Four Predictions For 2009

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By

Bruce Jackson

Published in Investing on 11 December 2008

Thankfully, 2008 is almost over. We make our stock market, recession, house price and interest rate predictions for 2009. It’s not pretty, but there is hope.

There are 2 weeks to go until Christmas day. 2008 is almost gone. In terms of wealth destruction, it has been a shocker of a year for just about everyone.

The Queen described her 1992 as an “annus horribilis”, saying it was “…not a year on which I shall look back with undiluted pleasure.” She had to contend with three of her four children separating or divorcing from their spouses and the fire at Windsor Castle.

2008 has been an annus horribilus for stock market investors. The FTSE 100 index has slumped 32% over the course of the year. Smaller companies like New Star Asset (LSE: NSAM), Afren (LSE: AFR) and Tanfield (LSE: TAN) have been hammered even harder. Banks like Lloyds TSB (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS), oil companies like BP (LSE: BP.) and mining companies like Rio Tinto (LSE: RIO) have not been spared. Unlike many other stock market corrections, this time there has been no place to hide.

But that was then and this is now. You can’t change the past, and looking backwards will get you nowhere. It’s time to look forward to 2009.

Prediction #1 – The Stock Market

The extreme stock market volatility will decrease over the course of 2009. Gone will be the regular days of up 4% or 5% or down 6% or 7%. Banks are not going to fail – it’s all about the recession now. We know we’re in a recession. We know it’s not going to be pretty. We have a feeling it will be a long and deep recession. They are all known knowns, and in theory, already priced into the stock market.

As for the stock market itself, it will oscillate in a range from around 3900 to 4700, which is plus or minus 10% from today’s level. My guess as to what the index may close at on 31st December 2009 is 4666. It is a pure guess, but it is up around 7% from today’s level.

Prediction #2 – The Recession

As mentioned above, the UK is already in recession, and it is likely to be quite a long and painful recession. Unemployment will continue to rise. There are currently 1.825 million people unemployed, and this number will keep rising throughout the whole of 2009 and probably into 2010, ultimately peaking at close to 3 million.

Sadly, this is no ordinary recession. The bubble was built on a mountain of debt, and as anyone who has tried to pay off debts will know, it takes much longer to pay money back than it did to spend it in the first place.

Some people are predicting the recession will last until the middle of 2009. The absolute earliest it will end is the third quarter of 2009. The fourth quarter of 2009 is a possibility, with quarter one or two of 2010 being most likely.

The good news is that you will get a twinge of ‘feel good’ before the recession has ended, and that might happen around this time next year, just in time for Christmas. Hooray.

Prediction #3 – House Prices

The economy isn’t going to get any much better whilst house prices are still falling. And with unemployment rising, the outlook for house prices is not good.

The Halifax house price index for November 2008 pegs the average UK house price at £163,605, down 15% year on year, and down 18% from their peak of just shy of £200,000.

Despite record low interest rates, house prices have another 25% to 35% to fall. Banks are still reluctant to lend to all but the most credit worthy. At the very least, people will need a large deposit at the very least to secure a mortgage.

Affordability remains historically high. According to the Halifax house price index, the house price to earnings ratio is estimated at 4.56 in November 2008. The long-term average is 4.0, or 12% below the November 2008 ratio. Because of the severity of this recession, there is a strong possibility of the ratio falling below the average, and with earnings not rising, house prices have to fall.

Sorry.

Prediction #4 – Base Interest Rates

The Bank of England have already slashed base interest rates to 2%, the lowest level since 1951. As I said in Three Things I Thought I'd Never See, some economists are already forecasting the cost of borrowing could fall still further, with a base rate of 0% no longer out of the question.

With all the doom and gloom I’ve predicted above, the Bank will have no option but to continue to cut interest rates, with 1% being the more likely low point of the cycle.

I’d like to be more positive with my predictions, but I’m afraid things are looking bad for UK PLC. The 5+ year debt-fuelled joy ride has come to a screeching halt, and all the fun can’t be undone in just a few months.

There are two great problems with debt…

1) Even as you pay it down, the debt continues to accumulate because you are charged interest on it.

2) In an environment of falling prices, selling assets at a fair price (an investment property, for example) to pay down debt is virtually impossible. You may be able to sell at fire-sale prices, but that may not be enough to get you out of trouble. It’s a nasty, vicious, downward spiral.

If you are game enough to invest in the stock market in these uncertain times, following the advice of investing legends Warren Buffett and Anthony Bolton, here are 2 options…

i) Making monthly contributions to an index tracking fund. Click here for more information.

ii) Try the Motley Fool’s premium share tipping service, Champion Shares, for free for 30-days. There is absolutely no obligation to subscribe.

Closing on a more optimistic note…

  • The recession will end.
  • The stock market looks forward, not back, and could have a good year next year.
  • Your mortgage will almost certainly get cheaper [Give our award-winning no-fee Motley Fool Mortgage Service a try today for free.]
  • Life is for living. Whatever 2009 throws at you, remain realistic, optimistic and healthy.

More: Three Things I Thought I'd Never See

> Bruce Jackson is optimistic by nature, but realistic too. He urges employers to take a long-term perspective, and urges employees to make themselves indispensible He doesn’t have a beneficial interest in any of the companies mentioned in this article.

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Comments

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LOJON 12 Dec 2008 , 7:03am

Hmmmmmm - methinks point 2 is in conflict with the rest -

You say the stock market will be roughly where it is, maybe up 10%, houses will drop 30%, interest rates will drop to 1%, yet you predict the recession ending in little over a year!!

So there are two people in the UK who believe it will be over in 18 months - you and Gordon Brown. To be fair to GB, he got us into this and he wants to cling to power, surely he really doesn't believe it though??

I guess time will tell -

LOJO

thedoc911 12 Dec 2008 , 8:38am

Hi Bruce....

let me guess: heavy investment in the stock market but living in rented accommodation???

Did I get you portfolio right?

I personally think your predictions are quite off...

best regards...

mich21 12 Dec 2008 , 9:00am

First time I have felt compelled to comment on this site, so here goes.
My opinion - Gordon Brown is NOT responsible for putting the country into recession. I do not like to think what David Cameron would have done when confronted with the present global crisis. Gordon Brown is the ONLY man to do the job at this time.
The level of credit card debt is akin to theft. If the credit card companies twisted people's arm, the people let them twist it. Where is the financial intelligence behind "borrowing" more money, either from equity in property, or credit card companies, only to spend it on cars or holidays? The level of greedy consumerism based on "I want it NOW" mentality had to end.
I had been a staunch Conservative for much of my life, but not any more.
How dare the C. party make such damaging statements as "Labour party spending its way out of recession".
And finally, with mortgage interest rates falling, now is the time to use the extra money to repay that credit card debt.


karispirit 12 Dec 2008 , 9:29am

Gordon Brown is the only man to do the job at this time? What an absolute joke. This is the same man who has had control of our finances for at least the past 10 years. What short memories a lot of you have.

