10974 The recession!

Nielo, it is a great idea to ask these questions to assess the impact of the current recession, but perhaps it may be an idea to covert this thread into a poll... Some people may wish to answer in a more impersonal way. And the answers may increase.... Just an idea.....

Not exactly on point but we learned a ditty at school about global economics. It goes like this:-

One may ask:-
"How can my spending cause inflationary trending,
When I squander every penny I have got?"
Well, when you're joined by many millions of civilans blowing billions then you realise it matters quite a lot!

Just a little diversion from the doom and gloom!

[B]Has the exchange rate seriously affected your lifestyle/future plans?[/B]

Its has been a worry for sure, but still having the ability to earn a living has been handy.
We are planning the kitchen garden for next year and already have doubled the size, and with the pies and cakes that the girls make chickens are a now a good idea.
When we first arrived in 2004 we were getting 1.57 e......now its a shade under 30 percent off at 1.18.........could we afford to it now......I don't think so, would we still do it ......ya bet your life.
No matter what the state of the economy, its the location that makes the difference.
Why be miserable in a dull, cold and wet yUK.......

Agree with Gala, too personal for me ,a poll would be a better idea.
A

[quote=Gala Placidia;103224]Nielo, it is a great idea to ask these questions to assess the impact of the current recession, but perhaps it may be an idea to covert this thread into a poll... Some people may wish to answer in a more impersonal way. And the answers may increase.... Just an idea.....[/quote]

Hi Gala

I did think about a poll, (you know how fond of them I am), but I think that the ways the recession will affect people are too multifarious to fit on a poll.

I do understand that people don’t want to discuss their financial situation in any detail but it would still be possible to say that maybe because of the monetary crisis they are altering their plans, or even to say what they are noticing other people doing that is different.

It may be that with the falling house prices in the UK, the dream of living in Italy is no longer practicable or that because the exchange rate has fallen they are choosing cheaper tiles for the bathroom.

For my own case, as my income is from the UK, I have suffered a decrease of almost 30% so I am much more careful how I spend what I have. I suppose that the biggest change is that eating out is a far less regular occurrence than before and I now make my own limoncello. Both very small changes but if lots of people stop going to restaurants it will be noticed in the wider economy.

If people stop buying houses here in Italy, it will certainly affect a lot of people who rely on selling to the UK market and so on.

I speak to my kids in the UK and it all sounds pretty bad, where as here it seems less bad. That is my experience and I wondered what others experiences were.

As someone who is still planning on the move to Italy in the next few years I feel we are going to be affected by the recession if it goes on longer than is presently being predicted. The price of houses is falling therefore we will not get what we would have liked for our house in England and that means less money to use as a 'cushion' for living off in Italy.
Houses aren't selling so if we are stuck with a house that doesn't sell we can't move.
As our income would be from England we will be affected by the low exchange rate making even less money to live off. Will it stop my plans to move? Like 'eck. :no:

I look at it this way; we have a mortgage on our house in England but not the one in Italy so while the interest rate is dropping I will pay as much as I can to reduce the number of years to pay. Our first house was paid off in 12yrs as opposed to 25 and I will do my damnest to do the same so that when we do finally manage to sell up, any profit will be in our pocket.

For the moment I live my dream through you lot! :yes:

Lorraine

i am in the middle of my own 'new build' between Lamezia & Pizzo, it's my on-going dream to one day move over when the kids are gone/willing to join us, the one thing that motivates me even more is the doom & gloom talk in England, i'm completely
sick of it, i'm certain the press is partly to blame, they are scaring the nation, god knows the press are'nt allowed to report on William & Harry but they're allowed to scare the general public to death. now don't get me wrong i understand this is a global problem and there's a downturn but all you get is bad news!
i always thought of my build as a holiday home but over the past 3 years the thought
of a permanent move is becoming a reality

Interesting to see that the number of new threads in the "travel/Holiday" section is pretty non existant. Is this because people are tightening their belts and not planning any trips or just a seasonal down turn.

For my own part we will probably cut back on our trips over the winter period and wait until the spring. This will mean saving money not only on flights etc but also on electricity and heating.

