financial crisis - Page 2

Aggie · 13-10-2008, 15:07

I work for a company that will fire 540 people in the Netherlands alone.

I probably will not be one of them, because the idea is that my department returns to the bank where we were outsourced 6 years ago. But our part of the bank was sold to a British bank. One of the major banks in the UK needing help from their government. Will they invest enough money to keep our ICT department intact? We are lucky in a sense that the British bank bought a piece of banking that they didn't have themselves (Corporate clients, with branches in 50 countries). Also 50% of my colleagues is external and I'm internal. So the externals go first.

I sold a bigger house last year because we needed more space (first one kid and within now and three days 2). Luckily we decided not to go for the maximum mortgage and we also had some savings. But there is rumor that the house prices will drop.

5 years ago I would have looked at the crisis as an interesting time. I could handle unemployment or a lower salary. But now I have a wife and (almost) two kids. I actually have responsibilities!

I'm really curious what will happen in the next months... I am positive on the long run, but the next 2 years make me a little bit nervous...

Shabbaman · 13-10-2008, 15:18

Quote:

Originally Posted by Aggie

But there is rumor that the house prices will drop.

I've seen that this rumor comes a lot from people who rent a house... sort of wishful thinking. I doubt house prices will drop significantly, because the demand is high here. And as opposed to other countries (like England, Spain and the US) house prices didn't rise very fast the last few years. House prices might drop locally, and several segments might get hit harder: the highest segment is suffering atm, if employers are afraid to hire new staff (unemployment is at an all time low... seems we (as in Holland) can suffer some setbacks) the price for starters could suffer... but that segment is the only segment that *might* be really overvalued.

Right now the house prices have stagnated, but remember that house prices are an average value. If one castle isn't sold, you'll notice that the house prices drop. This doesn't mean a thing for the price of your house. Besides, you just moved, as did I: as long as the house is worth enough as a deposit for your mortgage you're in no trouble. It'd only mean you'd have to stay in your house until you've paid your mortgage.

Pastorius · 13-10-2008, 16:16

I work for the government with pensions, which leads me to think that

a) I am safe
b) we are in the middle of a pension reform, so my knowledge will be valueable in the labormarket for several years (at least enough time to last through this recession)

I am in the middle of trying to sell this place, as we recently bought a "row house". We have very little debt now, so we can handle a period of potentially difficult housing market.

Socially I am more or less in Aggie's situation though.

I hope to sell this place before Crimbo, but I am not sure though. I ve done some calcuations as to how to react to different market scenarios though, and I ve got a big chunk of cash deposited to make the transition period as easy as possible.

Internationally, I ve noted that there are clear differences as to how hard this shit affects. USA was and is hit hard. Iceland is hit hard. Britain has been hit hard. So far there is no obvious sign that Norway is in as much trouble though.

Short term I predict a slight fall in interest rates. Medium term economic growth will decline, unemployment rise. This leads to a lower growth in the price level, meaning potentially lower interest rates.

I see that cheap money has inflated the housing market, but I also see that some types of objects are relatively more stable than others. Appartment market is probably the most volatile anyway.

It will be interesting to see whether the stock market has reached bottom to climb a bit, or if today's climbing attempt was shortlived.

Melifluous · 13-10-2008, 16:25

Well,

In England property prices have dropped around 25% in the last year. Gordon Brown is nationalising as many banks as he can and calling for "Punishment for Greedy Bankers". Socialism by the back door here come.

The Peoples Republic of Britain has a good ring to it...

My company had this to show/say about the FTSE at the moment. (Picture attached).

Fun huh?

Stapel · 13-10-2008, 21:06

One thing that makes this credit crisis not a crisis is the interest rate. Though a bit higher than the last 5 years, the interest rates, all over the world, are still historically low. This simply means there is more than enough money to be lent. Most newspaper articles with some depth acknowledge this. The point is that banks with money don't trust their borrowers. It all soudns a bit too easy perhaps, but this isn't really a credit crisis, but a reliability crisis.