As individuals we are expected to save for a rainy day and yet our entire country controlled by Gordon Brown who incidentally was never elected to be in that position in the first place, continues to lead the country into a mess.

We should not be in this mess and now Gordon Brown is looking to the rest of Europe to help him get us out of it.England will never learn. We are not proactive people. We are reactive. There is no hope for us anymore. We are has beens and the sooner we realise that the sooner we can all accept we are not who we once were. Those great people who made this country great are long gone. They would never put up with what we put up with. Shame on us.

Accountantsmum 12 Dec 2008 , 9:32am

I agree with mich21 that Gordon Brown is not responsible for the credit crunch. But I think he is responsible for the UK's position as a result being worse than it might have been. Bad - if any - financial regulation and a culture of 'whatever you want' - my bank used to play this song when I was waiting to pay in cheques! - have both been a major factor.
But for 2009? I can't see the recession being ended in as little as a year. Talk to me in 2014! Likewise the FTSE was once above 6000: I don't think it will hit that level before 2014. This is a long term crisis, and can't be fixed by a few palliative measures. House prices: yes, I think they will drop because supply is still exceeding demand. But price/earnings isn't the only factor: a new house costs so much to build, whatever is happening in the economy, and if they can't be sold for what they cost and a bit more then builders won't build, so supply lessens, so prices rise...I don't think here there is much further to go, for that reason. Finally, base interest rates: people won't invest if interest is below inflation, it's better to borrow. So although the base rate may indeed fall to 1% I can't see it staying there, because european rates will be better and so money will flow out, not a good thing.
Not much agreement with you there, then, MF!

breechers 12 Dec 2008 , 9:40am

To Mich21...so that's your first ever comment...what drivel...I hope it's your last!

To Karispirit....spot on!

Cjbovingdon 12 Dec 2008 , 9:45am

Firstly, good article in general, quite a realistic guide to what to expect in 2009.

However, I felt compelled to write re your comments about house prices. I feel that you are completely mistaken with regards to the housing market dropping a further 35 - 40% and you had better hope you are wrong as the UK will be the sick man of Europe up to our great grand childrens generation.

The housing market is the backbone of our economy, in my opinion. It is once the housing market slows that the general public starts to really panic. Being in the property game myself in the South East, I can tell you that this December has been the busiest December in decades, and certainly the busiest month since February for purchasers buying and selling houses. I do not argue that house prices have fallen by on average 15% this year (and some new builds by 20%) but since the interest rate drop there has been some serious activity in the market - bear in mind i am in the firing line.

Next year, the London and South East will see either a rise or drop of 2% from where we are today. This is because investors are going to re invest in property as they will feel it is a safer investment long term and will certainly get better return than the 3.5% they will get from a savings acccount. In addition, London and surrounding in particular will boom in 2011 at the latest as we are vastly overpopulated.(im not saying that is a good thing!)

With regards to the rest of the country, that trend will follow but 6 to 12 months on. The most affected areas in the country will drop no more than 10%.

Im sorry but property is purely supply and demand with the extra variable of location. We will not be where we were in 2007 for 2 years minimum but down 35% = absolute b******s

Of course, I could be completely wrong should the unforeseen occur,but based on what we know today, 2009 will be the rebuilding process.

EvilRobotTed 12 Dec 2008 , 9:53am

AccountantsMum: "a new house costs so much to build, whatever is happening in the economy, and if they can't be sold for what they cost and a bit more then builders won't build, so supply lessens, so prices rise...I don't think here there is much further to go, for that reason"

Builders were still making a tidy sum back pre-1996 when the average home was around a third of what it is now - £60K bought you a nice little 3-bed house around here. Builders were building then, there are two factors that I believe have been at play here:

1) Land prices have shot up with property prices. You can't build a house without having land to put it on, so builders had to secure the land first.

2) I believe builders have been "making hay while the sun shines" - if they were profitable when a 3-bed house was £60K, think how profitable they have been when the same house was selling for £180K (or even £215K as I've seen round here - that was the peak though)


I fully agree with earlier comments that we, as a nation, must shoulder the responsibility for our own debt. Instead of saving for a rainy day, people have been borrowing for a stormy one. Like sheep, the masses borrowed and borrowed without a thought that economic conditions WILL change - everyone seemed to be sleepwalking into a future in which they thought the gravy train would never come to a stop.

It's on the buffers now though, isn't it?


And on another note, I'd be interested to know how the Treasury's coffers are doing now they're not robbing as many people through criminal levels of stamp duty...

bigdogfan 12 Dec 2008 , 9:59am

Mich21 - I agree - Gordon Brown is not responsible for the current mess - it's global! This is one hell of a wake up call for people - needed for some time. Bruce is wrong about the past - you cant change it - true - but you can learn from it. My parents lived through the Great Depression of the 1930's and had a horror of debt - not surprising in the circumstances. Reflating the economy was the only thing that got the world back on track then -Roosevelt's New Deal with its massive spending on infrastructure ..... and in Europe the lead up to the war .... massive unemployment, the rise of fascism and racism. The lessons of history are here all too clearly. We dont need a war to reflate the economy just sensible spending on infrastrucure and low interest rates. I wish Gordon Brown would turn his attention to the thieves in the credit card business and start to control them by capping the rates they are allowed to charge and by greater controls on lending criteria - and definately ending the current practise of allowing these companies to turn unsecured debt into secured debt on people's homes. We need government programmes to keep people in work and yes Mich hopefully those with mortgage windfalls will use the extra cash to clear their credit card debt.

eiddenannerb 12 Dec 2008 , 10:03am

I for one never used a credit card over the last 10 years, so all this talk of reckless spending dopesn't apply to myself or my wife. We also have some savings. However, we seem to have made the mistake of buying our first flat not long before the property bubble burst (after threatening to for many, many years) as we had the deposit, my wife had finished her doctorate and started her first job, and we were tired of paying rent. So now we are left with a flat that probably cost 10%-20% less than we bought it (though we do not plan to sell anyway) and stuck in a fixed rate mortgage for 4 more years!

