Wheels are coming off the bus

[maximus]

Doomed

The path to recession thus became clearly marked. The banks will sooner or later have to write down the value of these assets, perhaps to the tune of $600 billion (£287 billion) to $800 billion, impairing their ability to lend to even credit-worthy firms and consumers, and further tightening credit availability not only in home-mortgage markets, but in the consumer, industrial and commercial property sectors. With credit crunched, fewer factories and office buildings will get built, fewer jobs created, fewer tills filled with credit-card receipts. This will add to the downward pull already exerted by the slumping housing market, where rising inventories of unsold and repossessed properties, and falling house prices will further weaken consumer confidence, already at a two-year low.

The gloomy scenario continues. The housing market, which has a long way down still to go, is affecting, or will soon affect, the financial markets, the labour market, and the macroeconomy. So forecasters are lowering their estimates for 2008 growth. They expect tightening credit to slow the construction of commercial buildings, hitherto a bright spot in a darkening picture. Moreover, the manufacturing sector is slowing, as is consumer spending. Inventories in shops are rising.

[Francko]

The gloomy scenario continues. The housing market, which has a long way down still to go, is affecting, or will soon affect, the financial markets, the labour market, and the macroeconomy.

During the worst recession period 2001-2003 the house market was booming but yet this didn't improve the job market, why would the opposite situation be true?

[pisces]

There was a recession during 2001-2003?

[AtW]

During the worst recession period 2001-2003

This was recession period for IT chaps, but other folk were quids in.

I think this time it is going to hit the fan, I only hope the crash won't happen before end of November - I am planning to sell all my plc shares while market is till more or less on top.

[wendigo100]

During the worst recession period 2001-2003 the house market was booming but yet this didn't improve the job market, why would the opposite situation be true?

That wasn't a recession here and it is irrelevant anyway. The problem is the unprecedented debt bubble.

You cannot expect to keep the economies going by spiralling debt, as the UK has been doing for 10 years (aka Brown's Economic Miracle). It's like keeping a steam-ship going by burning the wooden planks it is built from.

We're now having to take planks from below the waterline...

[AtW]

Shirely steam ships were made of iron?

[wendigo100]

Shirely steam ships were made of iron?

Steamboat then...

[Francko]

That wasn't a recession here and it is irrelevant anyway. The problem is the unprecedented debt bubble.

You cannot expect to keep the economies going by spiralling debt, as the UK has been doing for 10 years (aka Brown's Economic Miracle). It's like keeping a steam-ship going by burning the wooden planks it is built from.

We're now having to take planks from below the waterline...

Ok, it was full recession mainly for IT but many sectors were impacted with a higher unemployment rate and slow GDP growth yet the housing market was totally booming. Now, my point is why there has to be a necessary correlation between the housing and the job market? In case of a big price crash only a few people will be affected, the ones who bought at peak time and that took over a mortgage that was over their limit. Now, I don't think this represents a big percentage of the UK population. And even if they lose their family assets I still fail to see how this can impact the job market.

[AtW]

Now, my point is why there has to be a necessary correlation between the housing and the job market?

If you don't have a job you default on your morgage. Most people have bugger all savings, so even few months out of work will cause serious problems. They won't be able to remorgage because credit is not going to be available (at reasonable rates), so they will have to sell it. This will push prices down big time because those people will have to sell, where as buyers won't have to buy.

[Francko]

If you don't have a job you default on your morgage. Most people have bugger all savings, so even few months out of work will cause serious problems. They won't be able to remorgage because credit is not going to be available (at reasonable rates), so they will have to sell it. This will push prices down big time because those people will have to sell, where as buyers won't have to buy.

Yes, agreed that this will be an accelerator factor for the decline in house prices but how this can impact the job market?