@Meli:
I like technical analysis a lot. My guess would be that the most indices will test their january 2003 support levels.

mauer · 13-10-2008, 23:10

Quote:

Originally Posted by romeothemonk

The good thing about the "recession" and credit freeze here in America is that people that are broke can't get money. That is really awesome!!
Without people with no financial skills getting there hands on money, we as a people are blowing less money frivolously.
I will have some updated posts in my forum later this week with some thoughts on the matter, plus my own personal solution. It will just take some time to put together.

Not necessarily the people that are broke can't get money. I use myself as an example. We have a savings account. Not a large savings account, but 6-8 months worth of necessities saved up (ie mortgage, car payment, electric, groceries).

We also have about $40K worth of equity in our house. How this affected (effected?, whatever) us, is that we had a line of credit established with Wells Fargo against that equity. Not that we've borrowed against, but that is available to us to borrow against. Anyways, Wells Fargo, who was unscathed by this "crisis", canceled our line of credit. We also have an average, of the three major credit reporting agencies, of about 715.

Also, my 401K has lost about $12K in the past 10 months. That's huge, about $2K more than I've actually put in (including my companies 50% matching input).

All this basically means is that if I get hurt and can't work, or one of us loses our job for whatever reason, we've got a measly 6-8 months to get things together. Any longer than that and we'd be screwed.

On a side note, my wife also works for Wells Fargo. She said that she hasn't been able to approve one single loan in about the last three weeks. That's big as well, cause she says she normally processes about 50-60 a week normally.

akots · 14-10-2008, 02:57

That's bad news. I have about 770 and was actually going finally to try and buy a house may be in spring or summer but it does not seem I can get approved. As far as retirement goes, I did not lose anything since all were put into cash or government bonds 3 years ago. I do not gain either, just tiny 1-1.5%, so not enough to compensate for inflation.

ProPain · 14-10-2008, 08:15

For ua non-US citizens. What's the range on those credit scores?

socralynnek · 14-10-2008, 09:07

Personally I haven't lost much.

Our money is mainly in low-interest money funds. Low interest but low risk...

I have some shares of a banking company. Lost a little more than half of what it was worth in the last few weeks. But I had those shares as well when they even were lower. And they were paying a dividend constantly, so it is still not a bad investement.

It might hit me, if the underlying recession (if there will be one, but I guess so) hits my company.

That's maybe the main problem.

The state and banks have to act anti-cyclic.

But with all those measures where the state let the banks take higher risks, it was all pro-cyclic. Not only in USA, in Germany also. If the banking ruleset would have been like it was 15 or 20 years ago, Germany wouldn't have been hit, but now they are hit as well.
Therefore the recession we are now probably facing might be much harder than it would have been otherwise.

grahamiam · 14-10-2008, 14:46

Quote:

Originally Posted by ProPain

For ua non-US citizens. What's the range on those credit scores?

The range is 300 to 850.

700+ = excellent (me, Akots, Mauer, etc)
680-699 = good
620-679 = ok
580-619 = low
500-580 = bad
499- = terrible

Basically, the better the credit score, the better terms you expect to get for a loan. Someone 700+ should not have a problem getting a loan as long as it's not excessive. However, people with said scores are now having trouble.

Also, it's not just personal (or consumer) credit that's the issue. Say you run a restaurant and you need today's meats and veggies. Your suppliers show up in the morning, you sign-off on what you need, and they put it on the tab which you reconcile every 30 days. That's credit. Without this type of business credit, we are all going to be in a huge world of hurt, because companies use it for supplies, payroll, energy, etc. If we become a pay-first type of economy, I'm afraid many of these businesses will grind to a halt.

13-10-2008, 16:16	#13
Pastorius Custard used tile Join Date: Jul 2003 Location: Opening a can Posts: 3,158	I work for the government with pensions, which leads me to think that a) I am safe b) we are in the middle of a pension reform, so my knowledge will be valueable in the labormarket for several years (at least enough time to last through this recession) I am in the middle of trying to sell this place, as we recently bought a "row house". We have very little debt now, so we can handle a period of potentially difficult housing market. Socially I am more or less in Aggie's situation though. I hope to sell this place before Crimbo, but I am not sure though. I ve done some calcuations as to how to react to different market scenarios though, and I ve got a big chunk of cash deposited to make the transition period as easy as possible. Internationally, I ve noted that there are clear differences as to how hard this shit affects. USA was and is hit hard. Iceland is hit hard. Britain has been hit hard. So far there is no obvious sign that Norway is in as much trouble though. Short term I predict a slight fall in interest rates. Medium term economic growth will decline, unemployment rise. This leads to a lower growth in the price level, meaning potentially lower interest rates. I see that cheap money has inflated the housing market, but I also see that some types of objects are relatively more stable than others. Appartment market is probably the most volatile anyway. It will be interesting to see whether the stock market has reached bottom to climb a bit, or if today's climbing attempt was shortlived. __________________