To cap it all, my employers are cutting my pension contribution from 10% to 3% (so less benefit from pound cost averaging when assets are low) and have frozen salaries. My personal pension funds are way down. I haven't had a wage increase in nearly 2 years. So, what gravy train was I on?

onemarcus 12 Dec 2008 , 10:08am

How dare the Conservatives NOT say Brown is trying to spend his way out of a recession. In 1996 one Gordon Brown Shadow Chancellor said he would never try to spend his way out of a recession.

Labour having failed to save for a rainy day and having maxed out several credit cards they are going to put even more debt on new credit cards, It absolutely beggers belief that we have a man that claimed he had seen the light and had abandoned the old socilaist principles of throwing money at the problem and tax and spend now when we are in recession sees the light again and says what we must go back to the old ways of throwing money at the problem.

After the election, whenever that might be, to fund socialisst tax and spend VAT will be not 17.5% but 20%, National Insurance is already going to rise, duty on fuel will rise again and taxes across the board wwill go up. Now hands up who thinks any of this will help UK PLC create jobs and prosperity and stay competitive? Its economic suicide.

The alternative way is to instead not increase Government expenddture but decrease it so that we don't saddle ourselves with a great debt burden and taxes can be reduced when the time is right to do so. This way advocated by Cameron will leave UK PLC in a far better state than the Socilaisst econmics of the self proclaimed Man who saved the world Gordon Brown.

DMM77 12 Dec 2008 , 10:09am

Breechers...that was very unkind, what you said to Mich 21. Everyone is entitled to an opinion...even you.

Mich 21 is totally right about credit card debt being akin to theft, when it cannot be paid back. I taught some programmes in women's prisons where the majority of inmates had been arrested for minor shoplifting. They wouldn't have had to do that if they had credit cards to fall back on, but because they were low income people, they didn't. Shoplifting, credit cards out of control...all the same thing ultimately. If we put people in prison for credit card debt...oh dear, what a thought!

bouncingbanker 12 Dec 2008 , 10:13am

Accountantsmum: "I agree with mich21 that Gordon Brown is not responsible for the credit crunch." - that is not what mich21 said. And in common with a lot of people, you are making the same mistake; the credit crunch (caused by the banking collape) is not the same as the recession.

The credit crunch is the result of the banking collapse, which was due in great part to a relaxation in banking regulations, allowing dodgy lending debt to be taken off the balance sheet and thus not reportable - until belatedly IAS39 forced banks to report their debt at fair market value, worthless in the face of the collapse of Lehman Bros. And to some extent the independence ot he BoE has contributed to that lack of regulation - which was instigated by a certain Gordon Brown.

The recession is partly a reaction to the global downturn. Not Gordon Brown's fault directly but as you correctly state, our position is a lot worse due to the profligate borrowing encouraged then and now by Gordon Brown whilst at number 11 and 10.

Is Gordon Brown the right man to lead us out of the problems of his makings? I doubt it very much; the state of sterling is a good indicator of what everyone outside the UK thinks of his chosen strategy.

Fazzersix 12 Dec 2008 , 10:13am

Its no wonder the country is deepression with comments like these.

What a doom and gloom merchant you are in trying to create a response to your posting.

Suppose your next post is HOUSE prices to fall anther 100% !

Guess what it worked Merry Christmas.

Suppose your next post will say petrol down 35% because houses have gone down by that amount (GET REAL) and its obvious who posted this doom and gloom thingy disgusting post.

DMM77 12 Dec 2008 , 10:17am

The VAT issue in onemarkus's comments is spot on. Has anyone calculated the massive impact on retailers to change their pricing throughout their stores? All for the sake of a couple of pennies that mean "nothing to no-body". Daft. Beyond daft, bl**dy stupid.

KESSY777 12 Dec 2008 , 10:26am

I think think good old Gord is suffering more delusions of grandeur than old bonaparte himself , although they are of a different nature .no wonder the man looks knackered -look whats happened to the country . it now has no option but to spend/borrow its way out of recession , because the other lot are clueless ,and can't even muster the right kind of words to lay the bulk of the blame on the doorsteps of 10 & 11 for creating an economy built on debt where the proceeds of the borrowing have been peed against the wall and we have nothing to show for it , they're good at getting money out of peoples pockets , but absoluteley useless at spending it . take , well take everywhere they provide resources/funding /investment - large amounts have been wasted -as in 7-8 % inflation in major services e.g the doctors are laughing their socks off at the amount of money they've had thrown at them
p.m says we're better placed than the others ,including germany to weather a recesiom . could we have annexed east germany and created the wonderful 10 billion a month profit making economy the germans have. if we had annexed east germany we have have sunk further than the titannic .at least if their currency is devalued they can manufacture goods for themselves and to export . we closed all of ours down -and its not just the tories - new labour preside over an artificially strong pound which wrecked large swathes of industry (I think because they decided that a knowledge based economy was better than that horrible old polluting manufacturing industry . it now looks to have backfired whilst all the others think they should make things and have some knowledge based business as well . if politicians were held to acoount for their poor decisions , GOD help them - they would stave

Heraclitusll 12 Dec 2008 , 10:28am

Well said, karispirit. GB is totally egoistic and like his predecessor, interested only in position and power, and incapable of real feelings for others.

Fazzersix 12 Dec 2008 , 10:46am

Ok let all talk silly.

35% off house prices
35% off house rents
35% off a pint of beer
35% off petrol
35% off council tax
35% off wages
35% off gas and electricity
35% off water sewage
35% off your repairs
35% off dole
35% off housing benefit

Dont forget there is a support levels if you break it like above UK goes bankrupt !!!

Prices are near bottom because of the support levels, the above would have to happen for another 35% drop.

