The "Credit Crunch", and it's effects for everyone...

[Death]

Hail all!
The following has been edited and copied over from the London Christmas bash - 23rd Dec 2008CE thread to try and prevent a mass of off-topic and irrelevant discussion occurring in said thread. 8)

yeah [A Solo card would be better because of the] interest

Yeah, right...With todays Credit Crunch, and many American businesses deciding to totally screw up the Worlds cash economy through excessive and unmoderated lending, half-decent interest is now truly a thing of the past! hock::roll:

I wandered into my building society the other day to carry out some account maintenance, and check the status of my savings that are held in a cash-based ISA. Thanks to all of these World credit screw-ups - And the associated interest rate adjustments that have been made in a vain attempt to stem them - The interest rate that I was getting (Which was about 4.75% back in April) has now plumetted to a measly 1.07%! hock::roll::mad:

Ye know...I've got a damn strong temptation to take the Bank of England to court over these interest rate reductions. Although they'll make life easier for borrowers at the current time, it's savers like myself (My borrowing currently totals £0.00) who keep much needed money inside the banking system - And what do we get in return for helping to keep the economy afloat?

After all, the World economy has collapsed through the fault of (As I see it) several foolish American mortgage institutions handing out money to people without checking for adequete solvency beforehand, and personally I don't see why the Hell savers and investors like myself should have to suffer because of it. If anyone should have to suffer as a result of all of this; It should the creditors, financiers, accountants and MDs of the companies that started all of this off in the first place!

So: How has everyone else been affected by this "Credit Crunch" runaround...And why on Earth havn't World banks and governments taken a hard line (Such as changing laws, forcing debt write-offs etc.) on sorting things out like they should've done long before the whole thing began to spiral out of control? :roll:

Farewell...
>> Death <<

 

[Pumbaa]

Been made redundant 3 times, and now my own company is on the brink of collapse. The value of my house has fallen through the floor, and I've made over £16,000 in playing the stock market.

Overall I'm happy, as I'm watching the money coming streaming in!

Just don't ask me how - I don't want to give away too many tips!

 

[Aussie_Rail]

Well as the world appears to be going into recession (not sure exactly which countries are in fact in recession) two places that I definately know that are not in recession are Australia and New Zealand.

Here in Australia we have come very close to being in a recession but have avoided it for a while, and it was tipped there would be one in 2008, but now they say it'll be in 2009, but they are working really hard to starve off a recession, some measures they took were to guarantee everyone's bank accounts that were under $50,000 something like that.

And what they did in the last few weeks was they gave everyone money, people with kids under 18 or still at school/uni that sort of thing got $AUD1000.00 and pensioners got something on the lines of $AUD1500.00 which for a government that was pretty good.

And they gave out billions worth just so that people would spend it, they wanted us to go out an spend the lot, so we would bolster up the ecconomy, natrually most people would have paid off credit cards, mortgages and other loans.

But the big people for people here was that a lot of pensioners, retirees and people yet to retire have or had superanunation funds and a lot of those were invested in the stock market and because of the Americans and their greed the market crashed and a lot of people lost a lot of people on the stock market which was their super, it was quite common for people to have lost over $50,000 so people who retired had lost a lot and would probably have to go back to work and those that were going to retire had to stay and work a bit longer.

But a positive was the prices of petrol came right down, petrol was averaging at about $AUD1.70 or near abouts and now it hovers at about $AUD1.00 or less. House prices have stayed about the same although in some areas they have dropped abit.

Work wise, there has been a slump in construction and so there arn't as many jobs avaliable in construction, building, design and planning and natrually banking and finance etc.

With the continuing drought food prices have continued to rise as usuall and the ever tighter water restrictions don't help much either.

So what's happening in your part of the world?


AR.

