Gas & Electric

Economic markets linked to the main global forces are about to collapse.
Higher interest rates will lead to stagnation and defaults.
The current course will lead to stagflation leading to defaults.
Without sounding like a conspiracy theorist, folk might want to read up on the "great reset". The World Economic Forum have been pushing many ideas over the past few years under this phrase.
Michael Burry famous for his prediction and profiting from the 2008 Big Short is expecting something big in the next 12 months. US and China are the main drivers of the potential global event. China's debt and potential defaults linked to their property markets are eye-watering.

 

True , but when you look at house prices and wages then there's a clear disconnect . If we want to keep house prices on a constant rise then something has got to give on wages . Ironically interest rates at less than 1% has fueled house values and that's another thing that isn't sustainable over the long term . What are we at , 0.1% ? Another crash and we ll be in negative territory .

 

This is basically it. We're stuck between a rock and a hard place and the approach seems to be to bury our heads in the sand and pretend the inflation is transitory.

 

As Martin Lewis suggested quite strongly, DO NOTHING !
The standard tariff is lower at the moment than finding a new fixed one.
It will change but make the most of lower rates right now.

 

When we bought our first house in 87, the base rate was 8.88%. We were paying £100 a month mortgage, on a £15k terraced house. Two years later interest rates peaked at 14.88% and our payment had increased by half again.

Interest rates have been ridiculously low for the last decade, but something has to give. When you look at the historic rates on the Bank of England website, the rates during the last decade or so are crazy.

https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp

 

It’s funny you should say that. This might seem a weird story but it’s true.

My local is the sort of place for locals – brickies, electricians, old folk, me. Some years ago, on a quiet night I witnessed something well out of the ordinary. A small group of American businessmen having some sort of heated discussion or argument. I hadn’t seen them before or have seen them since. Whatever they were on about it seemed important and to me it looked like they’d gone to the pub because it was the place no one would find them. It was back in 2007 and only a short while before the markets crashed.

On Monday I popped in for a pint. I was intrigued to find four Americans in there – investment bankers by the sounds – talking worriedly about gyrations in the money markets, what models and data to follow. They were literally on the edge of panic at times.

Make of that what you will.

 

Everyone needs to keep their eyes on the Russia/Belarus situation. Russia are playing 2 games. They know we're (UK/EU) dependent on them for energy. They're amassing armed forces on the Ukrainian border.
Belarusian dictator with help of Putin sending refugees to the Polish and Lithuanian borders.
Basically Putin will keep taps on and remove the refugee issue, if he's able to make further incursions into Ukraine without resistance from EU and NATO nations.
We've potentially got a cold snap on the way, and the UK doesn't have any reserves due to lack of planning, investment and poor leadership.

 

What does he recommend the man in the street do; keep money under floorboards, in the bank, hide in't hills?

 

Illuminati Xmas do.

 

Basically it's all funny money anyway, basically it'll be the normal folk who will get smashed. The billionaire's will protect their wealth.
We're currently on course for either a USA 1920s situation or Zimbabwe. This inflation isn't going to go away, meaning if wages don't keep pace you won't have money to hide under the floorboards.
If they up interest rates too much many won't have a home ( so no floorboards).
Like I've mentioned maybe that will trigger a "reset". USA inflation currently at 6.2% and expected to rise further.
Chinese property market linked to such investment companies like Evergrande have already started defaulting.
Either way the normal folk of this planet with financial debts are nailed. Those with basic pensions and small amounts of savings are nailed.
Those already in a financial mess, carers, folk with disabilities, folk using food banks are about to get joined by new bedfellows.

But we got Brexit done and now have new blueish (black) French made passports.

 

If you can remortgage to a long term fix, do it now. Money is unlikely to be this cheap again in the medium term. Even if there is an early redemption penalty most offers are valid for 6 months so I would recommend getting an offer and sitting on it - there's no downside.

 

Good p

Good point, haven't had a mortgage deal since rates fell must be nearly ten years now.

 

Whilst we do get gas from Russia it only makes up about 5% of our supply.

 

Everyone who has solar panels or who is getting solar panels should also be investing in a battery storage system which is the same size in kWh as their daily usage.
You should then switch to a cheap off peak tariff, charge your battery up at night at a quarter of the cost, top it up during the day with sunlight and you should be able to bring your bills down by three quarters.
It requires a decent investment up front, but if energy prices rise at the current rate, you'll saved the cost within 10-15 years.

 

What lie?
To paraphrase ,’ we had nowt ‘ when we got married, we started small and had a mixture of new and second hand stuff, and built in some leeway for the chance stuff would go up ( and it did)
I do feel sorry for them but saying many aren’t responsible for the mess they find themselves in, I don’t get that.
The country might be in a mess but anybody taking on debts that stretches them to the limit even at ridiculously low interest and interest rates of course they are culpable.

 

How much did a house cost as a multiple of the average wage back then?

There's not really much choice these days other than to take on an onerous mortgage if you want to own a house.

 

can’t remember exactly, but wages weren’t particularly good and the 10k we paid for our first property seemed like a small fortune,and there wasn’t n’t much spare cash but we both worked and budgeted , don’t have a foreign holiday for years.
Now I’m not saying property prices aren’t stupid now because they are, but you only have to keep your eyes and ears open and see that loads of folk are walking into financial disaster natively or not.
All I’m saying is I can never remember it being any different.

 

We also 'had nowt' when we got married, but my first house (bought after the housing market had started to boom late 80's) cost me less than twice my fairly average salary at the time. A similar house today costs over 5 times the average salary in the area.

For the average homeowner in London, their house will likely 'earn' more than they do this year just by existing. In fact if house prices round here are anything to go by, it's not just London. I reckon my house will have earned over £15k this year based on houses sold nearby, that's a fair chunk of the 20 odd grand local average earnings.

So I'll stick to my earlier appraisal

 

I’m not arguing about interest rates.
But when you bought your £15k terraced house what were you earning? (In 87 I was earning about £13k)
And what would it sell for today?

The point isn’t whether interest rates should rise, but how much of your income was needed to furnish housing costs then vs now.