Poster get my drift now get real.

shrewdcookie 12 Dec 2008 , 11:01am

Mich 21 I dont know what David Cameron's Conservatives have done to upset you unless you find the truth unpalatable. In 1997 the Major government left office with the UK finances in sound shape and personal debt standing at £500billion. Eleven years on this has almost TREBLED to £1.4trillion and this will now hang over the UK population like a jail sentence lasting for up to a generation.This was allowed to happen because Gordon Brown as Chancellor sacked the Bank of England as the regulator of the banks as part of his granting operational independence for setting interest rates. Bank behaviour in consequence is now a matter of record. He even claimed credit during the downturn of the early nineties for the UK spending on plastic saving the retail sector from oblivion then. Now he is reaping the havoc from what he has sown. As happened at the end of the Callaghan government in the late 70's the Tories will inherit the mess that Labour created.However this time the problem is even more dire with record debt and low inflation so it will not evaporate so readily as it would if inflation was higher. The future will necessitate Thatherite style austerity measures but lasting longer than in the 80's. The current fiscal stimuli will only add to the nation's woes. The truth is we are in the smelly stuff big time and like the king's new suit of clothes nobody in the government can see it. Brown like Mugabee he chastises is in complete denial. So dont fall out with the Tories when they tell it like it is. At least the germans recognise Browns folly with their finance minister pouring scorn-we should listen to sund money arguements it is a contradiction in terms to spend our way out of this recession. Obama take note. The party's over the hangover has begun go buy your asprin in bulk quantity!! Merry Christmas.

shrewdcookie 12 Dec 2008 , 11:01am

Mich 21 I dont know what David Cameron's Conservatives have done to upset you unless you find the truth unpalatable. In 1997 the Major government left office with the UK finances in sound shape and personal debt standing at £500billion. Eleven years on this has almost TREBLED to £1.4trillion and this will now hang over the UK population like a jail sentence lasting for up to a generation.This was allowed to happen because Gordon Brown as Chancellor sacked the Bank of England as the regulator of the banks as part of his granting operational independence for setting interest rates. Bank behaviour in consequence is now a matter of record. He even claimed credit during the downturn of the early nineties for the UK spending on plastic saving the retail sector from oblivion then. Now he is reaping the havoc from what he has sown. As happened at the end of the Callaghan government in the late 70's the Tories will inherit the mess that Labour created.However this time the problem is even more dire with record debt and low inflation so it will not evaporate so readily as it would if inflation was higher. The future will necessitate Thatherite style austerity measures but lasting longer than in the 80's. The current fiscal stimuli will only add to the nation's woes. The truth is we are in the smelly stuff big time and like the king's new suit of clothes nobody in the government can see it. Brown like Mugabee he chastises is in complete denial. So dont fall out with the Tories when they tell it like it is. At least the germans recognise Browns folly with their finance minister pouring scorn-we should listen to sund money arguements it is a contradiction in terms to spend our way out of this recession. Obama take note. The party's over the hangover has begun go buy your asprin in bulk quantity!! Merry Christmas.

SnorteySnoots 12 Dec 2008 , 11:11am

I doubt if house prices will fall much further because a lot of people will be unable to sell with negative equity so although the market may remain stalled for a while, possibly throughout 2009 the next move will be up.

The stock market will be driven up by dividends - even if dividends are cut massively the % to share price will look very good in many cases and this will drive stocks higher in a low interest environment therefore I think 5,000 for FTSE100 by Dec 2009 is easily attainable.

Interest rates will eventually rise as inflation roars ahead - the slump in the pound and our dependence on imports make this a dead cert in my opinion. Again this will drive savers into stocks short term.

Unemployment is sure to rise but UK will become ever cheaper for outsiders so investment will surely follow helping to curtail job losses.

Turbulence in the Middle East following a pull out by the West will push oil prices up again.

So in my view 2009 will see;

1. Stagnant house prices with some modest recovery in sales.
2. Roaring inflation.
3. Nervous stocks that will jump around but the FTSE 100 will recover driven by dividend %, low interest rates and foreign takeovers.
4. Increase job loses but signs of recovery fuelled by foreign investment.


Strebor19 12 Dec 2008 , 11:26am

The present economic problems have been brought about by a catastrophic breakdown in confidence. It started in the banking sector resulting in the credit crunch. This then leads to all sorts of problems in the wider market place making other very viable businesses vulnerable. This lack of confidence is self feeding and has not been seen since the 1930's, and it is Global. Now logic tells me like in all relationships once confidence is lost it takes a long long time for it to return. Logic also tells me that the government can throw as much money as it likes at this situation it will make little or no difference, and just storing up even more problems for the future. This is what I am seeing, and this is why even though my Mortgage payments have dropped by £400 per month not one penny of it will be spent on the high street or anywhere else other than clearing down as much outstanding Debt as I can before I get hammered with increased taxes, and in the mean time pray to god I hang onto my job. Confidence will not return for many many years, this is why we will not be emerging from Recession anytime soon, certainly not next year, not even 2010, more like 2014 if we are lucky! Unlike other recessions in this country we cannot rely on a weak currency to increase our exports, because who in the rest of the world will be able to afford to buy as they are also in recession. The only Business to invest in at the moment are cash rich one's, every other business is at risk. The Banks know it and will not lend however much Gordon pleads. Bank of England's credit card is maxed out so we have no where to hide. We should all be very worried. Can Labour/Gordon fix the problem, not a chance, already played the Double or quits card (What has he got to loose?)next stop IMF like Iceland. Can the Conservatives fix the problem, maybe given about ten years and a lot of inward investment in Business, Power stations, cutting Government spending, and much higher taxes. So you can invest in what ever you like, but for sure your investment will be worth less this time next year than it is now in real terms. Hence it is not how much it has gone up, but by how little has it gone down, being the measure of a successful investment! This is my prediction ....

SiGl26 12 Dec 2008 , 11:36am

S'funny how these discussions seem to degenerate to party polical point-scoring (a bit two-sided as well; aren't there any Lib-Dem Fools?).

To get back on topic, what's most likely to drive down residential property prices is the default/repossession/auction fire-sale cycle. Lenders have no vested interest in maximising the return on reposessed property; the remaining debt stays with the borrower if the asset doesn't cover it.

Now that the taxpayer controls the banks (via GB, love him or loathe him, we have to lump him until he decides to ask us...) maybe there should be a change so the maximum recovery a lender can make is the value of the asset?

Otherwise residential property values will continue to fall (I think 25% down from now at the bottom is not unreasonable), and the surveyors/auctioneers/in-house estate agents will once again be rubbing their hands at picking up bargains on insider deals...

Strebor19 12 Dec 2008 , 12:00pm

SiGl26 .... Lib-Dems are people who cant decide what they want, i.e indecisive. I have no idea what there policies or what they stand for, and any votes they get are just protest votes by people who cannot bring themselves to completely jump ship. This is why there are no Lib-Dem Fools!!!

apressbutton 12 Dec 2008 , 12:19pm

IMHO
1 Stockmarket
Money remains tight and so volatility will remain high. If 2/1/9 is an up day and 31/12 a down day, the return over the year could be -10%, if the reverse, +10%.

2 Recession
Will be over relatively quickly. If over by Q2 2010, that is relatively quick. We have forgotten that these things drag on.