 

[Metroland]

High profile shops or companies gone bust so far:

Zavvi – formally Virgin megastore (Games and CD/DVD chain)
Woolworths (General store chain)
The Officers club (Clothes store chain) – part buyer found
Whittards (Tea and coffee chain) – buyer found
MFI (furniture store chain)
Mk One (clothes chain)
Rosebys (homeware chain)
Stead and Simpson (Shoe shop)

Documented companies in trouble or at danger of going bust:

Land Rover/Jaguar (car makers)
Vauxhall (car makers – part of General Motors)
Most other car makers have reduced production or have stated they need government loans or have posted a loss.
Clinton Cards (card shop chain)
JJB Sports (sports shop chain)
Debenhams (department store chain)
Jessops (camera store chain)
Dixons group (Curries/PC world etc – electrical shop)
Channel 4 (TV/media)

Companies rumoured to be in trouble:

Waterstones
BHS
Blacks outdoor
Maplins
WH Smith
B&Y
HMV
Homebase

A further 323 retail stores on the critical watch list and many other big names in media/insurance/building/transport especially.

Oh and McDonalds has a better credit rating than the UK

http://www.independent.co.uk/news/b...etter-credit-rating-than-britain-1059577.html

Countries in danger of going bust, like Iceland: Ireland, Spain, Italy, former Eastern block states.

 

[Calum]

My brothers already been affected with Woolies going bust, his store has its last trading day on 5th January. It was really sad going in there the other day, the shop was half empty and they're even selling their fixtures and fittings.

My part time office job gave me a months notice at the end of October, so I asked for more hours at my Co-op job and had my contract amended promptly. But a week after I left the office, they called me back asking if I want to work there again only because someone else is leaving after discovering that she has cancer. :cry:

 

[Aussie_Rail]

As far as I know HMV music store has closed all their outlets in Australia.

The only companies that I know of that are in trouble are Holden, you might know it as Vauxhaul or something. But overall because the Government gave away billions of dollars to spend most of the retail outlets are doing ok.

AR.

 

[Metroland]

Of course a lot of this is to do with the internet anyway and supermarkets - on line sales now making up for losses in high street, replacing pubs/post offices.

In the next 10 years expect most national newspapers to go bust, the BBC to disappear in its current form, record companies to go bust, TV and Radio to be restructured around online/mobile, less traditional books.

 

[Flyboy]

I truly hope that the end result of the problems in the manufacturing and retail sectors will be a return to quality rather than quantity, better Customer service and better products.

 

[LittleRedTrain]

Hail all!
With todays Credit Crunch, and many American businesses deciding to totally screw up the Worlds cash economy through excessive and unmoderated lending, half-decent interest is now truly a thing of the past! hock::roll:

You can't completely blame the Americans, the British have been just as bad, taking on credit cards, mortages they can't afford, or getting loans secured on their houses on the assumption that prices would keep rising.

Had people maybe lived within their means, cutting back on that new car, the latest games console for the kids, or the two week holiday in Spain, then maybe we wouldn't be in such a mess.

Ye know...I've got a damn strong temptation to take the Bank of England to court over these interest rate reductions. Although they'll make life easier for borrowers at the current time, it's savers like myself (My borrowing currently totals £0.00) who keep much needed money inside the banking system - And what do we get in return for helping to keep the economy afloat?

You can't blame the BoE, they are trying to do exactly the job they are supposed to, keep the Consumer Price Index inflation measurement at the 2% target. The interest rates they set are those they feel will best meet that target in the medium to long term.

You'd do better to blame the government, as they're the one that set the 2% target and decide what items are included in the CPI.
(It doesn't include house prices, if it had, then the whole mess might have been avoided as interest rates would have been raised earlier to slow house price growth).

 

[Darandio]

Well as the world appears to be going into recession (not sure exactly which countries are in fact in recession) two places that I definately know that are not in recession are Australia and New Zealand.

Here in Australia we have come very close to being in a recession but have avoided it for a while, and it was tipped there would be one in 2008, but now they say it'll be in 2009, but they are working really hard to starve off a recession, some measures they took were to guarantee everyone's bank accounts that were under $50,000 something like that.

And what they did in the last few weeks was they gave everyone money, people with kids under 18 or still at school/uni that sort of thing got $AUD1000.00 and pensioners got something on the lines of $AUD1500.00 which for a government that was pretty good.

