Recession ... what recession

11/4/2008 4:24:19

pacoryan

Posts: 903
Since: 31/10/2006
Region: Salisbury
Status: offline

I think the simple fact is no-one really knows what's going to happen, and they're all trying to predict it with next to no success. The stock market is usually a good barometer, pricing itself a few months ahead on the collective predictions of the market makers, voodoo essentially. The intangible sentimentality that drives those predictions has now been exposed as inherently flawed and we have had the most volatile sustained stock market period in ages as a result, while everyone tries to second-guess each other and get's proven wrong!

From a corporate perspective there's a lot of very solid business out there (and hence good value shareholdings), - with M&A activity still strong and happening because the firms buying have cash and aren't over-gearing themselves as they were before the last recession Ironically the one sector that did over-gear was the banks, but even most of those are still turning profit!!

So if you're invested - hedge your bets, diversify and sit it out. Once the sentimentality has been driven out and the financial base reset, true value will then be applied to the market. Just don't do the traditional British thing and panic too late!

Now from a social perspective we have a more uncomfortable position. The "Socialists" have managed to make the poor and middle-earners much poorer by robbing their legitimate income, and the rich and criminals richer. And an inherent flaw in our political system means that no long-term planning is made to remedy this. What is the first indicator of Joe public tightening the purse strings? No, not Restaurants, satellite TV, smoking, new cars or any other superfluous (if pleasurable) expenditure: - Savings and Pension contributions.

Several weeks ago it was reported that Personal Pension contributions were reducing (data recorded over several months) - now you may say that it reflects the market falling but anyone taking advice will know that the best time to be making monthly pension contributions is when the market is on it's knees!!

Savings have dropped right off too.

So underfunded retirement planning due to the stealthy increase in our cost of living rendering most of us unable to afford it - there's a social scandal that this government won't need to answer to so they do nothing about it.

Now the Property issue is a similar problem, in the grand scheme of things I'll stick my neck out and say that mortgages consume roughly the same amount of income as they always have. The trouble is tax in one form or another has consumed any margin we had.

The lack of regulation in the credit business has compounded this problem, due to the high cost of living people borrow at extortionate rates for tat, because they can. And then they compound it by adding it in to their mortgages at a lower rate but over 25 years (step forward Virgin One Account), thus spending their equity.

So in twenty years + (maybe sooner) we'll have a generation of folk with no retirement planning and big mortgage balances reaching 65.

I appear to have launched in to a bit of a rambling rant

Being uncharitable I could say you only have yourself to blame if any of these factors is having a dramatic effect on you - the stockmarket involves risk, if you can't afford risk you should avoid it.

If you took out a mortgage you can't afford now, whose advice did you take in the first place?

Are you spending more than you earn? Er this one is a bit obvious.

Having said that the Government has a responsibility via education and legislation to safeguard society from itself, which it is singularly failing to do, and the hangover is going to cause even greater economic division in the long run.

Mr Speaker, I would like to propose a vote of no confidence, I'll be in the bar