I do worry about the small business in our own area of Abruzzo and hope that they will survive the current crisis.

Jackie

Jackie Hi Well a friend of mine has just bought a Ryanair flight to/from Italy for £8.02 which are debit card charges. If you are in Italy your fuel in the UK is not being used!!!

We have recently finished having a swimming pool installed. When we first planned this the exchange rate was around 1.40 or so, and we did transfer some money at that. However as the cash was gaining interest in the UK and would not here, we opted for stage transfer - in hindsight what a mistake that was:no: Hindsight is a wonderful thing however.

We also have SASS and SIPP pensions, with the main investments being in the stock market, so we are faced with voluntarily taking less pension over the next few years, to allow the funds to recover, or being forced to take less at the next review. This, coupled with the fall in exchange rate, has made a considerable difference to our Euro income.

We have a holiday apartment here we rent out, or would, but we have no enquiries for next year yet, so potentially no Euro income for now either.

So yes, we are tightening our belts, but would we go back to the yUK, not a chance - and we still have a house there we could go back to.

[quote]If you are in Italy your fuel in the UK is not being used!!! [/quote]

Ah Sally, you obviously don't know the added costs of teenagers left at home!! Believe me if we left my son at home here and went off to Italy the glow of our house would be visable from the moon!

During the summer we arrived home to find the heating cranked up to 30 degrees as he had got cold on the night before coming out to join us in Italy and didn't think to turn the thermostat down when he left the house. The cats were almost bald!! This combined with the fact that he turned up at Ciampino with a huge suitcase full of dirty washing should give you some idea as to why we won't be leaving him again until the weather improves!

Jackie

It's hard - I've lost a third of my income over the past 12 months (get paid in GBP unfortunately) and starting a new business (Sibillini Cycling) in a recession is difficult.

I think it will be very interesting to see how many British visitors there will be next year. Friends that rent out their villa have still has strong bookings for next year. I hope for their sake that there won't be lots of cancellations.

[quote=jackie C;103342]Ah Sally, you obviously don't know the added costs of teenagers left at home!! ..............During the summer we arrived home to find the heating cranked up to 30 degrees as he had got cold on the night before coming out to join us in Italy and didn't think to turn the thermostat down when he left the house..............[/quote]

....and this surprised you?

[quote=jackie C;103342]Ah Sally, you obviously don't know the added costs of teenagers left at home!! ...........he turned up at Ciampino with a huge suitcase full of dirty washing.............[/quote]

....and this surprised you?

[quote=jackie C;103342].[this]....should give you some idea as to why we won't be leaving him again until the weather improves!

Jackie[/quote]

Have you thought of asking Social Services to put him in 'Respite Care', while you are away?

.

In the middle of a rennovation all planned and started at an ER of 1.45.

With the exchange rate dropping away we were initially tearing our hair out but we have now had a change of heart and are focusing on the positives it brings. It was far too easy at 1.45, it is now making us differentiate between our 'needs and wants'. If we want something now - well we are now going to have to roll up our sleeves and work for it and that can only be a good thing.

The exchange rate will not change the reasons we want to live here , family values, good friends, honest food , proper seasons and freedom to express ourselves.

Ryanair is selling free flights to and from Italy today but availability is limited, especially to Perugia airport. They actually make 1p charge for the flight. So there is a £4 or 5 euro debit card charge for the flight each way. Hence Sally's £8.02

alan h
[quote]Have you thought of asking Social Services to put him in 'Respite Care', while you are away?[/quote]

Never mind him - rather fancy a couple of weeks respite myself!

Jackie

Ps And no - I suppose I shouldn't have been surprised!

I have been thinking about the question posed by Nielo for several days now and have come to the conclusion that for many of us, much will depend on what happens with the "tourist trade". Anyone relying on Spring and Summer rentals will, perhaps, not discover how the world wide recession is affecting them until early Spring 2009 when the holiday enquiries and bookings start or not.....

One good thing about the recession is that some stores are having their sales before Christmas instead of afterwards.

I believe that M&S is having a one day sale today with reductions of up to 20% across the store, which might explain why some members are absent.:laughs:

We saw sale signs up in Fermo today .........