And they gave out billions worth just so that people would spend it, they wanted us to go out an spend the lot, so we would bolster up the ecconomy, natrually most people would have paid off credit cards, mortgages and other loans.

But the big people for people here was that a lot of pensioners, retirees and people yet to retire have or had superanunation funds and a lot of those were invested in the stock market and because of the Americans and their greed the market crashed and a lot of people lost a lot of people on the stock market which was their super, it was quite common for people to have lost over $50,000 so people who retired had lost a lot and would probably have to go back to work and those that were going to retire had to stay and work a bit longer.

But a positive was the prices of petrol came right down, petrol was averaging at about $AUD1.70 or near abouts and now it hovers at about $AUD1.00 or less. House prices have stayed about the same although in some areas they have dropped abit.

Work wise, there has been a slump in construction and so there arn't as many jobs avaliable in construction, building, design and planning and natrually banking and finance etc.

With the continuing drought food prices have continued to rise as usuall and the ever tighter water restrictions don't help much either.

So what's happening in your part of the world?


AR.

What, they just handed out money?????

As for the last part of your post, whats happening here is they are still taking money, not giving it.

 

[FusionRail]

Not Maplins! They are like.. the best electrical component shop ever!

Shame about the Officers Club/Petroleum too.

 

[Mojo]

Certaintly Christmas shopping is going to be a lot more difficult next year.

 

[FusionRail]

I dont do Christmas shopping :razz:

 

[Tom B]

Had people maybe lived within their means, cutting back on that new car, the latest games console for the kids, or the two week holiday in Spain, then maybe we wouldn't be in such a mess.

Agreed. It is quite perturbing how many people will complain about being in debt, or being short of cash - yet will keep on buying stuff they don't really need - such as the holiday, car, etc.

Likewise, many people at uni will go out and get drunk on a nightly basis - and then whinge that they've got no money for the rest of the term?!

 

[Metroland]

Few people realise how much debt the UK is in, don’t believe the spin of the politicians saying it all started in the US: I’ll tell you.

Total UK personal debt (that’s debt on credit cards, mortgages, HP agreements) at the end of October stood at £1445 billion, which exceeds the entire Gross Domestic Product of the country for a year.

In the mid 1990s consumer debt was about 500 billion, historically very high. 7 years later, it doubled. To quote George Osbourne, Shadow Chancellor:

‘"It took 600 years of banking history for household debt to reach half a trillion pounds. Now, under seven years of Labour, this has doubled."

Now, this debt has tripled!

On top of that the UK Government debt is now around £700bn rising steeply as the banks have been bailed out.

Michael Saunders from CitiGroup has calculated ‘external debt’ – ie, what Britain owes the rest of the world. It is not 40% but 400% of GDP, the highest in the G7 by some margin.

http://www.spectator.co.uk/coffeehouse/3078296/the-true-extent-of-britains-debt.thtml

The total debt as illustrated by the below graph shows UK real Public Sector debt and liabilities rising from £1.5 trillion in 2007 to 2.1 trillion by the end of this year, 2.8 trillion 2009 end and 3.2 trillion by the end of 2010.

http://www.marketoracle.co.uk/Article7526.html

‘Britain has a more or less bankrupt banking sector, with liabilities far beyond the states ability to guarantee without a loss of confidence in all UK debt and a collapse in the currency. I.e. the bailed out RBS alone has liabilities of £2 trillion, and a asset gap of at least £600 billion, therefore in a worse case scenario would require a huge amount of loans and guarantees far beyond the pin-pricks to date seen in the £90 billion to Northern Rock and £40 billion of Bradford and Bingley. The Bank of England is the lender of last resort so as to prevent bank runs, however what happens when the BoE is required to lend £5 trillion as a last resort? The answer is currency collapse followed by hyper inflation’

 

[LondonBVE]

Right before the crisis where the market was at its brim, the government raises our GST (similar to UK's VAT) to 7% (up 2%) than on the very month when the crisis start, they decide to raise our electricity by 12% and raise our fellow politicians's salary by around 5 - 15%. Later they learned that the US dollar were depreciating hence the Monetary Authority of Singapore decide the push the Singapore Dollar by a lot, once reach a new low of US$1 against SG$1.21 (a huge drop from the pre-recession of US$1G$1.51) and so do other currency.

