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FTSE 100 index

Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
I know nothing about stocks and shares but just saw this in the news on the BBC website...

http://news.bbc.co.uk/1/hi/business/6939899.stm

What could the implications of this be on someone who owns a property in the USA?

Thanks.

Comments

  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    What could the implications of this be on someone who owns a property in the USA?

    Depends if you're rich enough to pay off your mortage or loans.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Yerascrote wrote: »
    Depends if you're rich enough to pay off your mortage or loans.

    We're not. So what's the implications? :)
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    i suppose it depends whether you bought assets in companies that dealt with subprime loans
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    minimi38 wrote: »
    i suppose it depends whether you bought assets in companies that dealt with subprime loans

    Can't say we have.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    lol

    Can you afford your repayments?

    This isn't neccesarily going to affect home owners directly, (the ones who don't default anyway) - The point behind this is if it continues and goes sour, the big financial institutions are in trouble, which is going to cause economy slowdown, possible recession, people are going to stop spending etc.

    Also people have pensions linked to the FTSE etc, there are much wider implications.

    Shouldn't you be more concerned with the Dow, which managed to regain 300 points in last half hour of trading yesterday!

    Today's markets are looking at a pick up at the moment..
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    minimi38 wrote: »
    i suppose it depends whether you bought assets in companies that dealt with subprime loans

    If only it were that simple, if it was just some banks going down the toilet this wouldnt be anywhere near as bad.

    What has happened is in the rush to give out money the US banks have then sold off their debt to other investors all over the world (to off set their losses should the people default).

    So, billions have been given out to people who may or may not be able to pay them back, or even have bought a house with the money. These billions have been parceled up and sold on to investment groups, pension funds, banks...etc. all over the world.

    What this means in reality is there is very little real knowledge of where the risk is really held, how much bad debt there might be and who might be taking the big hits. This sort of uncertinty isnt good for the market.

    So, this has gone a long way from just being a US housing market issue.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Very nice post budda.

    The uncertainty is certainly what is causing the biggest problems.. and the fact people aren't coming out and putting their hands up about it shows its a big problem they don't want uncovered..

    The UK subprime is just as bad, if not worse imo, and I am just waiting to watch it unwravel.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    I dont think the UK is as bad as the US, at least here interest rates charged to dodgy lenders are higher.

    There was the rise of what were termed ninja loans in the US market, as in no income, no job and no assessment (of the house to be bought). You can imagine how many of those loans are going to default.

    And of course its not just about bad debt, there's always loads of that about the place (look at Japan it swims in bad debts). It is the fear that credit on the comercial market will get harder, now this means for companies and banks, if this gets harder and more expensive then debt all over gets more expensive, as in credit cards, home loans the whole lot. When the rates of these goes up then consumers dont have a much to spend and consumers spending is what its all about.
  • littlemissylittlemissy knit chick Posts: 9,972
    Very slight deviation here ...

    I am very aware of the fact that there are lots of problems and a couple of tv journalists were even talking about recessions. But I am not quite sure *what* is happening and what is going wrong and the effects that this is going to have on the American and global market. Can someone explain it all to me, in layman terms, what's going on and what it could mean for the general punter?

    Thank you :)
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Poor credit, interest only, 100+% LTV = a pretty big problem!

    Especially when you consider that the UK is one of the most (if not the most?) personally indebted country in the world !

    But OT - the 100 is all over the place today, it made a good start.. now down nearly 25 pts.. I got a feeling it's going to dive again today but who knows..

    They also stated yesterday's trading wiped about £60 billion off the FTSE100 companies lol
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Can someone explain it all to me, in layman terms, what's going on and what it could mean for the general punter?

    Well I think I've given a reasonably decent run down of whats happening, as for what it means to the general person - in the short term not much, though it makes the chances of interest rates going up low.

    In the medium term you may well see consumer spending turn downwards, and this could lead to job losses, which potentially could turn into something rather more drastic, but that seems unlikely at this point.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    .
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Poor credit, interest only, 100+% LTV = a pretty big problem!

    Especially when you consider that the UK is one of the most (if not the most?) personally indebted country in the world !

    But OT - the 100 is all over the place today, it made a good start.. now down nearly 25 pts.. I got a feeling it's going to dive again today but who knows..

    Well yes, we do have a lot of debt, but thats because we are obsessed with owning houses, the French dont seem to have caught that bug.

    And yes there has certainly been some dodgy lending in the UK market, but the UK housing market I think has better fundamentals, for one thing we have a lot less space, and its land which is the real issue when discussing the housing market. The US has almost too much land which means that there can easily be a glut in the housing markets in some areas.

    Yes prices are high in the UK, but that isnt just to do with confidence, it has to do with a general shortage of housing in the places people want to live - low supply and relatively high demand means high prices.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    its up nearly 50 points - could it end the day on a positive note? You'd think so after yesterday's plummet...
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Make that 100 pts
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Make that 100 pts

    As the stock market phrase goes, if you drop a dead cat far enough it bounces.

    As for the injection of money and the rate cut, not massively surprising, like I said the big thing about this period is people getting concerned about the lack of cheap credit.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Yeah, the fed are clearly panicking lol..

    I love the dead cat boucing term, I used it just yesterday :lol:
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Yeah, the fed are clearly panicking lol..

    Doing stuff like rate changes that quickly isnt great economic sense really, but then the US economy is looking a bit rough at the moment so a boost will do it a bit of good.
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