13-10-2008, 21:06	#15
Stapel Emperor Join Date: Mar 2003 Location: Netherlands. Posts: 3,196	One thing that makes this credit crisis not a crisis is the interest rate. Though a bit higher than the last 5 years, the interest rates, all over the world, are still historically low. This simply means there is more than enough money to be lent. Most newspaper articles with some depth acknowledge this. The point is that banks with money don't trust their borrowers. It all soudns a bit too easy perhaps, but this isn't really a credit crisis, but a reliability crisis. @Meli: I like technical analysis a lot. My guess would be that the most indices will test their january 2003 support levels. __________________ Vrooooooooooommmmmm Stapel doesn't like cricket

14-10-2008, 02:57	#17
akots Nebuchadnezzar II Join Date: Apr 2004 Location: Glover Park Posts: 4,459	That's bad news. I have about 770 and was actually going finally to try and buy a house may be in spring or summer but it does not seem I can get approved. As far as retirement goes, I did not lose anything since all were put into cash or government bonds 3 years ago. I do not gain either, just tiny 1-1.5%, so not enough to compensate for inflation. __________________ Cujusvis hominis est errare; nullius, nisi insipientis in errore perseverare Ciceron (Marcus Tullius)

14-10-2008, 08:15	#18
ProPain Customized Admin :) Join Date: Mar 2003 Location: sailing the seas of cheese. Posts: 5,852	For ua non-US citizens. What's the range on those credit scores? __________________ I fed my Dog the American Dream Well, he rolled over and he started to scream He said, I dig the taste of salt but it don't keep me alive yeah, yeah

14-10-2008, 09:07	#19
socralynnek Moderator Join Date: Nov 2004 Location: USS Defiant Posts: 3,827	Personally I haven't lost much. Our money is mainly in low-interest money funds. Low interest but low risk... I have some shares of a banking company. Lost a little more than half of what it was worth in the last few weeks. But I had those shares as well when they even were lower. And they were paying a dividend constantly, so it is still not a bad investement. It might hit me, if the underlying recession (if there will be one, but I guess so) hits my company. That's maybe the main problem. The state and banks have to act anti-cyclic. But with all those measures where the state let the banks take higher risks, it was all pro-cyclic. Not only in USA, in Germany also. If the banking ruleset would have been like it was 15 or 20 years ago, Germany wouldn't have been hit, but now they are hit as well. Therefore the recession we are now probably facing might be much harder than it would have been otherwise. __________________ Being without a signature since November 2004.

13-10-2008, 15:07	#11
Aggie Emperor Join Date: Mar 2003 Location: N/A Posts: 4,490	I work for a company that will fire 540 people in the Netherlands alone. I probably will not be one of them, because the idea is that my department returns to the bank where we were outsourced 6 years ago. But our part of the bank was sold to a British bank. One of the major banks in the UK needing help from their government. Will they invest enough money to keep our ICT department intact? We are lucky in a sense that the British bank bought a piece of banking that they didn't have themselves (Corporate clients, with branches in 50 countries). Also 50% of my colleagues is external and I'm internal. So the externals go first. I sold a bigger house last year because we needed more space (first one kid and within now and three days 2). Luckily we decided not to go for the maximum mortgage and we also had some savings. But there is rumor that the house prices will drop. 5 years ago I would have looked at the crisis as an interesting time. I could handle unemployment or a lower salary. But now I have a wife and (almost) two kids. I actually have responsibilities! I'm really curious what will happen in the next months... I am positive on the long run, but the next 2 years make me a little bit nervous...