I am with Nigel on this one.
Some of you may remember last year when I posted a thread on someone who was betting of a collapse in the US economy around August time... Remember three bankers who walked away with something like $3b around november time??? there has been a feeling for a long time now about the state of the US economy and its impact on all over economies due to its hold over them and its inevitable effect on the UK. I even mentioned something about this a year or two ago in a thread where a US B&O dealer said that the economy was fine yet there were rumours and concerns back then over access to finance and sums borrowed.
Nigel is correct, in the UK we have simply too much money on finance which, at present is showing no profit and defaults on borrowings are increasing daily. We, like the US have put way too much emphasis of our economy on the back of house prices and its reflection of earnings when the cost of living has increased quite dramtically and there has been no real increase in wages for your average Joe. Banks have simply put been greedy and relied heavily on an ever increasing housing market which have been sold as good debt when in fact its actualy bad as those with mortgages have remortgaged, loaned, continued to use credit cards, nice cars on finance and bang, inflation which has led onto staglfation as the UK is in at the moment. We have an economy which is not growing, inflation increasing (dont believe the rubbish from brown and co, have a look at your food shopping and cost of living etc and work it out for yourself).
I would say that we are in tough times, and will be so for at least 3 years. Expect a drop in house prices of around or upto 30% for the short term but to then even out but at the same time, expect an increase in redundancies. Now I say this but over the last 3 years, how many jobs have been lost? how many businesses have closed and moved offshore? We have been on the edge of a resession for the last two years at least, the banks have been propping this up with continued borrowing fueling an ever increasing debt ridden economy which is why the credit crunch happened as banks would simply not borrow more money due to so much being borrowed already.
This could all have partly been avoided if the BOE had put rates up in 05 instead of cutting them. Northern Rock to me was always dodgy... everything about the business was wrong and many sceptics knew it would not last.. and that a bailout would always be the end result.
The futures grim.. very grim.. but as many say, banks have a short term memory and as soon as the bad debt is gone, the doors will be opened once more.
Regarding up and coming coutries, Dubai has to be up there and are setting themselves up as the next trade center for the world. Lots of money and I do not think much has been invested in houses or consumer debt. I think they sold most of thier oil to help invest in Dubai to make it a world leader.
I also find it "funny" that China is being demonised in the press at the moment for anything... when all know that they along with the Russians will become major players in the global econmony.. see them flexing their power in Georgia as we speak securing more gas and oil which we are all reliant on.