3 House prices
..are a very emotional subject and as such are affected by emotions.
One analogous product could be flowers - funny how they increase in price in the middle of feb every year - you would think that growers would grow more or people would buy less :).

House prices will fall further because everyone says they will. My arbitrary geuss is 20% (4.56/4.0 and round up a bit).

There is a floor for house prices. If I can borrow money, buy an office block/ house and rent it out, pay back the interest and make a profit - the floor is not too far away.

House prices will start rising when you start reading smug articles in the sunday times on how much better off someone was to rent or buy a boat.

4 Base rates
I would like to think that in 2009, we start to see base rates as something like the CPI (RPI with housing costs excluded) - a little irrelevant. Do you know anyone who does not pay to live anywhere (no teenager jokes please).
My tracker is linked to base rates with a floor.
My loans are fixed.
My credit cards are 0% or 15%.
Rates do change, but are not too closely correlated with base rates at the moment.

Now, can someone tell be whether or not to buy euros now...

redimp98 12 Dec 2008 , 12:24pm

bigdogfan 12 Dec 2008 , 12:26pm

Streor19 - given the political shift resulting from Thatcherism the Lib Dems and New Labour are far right of the pre Thatcherite Tories. Lib Dems arent indecisive - they just have a different view point. I'm not a Lib Dem but do respect their point view.

redimp98 12 Dec 2008 , 12:26pm

Flash Gordon has saved the world. No risk capitalism a) In good times, the few milk the profits
b) In bad times, the taxpayer picks up the tab

The real genius is being able to con people that this is the best way forward

vurrister 12 Dec 2008 , 12:50pm

I agree with the critics of the negative shape this debate has gone -

There is no doubt that the major part of a solution is for the banks to resume sensible asset based lending again which they seem reluctant to do at the moment - In this respect talking asset values down is negative but one of the biggest problem areas seems to be the valuers who apear to be qualifying every report with a 'but might not sell' prefix. So long as this continues bankers will take some coaxing down the fence

vurrister 12 Dec 2008 , 12:50pm

I agree with the critics of the negative shape this debate has gone -

There is no doubt that the major part of a solution is for the banks to resume sensible asset based lending again which they seem reluctant to do at the moment - In this respect talking asset values down is negative but one of the biggest problem areas seems to be the valuers who apear to be qualifying every report with a 'but might not sell' prefix. So long as this continues bankers will take some coaxing down the fence

OzBloke 12 Dec 2008 , 12:53pm

Gordon Brown SPENT and BORROWED when he was wallowing in income and should have dome some SAVING.

The word "prudence" does not feature in his rhetoric anymore, let alone "an end to the economic cycle of boom & bust" - or whatever he actually said, but that's the gist of it.

What a joke the man is, and he thinks he's brilliant. Your average housewife knows more about budgets and money management then this idiot will ever understand.

We would be in a better position, and I admit I don't know HOW much better, except for the typical Labour spend & borrow and throw money at Government Services profligacy.

MrRee007 12 Dec 2008 , 1:01pm

House Prises

I have been seeking to buy a second property and have, just this last 3 weeks, seen property go 'under offer'.

These properties have, without exception, dropped their asking prices about 15% to generate interest - they are then going under offer for I would assume 10% offthe asking price .... so, we could argue that a 25% reduction is needed to start selling again.

House prices are so, so dependant upon 'feelings' and 'confidence' - a big rise in unemployment and doom and gloom on the TV directly knocks £££££££££'s off property prices.

JasKing1 12 Dec 2008 , 2:08pm

My prediction for 2009: There will be no more british pounds, as we will join the Euro as the exchange rate will hover around 1:1 for the foreseeable future. Just kidding :) Have a good Christmas break. Jason

peepobaby 12 Dec 2008 , 3:02pm

Prediction 1: The credit squeeze does not end

Obvious but totally ignored by this article.

chris280 12 Dec 2008 , 3:10pm

The biggest mistake the BOE has made is to cut interest rates, these cuts will make no real impression on the recession. What it has doen is effectively left the UK out in the cold as no forign investment will touch this economy as the return is not there...

As for spedning our way out of this what in heavens name is this government thinking, it will not work, it will only leads us into a deper recession read the Hitory books in more detail and you will understand.

As for the credit crunch Vs recesion comments earlier, will you please get real, the two are linked. This mess was not caused by Gordon Brown but the morons in america that lent money to people that simply could not afford to pay. They then had the nerve to market these vehicles as good investments to the worlds Banking "Professionals" (AKA known as sheep who cannot think).

We will mark my words head for a depression and then raging inflation watch the interest rates start to soar in 2010/2012.

The government should forget trying to spend its way out of this mess and get its house in order and make sure the Banks do the right thing and lend to those that can afford to pay.

We need to go back to common sense values, it is time for a new political party in this country one that stands for the people of this country and one that stands for common sense values.

Blair deliberately let all and sundery into this country, it was a plan and evil plan to diss unite this country so that he and his party could keep control, not only handing our currency over to Europe but also deposing the Queen, you wait and see.

If you don't stand up and be counted now and support the common sense party this country is doomed to have no identity and be the dumping ground of Europe.

Merry Christmas, yes Merry Christmas, Not Happy Holidays. I English, British and proud of it.

Chongq 12 Dec 2008 , 3:30pm

Snortysnoots is right there will be high inflation , driven by the pound devaluation, but there will be rising interest rates to compensate.
FTSE 100 will be at 5500 approx to reflect higher dividends: just look at BP, Shell & BHP. A new breed of losers will emerge: those that hedged (gambled but claimed they were mitigating risk) pounds against foreign currencies and bought oil forward at high prices (eg US airlines)

Strebor19 12 Dec 2008 , 4:07pm

SiGI26 and Bigdogfan ... RE: Lib-Dems check out this link which I think says all you need to know about your average Lib-Dem MP ... !!!
http://www.dailymail.co.uk/news/article-1094162/Lib-Dem-MP-wasted-brigade-time-calling-999-boiler-making-noises.html

Lion113 12 Dec 2008 , 4:34pm

Having lived through several financial downs I would comment.

1 Low interest rates have forced the £ down. All imports will cost more 40% of food is imported + gas and hydrocarbons all wasted by governments from 1970 on hence inflation will rise.

