credit card debt, hedge fund/derivative debt, LBO fund debt, monoline insurance debt, national debt, all bundled in "advanced" financial instruments that almost no-one understands.

For all the investment in risk management teams that the banks have made, they haven't a clue what is going on. Moody's came out and admitted a few days ago that they are finding it almost impossible to assess risk at the moment.

Greenspan, and his lackeys, have taken us into a world where the economies of nations are based on a speculative monetary financial system. A global casino, which is systemically unstable.

As more and more hedge funds have been set up, and as more and more exchanges have moved to trading wholly electonically, and as more and more banks, pension funds, governments and other institutions invest via these hedge funds, all trading essentially the same types of strategies, electronically, you find that they are all holding more or less the same positions in the same instruments. Guess what happens when one of them starts running for the door ... just like in August when someone did exactly that in the market-neutral equities space.

The interesting thing for me has been that so-called high net worth individuals have been mostly pulling their money out of this bogus money market, and investment capital from our pension funds has been replacing it. The high net worth individuals have been moving more and more into private equity - war materiel, mining and raw materials companies.

As for the housing market, that's over. People have been telling me that I've been talking shite, that house prices in London will not drop, because there is such demand for houing in London that it just can't happen. What they forget is that someone's desire for a house is only part of the "demand" equation. They have to be able to finance it, and that isn't possible in an ever increasing number of cases, despite 300 billion euro loans from the ECB.

Finally, consumerism will collapse further in 2008, not so much because of lack of "confidence," but as the result of the reality of higher food and energy prices.

All in all, not a pretty picture. As Peter Spencer of Ernst & Young's Item Club said before Christmas, it going to "make 1929 look like a walk in the park."

Still not to late to fix it ...

[bumkun]

*nods*

[contracycle]

Originally Posted by w14

Still not to late to fix it ...

Well lets see what happened last time:

"Stock prices have reached what looks like a permanently high plateau."
- Irving Fisher, Oct. 17, 1929

"There will be no interruption of our permanent prosperity."
- Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928

"I have no fear of another comparable decline."
- Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929

"In most of the cities and towns of this country, this Wall Street panic will have no effect."
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929

"I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future."
- E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928

"...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression..."
- Harvard Economic Society (HES), November 2, 1929

"For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over."
- Business Week, November 2, 1929

"This crash is not going to have much effect on business."
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

"Financial storm definitely passed."
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929

"Hysteria has now disappeared from Wall Street."
- The Times of London, November 2, 1929

"... a serious depression seems improbable"
- Harvard Economic Society, November 10, 1929

"This is the time to buy stocks."
- R. W. McNeal, market analyst, New York Herald Tribune, October 30, 1929

"Unless we are to have a panic -- which no one seriously believes, stocks have hit bottom."
- R. W. McNeal, financial analyst in October 1929

"[1930 will be] a splendid employment year."
- U.S. Dept. of Labor, New Year's Forecast, December 1929

"The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin."
- Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929

---


"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
- President F.D. Roosevelt, 1933

[The Mouth of Sauron]

A few thousand trailer-trash Yanks default on their mortgages and the whole world's in economic turmoil ?

Load of bollocks . Despite all the best efforts of the doom-mongers, Western economies will still be OK this time next year . And in the UK, how can you have a house-price slump when Brown and his multi-cultural colleagues are letting in over a million immigrants each year ? Interest rates are still at a historical low and if they come down further all the speculators ( including property speculators ) will be back out of the woodwork quicker than you can ask " what's sub-prime ? " .

[Neko]

Originally Posted by The Mouth of Sauron

A few thousand trailer-trash Yanks default on their mortgages and the whole world's in economic turmoil ?

Load of bollocks . Despite all the best efforts of the doom-mongers, Western economies will still be OK this time next year . And in the UK, how can you have a house-price slump when Brown and his multi-cultural colleagues are letting in over a million immigrants each year ? Interest rates are still at a historical low and if they come down further all the speculators ( including property speculators ) will be back out of the woodwork quicker than you can ask " what's sub-prime ? " .

Thank you Mervyn King for that incisive summary...

[bumkum]

may i humbly draw your attention to mr john lanchester's longwinded but (naturally) very readable opinion?