3rd quarter came, we happily entered "technical recession" and unsurprisingly the first in south-east Asia to enter recession though the very same day, shopping centres in central area were having sales and people were queuing up for the vouchers. The government finally decide to stop the appreciation of Singapore Dollar and decide to keep it neutral as much as possible. Well obviously during the period when the Singapore Dollar was in appreciation, the figures were astonishing.

Example:
€1 : SG$2 (pre-recession was €1 : SG$2.20)
£1 : SG$2.50 (pre-recession was £1 : SG$2.80)
AU$1 : SG$1.05 (pre-recession was AU$1 : SG$1.20)
NZ$1 : SG$0.92 (pre-recession was NZ$1 : SG$1.12)

That was the old policy of allowing the Singapore Dollar to appreciate greatly but on October 7, they decide to change the policy to moderate appreciation which I think stable the dollar as the US dollar has greatly appreciate back from a low of $1.21 to $1.44 as of today though some currency seems to be depreciating with the British Pound and Australia Dollar most obvious, which I will explain later. During this same very quarter, lots of very bad news came in, the official news of the banking sector collapsing and all sectors except construction was seeing red in their growth. The banking sector was greatly hit by the Lehman Brothers' collapse which causes investors to panic demanding local bank that is in-charge of Lehman Brothers' stuff to pay them back the money they have invested. Unfortunately there was some mishandling during this period, because after LB's collapse, the newspaper back page was full with elderly crying saying that they have invested all their life-time savings into the LB's minibonds and they were cheated for 3 days which led the banks to announced that all elderly and needy people will have their money returned to them while rest of them have to convinced the bank on why they should refund them the money which cause an uproar. There was a 5 day rally held and finally they were asked to meet with banks to discuss about the money. That is the end of the 3 of the 2 banks and they continue operating without problem while the 3rd one which is our local bank suffered badly and decide to sack of 100,000 workers worldwide and locally. This means that the government has to answer for that as this is the first time such a high amount of people were sacked hence the government said that they will not help or bail-out any single company but will instead give them money to train their workers and advise company to look for others ways to lower their operating income with retrenchment being the last resort. Well the market was not very happy with the news but no results were seen yet as it was too early. Later along, they announced to raise our electricity by 21% for no reason even though oil prices has drop, which was later explained and come with a very stupid excuse. They claimed that they are using the average price of the oil price 2 months ago and use it as our electricity price which they also claim that they have no idea how to calculate the average price of the specific month. Well that was fine with us cause that very month, we are getting a $100 subsidy of our electricity and water bills hence even if the 21% extra was charge in we are still paying much less. Later though they decide that next year January to cut electricity prices by 24%, I seriously find this a joke. Yesterday the government finally realise that they really need to help company hence they decide to cut taxes by 1.25 basis point which were sending joys to all small and mid-size company.

Anyway the $100 subsidy was part of the GST offset package which was introduced during the GST hike. The 5 year package include giving all Singaporean $300 every year with extra $100 for those who have joined the army. It also include subsidising electricity and water bills and town council's tax by half twice a month. The package was actually more a less a "Vote for me in 2011" trick which they do every time, one year before election to lure people. Anyway back to currency topic, the pound was indeed depreciating a lot against Singapore dollar from £1 : $2.80 to £1 : $2.08 which make me wonder what has happen to UK and Australia Dollar was for the first time AZ$1 : SG$0.96 from the original AZ$1 : SG$1.20.

I was not so amazed by Australia and New Zealand but was surprised by the British Pound depreciation of 32.21%! What is happening?

 

[anthony263]

Agreed. It is quite perturbing how many people will complain about being in debt, or being short of cash - yet will keep on buying stuff they don't really need - such as the holiday, car, etc.

Likewise, many people at uni will go out and get drunk on a nightly basis - and then whinge that they've got no money for the rest of the term?!

sounds like half the people i know on the motorsport management course at uni

 

[Robert57303]

The company i worked for went bust and then we got offered new contracts with another company until they finally finished us working for them because they went into problems.