Ah don't worry Nielo I'm here, but methinks J+C is off there to buy me a red wool winter coat!!! lol

I wouldn't buy you something so personal as a red wool coat Sal - I thought some out of date prawn sandwiches would suit you better!!! lol

how out of date ?

Out of date enough for Sally to sue M & S - if she survives! :bigergrin:

Hotfoot from M&S. Busy, but it is late night shopping anyway, and euros predominately people buying it seems but still plenty of stock. Wait for the returns and the bargain rail next week!!!

(Also many clothing shops here have 30/40% off too at the moment)

Ah… do I see the much more dangerous deflation taking over from recession? God help us all if that happens!!

My business is probably one of the few that traditionally does very well in a recession - and even better if deflation takes place. I might just buy that diamond encrusted villa in Amalfi after all.

The first couple of months of the "Credit Crunch" hit us hard - down by 45% at least - but as the public settled into acceptance that the media was going to contiually hype the situation and they realised that they were safer staying put - business increased and has now exceeded previous levels - even though one or two big clients went to the wall.

Strange old world aint it?

One of our oldest clients closed there account with us after 29 years, formally Banca De Roma London, recently taken over by Unicredit .........sad times at BDR, only 9 of the staff managed to keep there jobs.
Good luck to all the others.

[quote=Nielo;103452]Ah… do I see the much more dangerous deflation taking over from recession? God help us all if that happens!![/quote]

I seem to remember that I read somewhere that the part of the Maastricht agreement when the value of the €uro was set for for those countries converting to it on 1st January 2001, was that this would eliminate the need for revaluing or devaluing the currency. Of course that would then indicate that those countries who did NOT accept the €uro [I]may[/I] be forced into devaluing their currency - Britain, Denmark, Sweden.

The fact that the €uro has gained so much in value against other world currencies like the US$ and the Japanese Yen, has now put us in a difficult position in Europe with regards to devaluation, but I fear it may be worse in the UK.

I am (thank heavens) in a reasonably good position, having completed all the move, restructuring, legal and other finacial strings attached to the purchase of my house, when the €uro was still very buoyant and still at 1.48-1.60 to the £. If I was doing all that now, I certainly would be looking at nothing less than a disaster. I feel so sorry for those who have become caught up in all this. But at the same time I'm heaving a huge sigh of relief that I'm not!

Well a cut in the VAT rate will do nothing for me unless it bolsters the pound against the Euro, but if it happens as predicted I wonder if it will make the necessary difference.

It may help out with the Christmas shopping or if you are thinking of making large purchases but it won’t help people with their food bills.

Also the threat of rising taxation to pay for it does not really help the gloom factor.

I wonder where it will all end!

[quote=Luce Dell'Amore;103403]
The exchange rate will not change the reasons we want to live here , family values, good friends, honest food , proper seasons and freedom to express ourselves.[/quote]

Er... I think most of those are personal values and aren't dependent on where you live. So for example I ate honest food in the UK too, which I, or my friends cooked.

To the actual OP: well, my _main_, although small income is in GBP, so I'm definitely looking for more teaching work. As the snow is so good at the moment, I am, however, having to be a bit selective ...

[quote=Carole B;103483]
The fact that the €uro has gained so much in value against other world currencies like the US$ and the Japanese Yen, has now put us in a difficult position in Europe with regards to devaluation, but I fear it may be worse in the UK. [/quote]

Actually Carole, that's the only thing good about the US recession. The euro exchange rate for US dollars in now about $1.26 US to the euro. When we were in Italy in July is was $1.60 to the euro!

[quote=Nielo;103758]Well a cut in the VAT rate will do nothing for me unless it bolsters the pound against the Euro, but if it happens as predicted I wonder if it will make the necessary difference.

It may help out with the Christmas shopping or if you are thinking of making large purchases but it won’t help people with their food bills.

[/quote]

If a cut is true and we are just awaiting the detail, as a retailer I doubt a cut in VAT will help shoppers - If I am selling something at £9.99 inc vat at 17.5% and vat drops to 15% then I am not going to price change for a couple of pence, I regret that i and I suspect many other retailers will just pocket the difference.