2. When the bank rate falls to 0% (widely predicted) who would want to lend the government or banks money

3. Banks are being pressed to lend money on one hand and to pay back the government on the other. The crisis in confidence has led to a reduction in cash availability. Furthermore, many of those screaming for more credit from the bank are poor risk and 40 years ago would only have had loans properly secured on property (also now slumping) shares (ditto) valuable realisable assets which are often not available. If these borrowers default, is the government (taxpayer) going to give the banks money to cover their losses incurred because the government is pressing for more lending?

We need to keep the bank rate higher than now so that there is an incentive for people to lend money to the banks and to save in cash, keep borrowing everywhere (including the government) as low as possible and perhaps we may get the right balance for the UK economy to recover more quickly than the global economy by 2015.

bigdogfan 12 Dec 2008 , 4:36pm

Great fun Strebor19. Why dont we start a disinformation campaign too- we have the right economic / political climate. All political parties have idiots and plenty of morons with huge egos. Most people who've had any sort of life have done something embarrassingly stupid which they'd rather not broadcast - fortuntely they're not in the public eye!!

bigdogfan 12 Dec 2008 , 5:10pm

CHRIS280 - read what history books? Let's see 1929 Great Crash - collapse of the US Stock Exchange - why? Uncontrolled speculation ... largely on land/property. Banks lending money to speculators on assets with inflated values. When the bubble burst confidence in the banking system went out the window and banks crashed. Some of this sounds familiar?!! Knock on effect was a global depression- massive unemployment in the USA and in turn in Europe. That led to phenomenal unemployment with all the attendant human misery. Roosevelt had the vision for a New Deal and massively increased gov expenditure. Germany was the worst hit in Europe - Hitler invested in infrastructure and prepared for war conducting the most appalling racist attacks on Jews and minorities. It was the war that finally caused boom. Lets move onto the 1980's and Thatcherite austerity to "straighten things out like a good housewife". I brought up a family during that period and was lucky enough to have a good job and income. I remember the appalling human misery caused by the restraint - the collapsed marriages and broken families - suicides and repossessions leading on from unemployment. This isnt fantasy - it happened and not that long ago. It spawned a generation that put ME at it's centre. A generation that hasnt the experience or knowledge to know anything different.It's easy to support restraint when it's not your job / home /family /sanity on the line. But beware you hawks out there -it could be you next. Can you guarantee your job? What about your health? I've had 2 family members with cancer in recent times. If things go belly up will you be able to pay all your bills? Be careful before you support policies you recognise will really hurt some people because YOU might be it's next victim.

worthabob 12 Dec 2008 , 6:37pm

I don't know how the tories can talk about saving for a rainy day The milk snatcher sold everything that stood still, dismantled pensions for workers because they cost too much decimated british manufacturing industry replaced apprentices with yoppers Closed the coalfields now we don't even own our own electricity companies thats a laugh coming from a woman who didn't want european inter ference

petitemisschief 12 Dec 2008 , 7:08pm

Why does everyone point the finger at Gordon Brown. Did he suddenly emerge from nowhere and declare he was going to bankrupt the country. Typical of today - its always someone elses fault. Did the Labout party not get elected 3 times? By us - the electorate! Were we forced to borrow beyond our means with our arm up our back. Did Gordon Brown order the banks to be greedy bloodsucking leeches or are you sure they didn't manage to think that one up theirselves? And did Gordon Brown command the oil producers to try and cream as much as they could out of us? And look where that got them. Get real - we're all culpable, get your own house in order - lots of us have gone without over the years to do so.

peepobaby 13 Dec 2008 , 12:33am

Prediction 2: Inflation will fall but quickly rise and be followed by interest rates.

shepherd2008 13 Dec 2008 , 12:48am

Ok folks lets get real here! Its all about psychology.

The arguements for what will and wont happen are very relevent to what will actually happen because it is in our nature as a herd to follow what we are told.

All of the above negative things suggested by all posts will happen. Why?

Because we are all saying that they will happen and psychologicaly that is what we are steering things to happen!

We see it on the news and in the papers every day!We talk about it at work every day. We talk about it at home every day. We talk about it in the pub every day. We cant get away without talking about the doom and gloom of the housing crash etc.

(The same psychology has been used on us for issues such as terrorism, wars in Iraq/Afganistan, gas/electric increases, global warming issues etc. Not seen much of those important issues recently though and they havnt gone away!)

So we all start saying that house prices will drop by another 35% from todays prices and this snowballs and hey presto that is exactely what will happen. Those wanting to buy are listening and watching carefully and are praying for this extra 35% drop and wont budge until its reached. Those wanting or needing to sell are quaking in their boots but will have no choice but accept lower offers to account for the forthcoming 35% drop.

As for the authors' own predictions - well anyone can start a rumour! Somehow rumours of this type have a tendancy to become reality simply because every man and his dog follow the herd and start playing 'Simon Says'.

Conversely, if i was to tell you that house prices where to increase by 55% over the next 12 months and you all passed this around the pub and work etc and then the news channels and papers got hold of it then hey presto!





shepherd2008 13 Dec 2008 , 1:04am

For those of you comparing the UK housing crisis with the USA crisis please stop!

The USA housing situation is completely the opposite to the UK. Those who say that what happens in the USA will happen in the UK are simply mimicking what they see and read in the media. Stop listening to this rubbish!

The USA has lots of land and minimal restrictions or red tape. It is basically easy to acquire lots of land and build on it in America. Americans are over supplied with property!

The UK has limited land available and possibly the most difficult legal requirements/red tape in the world. The UK has a severe housing shortage and will continue to do so certainly for the next 50 years.

You can hardly compare the two! Wake up and stop following the herd!

laalaa41 13 Dec 2008 , 2:13am

Are we suggesting that even as Chancellor Gordon Brown and the government had no control over the banks? Could they not have at last given the FSA et al some TEETH! I think he does have to accept some responsibility for the free-for-all free-fall.

I also think the predictions are a bit off. I think it will take 3 years before we even begin to see an upturn in the economy and it till be another 2 years after that before we could safely say the country is doing business healthily again. It will take that length of time for ordinary people to recover too and once they do and start spending again.....

The point on being on the never-never - if the financial companies want to continue to do business, might I suggest they reduce their profit margins and REDUCE interest rates! Put it this way - how clever is it to destroy your only food-source?

bouncingbanker 13 Dec 2008 , 11:58am

chris280: "As for the credit crunch Vs recesion comments earlier, will you please get real, the two are linked. This mess was not caused by Gordon Brown but the morons in america that lent money to people that simply could not afford to pay." I hadn't realised that Northern Rock (the first financial institution that went t*ts up, btw) was american.