 

[Aussie_Rail]

What, they just handed out money?????

As for the last part of your post, whats happening here is they are still taking money, not giving it.

Yep, they gave away all this money to stimulate local spending and to help crank up the ecconomy, whether it worked or not beats me, but as Australia/New Zealand aren't in recession yet, I guess it worked.


But I have to say that despite all that has happened so far I'm not sure about the UK and America, but I think this is a recession that we pretty much had to have.

For too long we were living in a 'take now and pay later' environment, people were borrowing more than they needed just so they could have everything now, and I'm referring to young folk who are/have bought their first home.

Unlike their parents back in the 50's and 60's where when they bought their first home it was modest and suited their needs and they did not have all the newest appliances of the time, they gradually moved up in the world.

But now the young home buyers take out huge loans so they can have the best home, with all the new appliances that they want, well now this thirst for the latest and greatest has to end.

So now we have entered the 'its time to pay' senario and people realised that they cannot afford to pay, and for many most of what they own and do is done on credit, so in this day and age its not uncommon for the average joe to have more than one or two credit cards, well now they have to pay and so the credit crisis started.

Here is a line of thought that people should think about before spending:

"If you cannot afford it then you cannot have it".

and:

"A credit card is not your money, it's someone elses and you have to pay them back".

And I recently saw a pre-documentary something on the lines of "I.O.USA" with empahsis on the 'I.O.U', and I was amazed at how many people do not have savings, people live off their paycheck on a week to week basis.

How many here have savings, or save their money for a 'rainy day' so to speak?

Do people save their money so that in the event of an emergency they have instant cash avaliable, or save their money for something they wish to buy, like a car or a deposit on a house etc?

Or does anyone not save their money? Do you spend it when you get it and by next payday have none till you get paid?

 

[Death]

Hail all!

For too long we were living in a 'take now and pay later' environment, people were borrowing more than they needed just so they could have everything now, and I'm referring to young folk who are/have bought their first home.

I agree fully with this statement, and after recently giving some thought to the credit crunch scenario (Bearing in mind that I have no real skills in economics) I have become surprised at the number of people who expect to live off of credit-based means, and even factor anticipated credit card borrowing into their general accounting! hock:

The one exception that I would make to the above though is in the case of mortgages and first-time homebuyers. Saving up enough cash to buy a house outright is pretty much impossible without a lottery win, and in my opinion a well-arranged and regularly paid-to mortgage is a reasonable form of borrowing however ye look at it. 8)

Unlike their parents back in the 50's and 60's where when they bought their first home it was modest and suited their needs and they did not have all the newest appliances of the time, they gradually moved up in the world.
But now the young home buyers take out huge loans so they can have the best home, with all the new appliances that they want, well now this thirst for the latest and greatest has to end.

EXACTLY!
Personally - If I was in a financially suitable state to allow it - I would take out a mortgage for a property that was reasonably sized and located for my needs, but fittings and furnishings would be added as and when I could afford them. In the beginning, I'd be sticking with cheap and/or second-hand appliances and furniture to start off with...And if for whatever reason I wanted that new £3,500 Bang & Olufsen entertainment system, I'd start off with a generic secondhand hi-fi system for a much more affordable £40.00 and start saving for the B&O system using only my own means. 8)

So now we have entered the 'its time to pay' senario and people realised that they cannot afford to pay, and for many most of what they own and do is done on credit, so in this day and age its not uncommon for the average joe to have more than one or two credit cards, well now they have to pay and so the credit crisis started.

Personally, I have two payment cards in my wallet at the moment...But as they're both debit cards, the funds are transferred from my bank account at the time of sale (Or the transaction is rejected immediateley if there are insufficient funds) and as a result the only kind of accidental borrowing that I might enter into - If I'm not careful - Is the amount of my overdraft, which I've deliberateley had set at a low and managable level for just that reason!

In trying to find a complete solution to the credit crunch - Though I'm no financier, economist or accountant - The only solution that I can come up with is a complete suspension of the World credit markets...Where people would pay off any and all debts outstanding against them, settle their balances in full (Mortgages excepted), and close their accounts with all credit/store/charge card providers. Once that had been done and the average World debt was as close to £0.00 as possible, then new credit could be issued to consumers...But it would be much more tightly controlled, stricter checks would be in place, and people would only be allowed to take the credit that they could genuinely manage and repay within the stated terms! 8)

Here is a line of thought that people should think about before spending:
"If you cannot afford it then you cannot have it".
and:
"A credit card is not your money, it's someone elses and you have to pay them back".

That's pretty much the line that I try and take. If I want to buy something for £100 and there is less than £200 in my bank account, then I don't buy it until that condition is true. In this way, I manage to ensure that I only spend money that I already have, and the only kind of debts against my name are the normal routine "debts" that I clock-up with service providers like my electricity company - Which are always paid off as soon as bills are received. 8)

Also: If ever I find myself in the position where I have a bill that I cannot afford to pay, I'm not afraid to contact the provider(s) of said bill, state that I cannot pay it in full because <whatever>, and ask them if I can arrange a payment plan to pay off my balance in installments.

How many here have savings, or save their money for a 'rainy day' so to speak?
Do people save their money so that in the event of an emergency they have instant cash avaliable, or save their money for something they wish to buy, like a car or a deposit on a house etc?

Personally, I'm a saver all the way. I have a few Scrooge-like habits which mean that I spend less than the average person anyway, but - Aside from existing primarily as a place to store my savings - I also use my savings account as an alternative to credit cards and loans.

If I only have W amount of money in my bank account which is insufficient to cover desired purchase X, then I might take amount Y out of my savings to provide sufficient funds for purchase X - If I consider such use of that money sensible and acceptable in the circumstances. I then normally pay amount Y back into my savings as rapidly as I can, along with interest to counter what I'll have lost in "borrowing" some of my savings for a time. 8)

In this way, I effectively deal with myself as both creditor and debtor, and consequently I am able to set whatever repayment and interest terms against myself as I choose. Normally this benefits me in allowing myself to get a decent rate of interest (I normally set it at about 7.5% APR for large purchases, but personal APR of about 110% tends to be the norm if I can afford it.), allows me to repay any balance early without incurring any charges if I wish, and - Best of all - As I am dealing with myself in money that I already have in the first place, I don't ever have to worry about repossession orders or visits from Bailiffs!

Farewell...
>> Death <<

 

[Aussie_Rail]

Hail all! I agree fully with this statement, and after recently giving some thought to the credit crunch scenario (Bearing in mind that I have no real skills in economics) I have become surprised at the number of people who expect to live off of credit-based means, and even factor anticipated credit card borrowing into their general accounting! hock:

Unfortunately there are people out there that count the limit on their credit cards on top of their bank balance, which means that they don't fully understand how credit and loans work.

The one exception that I would make to the above though is in the case of mortgages and first-time homebuyers. Saving up enough cash to buy a house outright is pretty much impossible without a lottery win, and in my opinion a well-arranged and regularly paid-to mortgage is a reasonable form of borrowing however ye look at it. 8)

Usually, and depending on the cost of the house, but saving for a deposit is often hard, and here in Australia there is such a thing called a 'first home buyers grant' which used to be about $AUD7,000, but now I think they raised it to about $AUD12,000 and I believe this was done to make housing more affordable for people, and this money was money given from the Government, you don't need to pay any of it back. Although the various states impose a wide range of taxes which also makes buying a house a little more difficult.

Whether or not there are any form of grants are given in the UK then obviously it will be a hard, but if millions have been able to do that for years but some will find saving easier than others.

[EXACTLY!
Personally - If I was in a financially suitable state to allow it - I would take out a mortgage for a property that was reasonably sized and located for my needs, but fittings and furnishings would be added as and when I could afford them. In the beginning, I'd be sticking with cheap and/or second-hand appliances and furniture to start off with...And if for whatever reason I wanted that new £3,500 Bang & Olufsen entertainment system, I'd start off with a generic secondhand hi-fi system for a much more affordable £40.00 and start saving for the B&O system using only my own means. 8)

People need to think more like you in that sense. There is no need to have the best house in the street with the best new car and all the newest furnishings and appliances, having a modest house in an area that you are still able to access transport, employment and eduaction and medical facilities is what you need to look for and even then you do not need to buy in the middle of that town or city, it never hurt anyone to live some way out and have to travel, generally, or at least here in Australia the further away you live from the major cities the cheaper the land and houses are, usually, not everywhere, but in the majority of places.