The US is not the root cause of every financial or ecomonic disaster visited upon us. The UK economy ceased to grow in december last year, well before the emergence of the credit crunch. UK and European banks are also holding toxic debt which does not originate in the US, for example, 125% LTV mortgages, mortgages written on unsustainable multiples of income, bonds based on credit card liabilities, credit default swaps, etc.

It isn't even as if the idea of off-balance sheet debt originated on Wall Street, it was devided by a certain scot (nice symmetry there) trading out of Paris just before the napoleonic war.

You really have fallen for everything that the treasury spouts as fact.

Petitemisschief: It is not he has suddenly emerged. Gordon Brown has allowed and encouraged the expansion of unsustainable growth in credit over the three terms in office, spouting prudence until he could get away with reverting to type and spending wrecklessly.

A governing body with teeth, like the BoE, could have stopped 125% LTV or 3+ income multiple or unrealistic buy-to-let mortgages being written. And the issuing of credit cards to all and sundry without verifying supporting income claims. And it isn't that he's solely to blame but some people who are less financially sophisticated need to be protected from themselves.

I didn't vote for him as prime minister, btw, no one in this country has.

jamesunsen 13 Dec 2008 , 2:05pm

Prediction #3 – House Prices
The economy isn’t going to get any much better whilst house prices are still falling.

Is the economy going to improve whilst houses are out of reach for the twenty somethings?

bigdogfan 13 Dec 2008 , 2:34pm

Bouncing banker - totally agree with your comments about Gordon Brown allowing an unsustainable growth in credit. He has allowed a free for all without restrictions and now the economy will have to pay a bigger price than some other economies to recover from the blow of global recession. Laissez faire is a recipe for disaster. What we need is responsible controls of the financial institutions. The current crisis is due to the lack of regulation as these institutions have irresponsibly played roulette in the search for bigger profits by lending as you say to all and sundry irrespective of their ability to pay - and at frequently exhorbitant rates. I have to say that I dont think the Conservatives for all their rhetoric would have introduced tighter controls. George Bush certainly didnt. I dont think the problem lies with the income multiples because without these first time buyers wouldnt be able to get a foothold on the property ladder - and they are essential to the property market. The problem lies with all the easily acquired additional credit that people can get to add to their mortgage debt burden - it's here in my opinion that we need greater controls. Of course some people would argue that the British obsession of owning property is a major cause. Well I remember Mrs Thatcher's property owning democracy! It was at the heart of her philosphy and it started with the selling off of social housing and all its attendant problems.

bigdogfan 13 Dec 2008 , 2:48pm

shepherd2008 - what you're talking about is confidence - a thread picked up earlier - and propaganda. The more we talk up a situation the more likely the prophesy is likely to be fulfilled .... and so on. Unfortunately it's those in power who control what happens in the global and UK financial markets. It's hardly surprising that people have cut back on spending when the future is uncertain. No amount of positive talking by the "herd" will change that until there has been clear changes from above. Other political issues have been changed from the ground up but in our type of democracy the financial power is out of our hands. The best we can do is to put pressure on politicians to reform the financial institutions but as many are multinationals they can shift resources / investments elsewhere if our political leaders are too draconian in their approach.

petitemisschief 13 Dec 2008 , 11:14pm

The point I was making is that you focus all the blame on Gordon Brown. People have to accept personal responisbility for the their own debt if they borrowed irresponsibly. If they are encouraged to think its all someone elses fault they don't learn from it. I learned the hard way about credit card debt but since I cleared it off about 10 years ago I have slowly got myself into a reasonably comfortable position and to be honest, if I can hold on to my job which is by no means cetain I'm much better off in the current climate than I was a year ago. My mortgage payment is down 25%, prices are coming down, petrol is coming down, fuel prices might come down and I've no wish to sell my house at present. If the current situation is all Gordons fault then cheers Gordon!

shepherd2008 15 Dec 2008 , 1:14am

bigdogfan - I wasnt talking about the global and financial markets. They are for gamblers. You missed my point completely and are clearly one of the herd who actually believe that house prices are somehow controlled by the government or people in power! How wrong you are! They simply influence the hysteria through the media for there own benefit.

Who tells you how much your house is worth? Is it the Prime Minister or is it a bloke from the valuation company being paid £25? And how does he come by the figure? Does he telephone the Prime Minister or is he influenced your expectations of the price and then compares upto 5 similar property sales/for sale in the same area? The government have nothing to do with the marketed price of your property! YOU DO!

Nothing scientific, nothing technical, no government involvement - just a regular bloke earning a living and you.

The general public control house prices through either greed or fear. Simple!

Your neighbour controls this. You control it. I can influence the house prices in my street tomorrow if i wanted to. I can effectively lower the price of every house in my street or i can effectively raise the price of every house in my street and i can do it with one simple telephone call. It is also quite simple for one person to influence the property market in a whole town in any given area.

To the ill informed herd (general public) the property market appears to be a sophisticated and elaborate business controlled by a greater being. Its not!

People like you instill these thoughts and fears at its people like you that create the hysteria that snowballs into doom and gloom.

It is the brainwashed mind of the herd that will always believe that someone with power or much more inteligence controls these things. Wrong.

Ever heard of Chinese wispers, idol gossip or rumour control - its all the same bigdogfan and all are started by the average man in the street or by a bored journalist who has had a bad experience through a house sale or by a property investor wanting to influence a sale or purchase for his portfolio. Wake up bigdogfan, you are clearly commenting as one of the brainwashed millions.


shepherd2008 15 Dec 2008 , 1:41am

For those of you who have gone through the purchase of a property you will have experienced the disparety between prices in the same street for poperties that where built at the same time, look the same, have the same layout etc etc.

So why is No19 up for £135,000, No21 up for £165,000? and No27 up for £105,000? Why?

Interior cosmetics do not account for such a difference in price (unless you have solid gold taps and italian marble floorsetc). So why the difference?

Are the marketed prices due to government involvement or are they due to a valuation, the sellers expectations and sellers personal circumstances?