So I would assume that this would also be the case in the UK, if you are a first home buyer, then the cheaper the house, the better for you, especially if you have a mortgage to pay, buying a much more and expensive house in the middle of the town or city, just because its closer to everything in my opinion is a bad choice, the higher the value of the house and the more your mortgage will be.

[Personally, I have two payment cards in my wallet at the moment...But as they're both debit cards, the funds are transferred from my bank account at the time of sale (Or the transaction is rejected immediateley if there are insufficient funds) and as a result the only kind of accidental borrowing that I might enter into - If I'm not careful - Is the amount of my overdraft, which I've deliberateley had set at a low and managable level for just that reason!

I have one debit card which I only used if I have not got enough cash, or If I go to an ATM and I have a credit card with a low amount and I use it for emergencies etc.

[In trying to find a complete solution to the credit crunch - Though I'm no financier, economist or accountant - The only solution that I can come up with is a complete suspension of the World credit markets...Where people would pay off any and all debts outstanding against them, settle their balances in full (Mortgages excepted), and close their accounts with all credit/store/charge card providers. Once that had been done and the average World debt was as close to £0.00 as possible, then new credit could be issued to consumers...But it would be much more tightly controlled, stricter checks would be in place, and people would only be allowed to take the credit that they could genuinely manage and repay within the stated terms! 8)

I think the solution is that applying for a credit card or any kind of loan should be made more difficult, there should be proper background checks done against people, loans and any form of credit should be given to those that are financially stable, they have a job, they have some level of savings and they have a good history of being finacially sensible.

[That's pretty much the line that I try and take. If I want to buy something for £100 and there is less than £200 in my bank account, then I don't buy it until that condition is true. In this way, I manage to ensure that I only spend money that I already have, and the only kind of debts against my name are the normal routine "debts" that I clock-up with service providers like my electricity company - Which are always paid off as soon as bills are received. 8)

There are people out there that go to a supermarket and they might only buy a bar of chocolate, it might only cost a few dollars, but they would pay for it with their credit card, but the thing that is most disturbing about credit cards is that there are people that pay off credit cards with credit cards!

[Also: If ever I find myself in the position where I have a bill that I cannot afford to pay, I'm not afraid to contact the provider(s) of said bill, state that I cannot pay it in full because <whatever>, and ask them if I can arrange a payment plan to pay off my balance in installments.

That takes courage, people would be too noble to admit that they cannot afford it only kicking up a stink when the gas or the power, water etc gets cut off. It never hurt anyone to liaise with the company to come to some kind of an agreement.

[Personally, I'm a saver all the way. I have a few Scrooge-like habits which mean that I spend less than the average person anyway, but - Aside from existing primarily as a place to store my savings - I also use my savings account as an alternative to credit cards and loans.

Being a scrooge will probably be something that most people will have to get familiar with.

Your credit card is suposed to be used for expences you have to make, but your unable to pay for it entirely with the funds avaliable in your bank account. For emergencies, if your car breaks down and you need to spend huge amounts then you can rely on your credit card and once you've used it you then pay it off, normally you would make weekly or fortnightly payments of decent amounts or how ever much your able to pay off each time.

There are just some people that are not meant to have a line of credit, which I can see credit being a luxury in the future.

 

[mbonwick]

I'm not old enough to own any plastic of any kind, but I'm a saver all the way. Partly this is because the things I want are rather expensive and I don't want to be owing anyone anything. Partly because there's not much I really need to buy.

This is the daft thing, IMO. MY dad always pays his credit card bill off in full as soon as he gets it. This Xmas, Barclaycard raised his credit limit by £3000. When he mentioned it, I thought "We're entering a recession, and banks are supposedly cutting down on their lending..."

 

[Pumbaa]

I'm not old enough to own any plastic of any kind, but I'm a saver all the way. Partly this is because the things I want are rather expensive and I don't want to be owing anyone anything. Partly because there's not much I really need to buy.

This is the daft thing, IMO. MY dad always pays his credit card bill off in full as soon as he gets it. This Xmas, Barclaycard raised his credit limit by £3000. When he mentioned it, I thought "We're entering a recession, and banks are supposedly cutting down on their lending..."

That's because the Banks want him to spend money.

 

[Metroland]

The only loan worth having is a mortgage, which you can use as leverage in the right market conditions. Almost everything else is a money drain and a free gift to that bank - you might as well set fire to it.

Anyway, talking of giving away money, it appears the next idea is that the government are going to print some more! Maybe after this, they might lend the printing press to 'needy individuals' to help solve their problems to Hyperinflation here we come!

 

[Pumbaa]

 

[metrocammel]

Hyperinflation here we come!

My dad has several millions Reichmarks, however sadly that doesn't make him a millionaire! We aren't issuing 'quadrillion pound' notes just yet :P

 

[Tom B]

A bank teller I spoke to the other week when transferring money was saying it was strange how few people used £50s, considering inflation. Though many places won't take £50 or higher either out of change concerns or not wanting to check for security features.

 

[Aussie_Rail]

A bank teller I spoke to the other week when transferring money was saying it was strange how few people used £50s, considering inflation. Though many places won't take £50 or higher either out of change concerns or not wanting to check for security features.

When I was in London in 2003 I noticed there few a lot of places, mostly small stores, shops etc that had little signs in the windows saying that they don't accept £50 notes.

Are they aloud to do that, given that the notes are legal tender can a shop really refuse a customer if they produce a £50 note?

And you's should spare a thought for the people in Zimbabwe where they released a ZN$100,000,000,000 bank note and I think there are even higher notes around now. And I think 2 of those notes buys a couple of eggs too.


AR

 

[Death]

Anyway, talking of giving away money, it appears the next idea is that the government are going to print some more! Maybe after this, they might lend the printing press to 'needy individuals' to help solve their problems to...Hyperinflation here we come!

Oh great...That's just what we need. Germany tried to solve their financial problems in exactly that way back around 1930CE, and look what happened there!

Are our Government so ****ing blind to matters around us that they don't have the vaugest inkling of common sense? :roll:
I know that my own approach to a credit crunch solution - Settling, stopping and removing as many credit/loan facilities as possible - Would be just as unattractive to most people as they would need ready cleared funds in their possession to buy anything...But at least my approach would curtail/control our national debt, reduce problems and expenditure through loan defaults, and just might lead us into inverse inflation (I.E: Prices and the cost of living start going down) if we're lucky! 8)

So I have to ask: When our economy collapses - As it inevitably will - Which country will we be invading, and who will lead our new Nazi government?

When I was in London in 2003 I noticed there few a lot of places, mostly small stores, shops etc that had little signs in the windows saying that they don't accept £50 notes.
Are they aloud to do that, given that the notes are legal tender can a shop really refuse a customer if they produce a £50 note?

That's a bit of an iffy point from what little I know of trade laws. Although a £50,- note is legal tender insofar that it is negotiable upon the funds of the *ank of England, businesses are not actually required by law to give change when a customer overpays - Nearly all businesses provide change though as a general courtesy to customers, and to prevent those customers from avoiding their business in the future. 8)

A possible example of that law being exercised is what happens when a bus driver for Stagecoach (Aldershot yard, at least) cannot make the right change in cash. In these instances, the driver may - At his discretion - Issue a credit note on his ticket machine, which can be exchanged for cash at the company offices/depot, or possibly used towards payment of future journeys or passes. Although the credit note is almost as good as cash if ye can get to a company office easily, it's not legal tender by any means - And when one has such a credit note in their possession, they are effectively trading in Stagecoach Dollars, not Pounds Sterling!

Farewell...
>> Death <<

 

[mbonwick]

Stagecoach Credit notes are OK when you get £1 more from them that you should have...