It is therfore the sellers/buyers who influence the property market - up or down - through greed, fear, rumour, chinese whispers etc. Rumours of a price crash are fuelled through media and the herd follows suit! Then through hysteria the herd then influence the property price to drop and drop and drop.



bigdogfan 15 Dec 2008 , 1:50pm

shepherd2008 -at no point in my comment did I refer to house prices. I was referring to banking / financial institutions. Frankly anyone with even minimal economic understanding would realise that supply and demand has a major impact on prices. If the market price of any commodity is less than the economic cost of producing it then businesses will cease producing said commodity. I was in fact picking up your thread on psychology and the impact it has on confidence and the knock on effect on demand and prices. However taking up the point on house prices - they arent just determined by Joe Public's demand - that in turn is affected by the availability of credit to buy houses. Reduced / less accessible credit results in fewer people able to buy (particularly first time buyers). You correctly identified the role of buyers' personal circumstances in your argument but failed to consider what factors influence those circumstances. Yes of course people on the ground have their expectations but no amount of confidence will boost demand for housing if people cant get credit. Equally local factors concerning location and development potential etc will have an impact on expectations / prices. I would love to sell my house at it's top end price but the reality is I'll have to sit it out for the economic cycle to turn and for things to settle down - which I believe will happen from my knowledge of history and economics. Property prices will inevitably bottom out before in time they rise again. That is how economic cycles work. The aim is to manage those cycles so that neither the troughs or the peaks in economic activity are too extreme. I'm not aware that the decisions on how much credit is available in circulation or the cost of that credit is in the hands of the public. Confidence has been damaged because of the actions of financial institutions. I reiterate what I said previously - that there needs to be clear changes from above and greater regulation. Believing this to be the case does not make me part of the herd -nor anyone else who has a different view point - if they are seeking explanations for and an understanding of the current crisis. The herd doesnt analyse situations it just accepts and follows what it hears on the news or sees in newspapers.
It is a shame we cant have sensible discussions here without resorting to personal comments!

peepobaby 15 Dec 2008 , 11:20pm

Aha, back to the old chestnut. The UK economy is founded upon housing wealth.

What's you house worth? The amount that it could rent for per year mutliplied by between 15 and 20. Then you can add on 10% for a premium.

Anyone who believes different has bought into the property myth. If everyone buys into it, then it wouldn't be a myth - so long as banks bought into it too. Unfortunately for most, they don't buy in any more. Boom! Or is that bust?

shepherd2008 16 Dec 2008 , 12:04am

bigdogfan - It is a shame about your personal comments. Get over yourself. I believe the original article was in part about predictions for the housing market. My own comments where directed towards the article, with one comment about global financial problems directed at you! Take a pill and stop calling the kettle black

bigdogfan 16 Dec 2008 , 12:28am

shepherd pots and kettles indeed seeing as you referred to me as "clearly one of the herd" who you described as "ill informed" and "brainwashed" and directly stated I was one of the "brainwashed millions" - very personal by anyone's standards. I dont need a pill but you definately need to learn how to express yourself in a discussion without degenerating to being personal and then have the gall to not even recognise when you been doing it. I'm not going to continue this thread with you because you clearly have no respect for anyone who has a point of view different to yours.

matchmade 17 Dec 2008 , 3:41pm

EvilRobotTed clearly has no idea about the cost of building new houses: there has been massive inflation on products and wage costs since the early 1990s, plus the government has added loads of new building regulations. It's almost impossible to build a house for less than £900 a square metre now, so a small 3-bed semi sized 120 m2 will cost £108,000 just to *build*.

In addition there are new Section 106 taxes at about £10,000 per 3-bed house, and if a building site has more than 15 units, the Government now requires builders to give away 1/3 of the houses as "affordable homes" to a housing association for just the build cost. Thismeans all the land costs and ancillary costs like finance and planning have to be carried by the remaining 2/3 of the houses for private sale. The Section 106 and affordable homes taxes did not exist in the 1990s.

Finally of course the cost of land has risen enormously, as has the complexity and cost of getting anything through planning, with all the risks of failure that involves. It's amazing to me that any houses get built at all in this country.

AccountantsMum felt house prices will recover soon because so few new ones are being built. I think this unlikely, because new homes form such a small part of the market. The key things are confidence and the availability of mortgage finance. Both are in very short supply at the moment, so we are looking at a steep, steep fall in house prices to below-trend valuations, as happened in the 1990s, followed by a long period of stagnant prices while debt is wrung out of people's finances. It took ten years before prices returned to 1989 levels in real terms: see the graph using Nationwide's statistics at housepricecrash.co.uk.

Staintunerider 18 Dec 2008 , 8:36am

Bruce wants to buy a house that's why he is always talking the market down !

Reckondite 18 Dec 2008 , 6:40pm

With a few upward blips, the UK was in recession from late 1973 till the mid 1980s with a steep fall in Sterling and real compound inflation hitting near 1000%. And this was all based on 2 Oil shocks and Barber's 1972-3 "dash for growth" where property in real terms hit levels not seen again till this Century. Unlike now this Boom was short and few people were allowed to incur mountains of debt as now.
In 2003 the Stock Market was at 3200 following 9/11 and the Dotcom Crash. Things are far more serious now so why shouldn't the Market go even lower now.
Chances are this Recession will last many years, not months especially as printing money, ignoring the prudent and bailing out the feckless and those who overpaid for assets because others did too are being propped up instead of letting nature take it's course.
Britain has far fewer "real" jobs, and property is still grotesquely overvalued.

malchill 19 Dec 2008 , 10:28am

When the recession is over and I think we are talking latr 2010 at the earliest it will take several years for things to get going again.If you recall the last one and I have been through many since 1967 Labours devaluation debacle,the green shoots of recovery are a long time coming.
This one will be far worse to get going again because of the debt mountain we already had under Brown which he has added to further to try to buy his way out of recession and also to cling on to power but the VAT reduction will be seen to have been a huge costly mistake just like the many others starting with the creation of the pension crisis in 1997,the selling off our gold resereves for a pitatnce,his inability to deal with the PSBR his waste of increased taxation and his inability to solve the public seector pensions( and I wont bore you with a list of lesser problems such as PFI etc).

It now needs confidence as far as the UK is concerned and this wont change while Brown is in charge the quicker he goes the better the chance of some policy change occurring and the city and the banks getting back to normal.

regards malc

jonathanheenan3 24 Dec 2008 , 9:10am

I agree with a lot that was said, house prices will be hit harder than most analysts think. Its a mugs game gussing how much but anywhere between a further 20-50% over the next 4 years seems reasnable.

One thing I can promise you is that the recession will not end in 09. Hopefully it will officially end in 2010/2011 but we will not have a quick recovery. I believe it will be 2014 before we get the feel good factor back again.

You cant binge drink, drive into a lorry at high speed and expect to go back to work the following day

The stock market will hit 3000 before it hits 6000.

I have just bought a small house and invested my SIPP in 4 funds incase I am wrong!!!

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