[quote=sueflauto;103773]Er... I think most of those are personal values and aren't dependent on where you live. So for example I ate honest food in the UK too, which I, or my friends cooked.
..[/quote]

Secondo lei! If you wish to start another thread I will be happy to debate the issue with you.

I agree with Luce in that most traders won't pass the small saving in vat on. In fact as usual, the government haven't thought out the cost to small business in man hours and staff wages of having all of those price tickets changed to reflect the drop in vat!

I doubt also whether a saving of £2.50 on every £100 spent will have us all rushing to the shops!

Jackie

If this VAT reduction does proceed then it is not really Joe Public who will benefit - but businesses certainly will. It may only be £2.50 in every £100.00 that is being saved, but when you multiply that by the many billions of commercial turnover nationwide each and every day - that is a signficant saving.

So interest rates now at 2% (when I was paying off my mortgage it rose to 15%!!) and the Halifax, which is using taxpayers money to keep itself afloat decides not to pass on the rate cut to their borrowers!

Their excuse for this is that the cut would not affect 85% of their borrowers and they have a duty to their savers…..hang on that actually means they are getting the extra money from ONLY 15% of their borrowers! I know banks are not good at math but with this sort of nonsense no wonder the £ is seen as a liability.

£ to € parity by Christmas?

And all this after they (the banks) exposed the moneys from their savers to play "roulette"...Tougher rules are needed urgently to let the bank clearly know what they can and cannot do....
As for the pound - euro parity, it looks as if it is going that way.

[quote=Nielo;104740]So interest rates now at 2% (when I was paying off my mortgage it rose to 15%!!) and the Halifax, which is using taxpayers money to keep itself afloat decides not to pass on the rate cut to their borrowers! ...............[/quote]

I'm not surprised that banks are not passing on the full rate cut to borrowers. The banks are already committed to paying fixed rates of interest to many of their existing investors, and this cannot be paid if they don't have a proper income stream.

I [along with many other depositors, I'm sure] have an account with Halifax that pays 5.5% on any sum deposited, until October 2009. They have to meet that 'contractual obligation' to me, and this can realistically only be done by keeping some of the interest cut back to service that debt .

Italians are also suffering the consequences of this world recession and the foolishness of banks and financial institutions who have invested their monies in highly volatile funds. Here is an interesting article:

[url=http://www.ansa.it/site/notizie/awnplus/english/news/2008-12-05_105297671.html]ANSA.it - News in English - More Italians now risk insolvency[/url]

The thought of the pound/euro equality pertrifies me; and I should think those others who have money tied up in the UK. Last year we were 1.5 euro to the pound. now we're barely 1.16. We loose a tidy sum every time we get funds from the UK. Damned Estate Agents have got a lot to answer for....... they started all this.:no:

[quote=pgerrard;104868]The thought of the pound/euro equality pertrifies me; and I should think those others who have money tied up in the UK. Last year we were 1.5 euro to the pound. now we're barely 1.16. We loose a tidy sum every time we get funds from the UK. Damned Estate Agents have got a lot to answer for....... they started all this.:no:[/quote]

You are now in the same boat we found ourselves in for the past few years. We saw large numbers of English and other EU country citizens being able to purchase homes that we couldn't. You all had it really good! Our currency tanked in comparison to the euro. Living in the USA for now, we had to put our plans on hold to purchase a home in Italy to eventually retire to. Now that the exchange rate is finally in our favor again, with the uncertain global economic situation we probably will be waiting a few more years until things hopefully stabilize in the USA.

I don't understand your comment though about Estate Agents. They are not the cause of this mess from my understanding. It is the banks and other mortgage lenders who made risky loans without proper financial documentation.

[quote=Lisa C.;104872]You are now in the same boat we found ourselves in for the past few years. We saw large numbers of English and other EU country citizens being able to purchase homes that we couldn't. You all had it really good! Our currency tanked in comparison to the euro. Living in the USA for now, we had to put our plans on hold to purchase a home in Italy to eventually retire to. Now that the exchange rate is finally in our favor again, with the uncertain global economic situation we probably will be waiting a few more years until things hopefully stabilize in the USA.

I don't understand your comment though about Estate Agents. They are not the cause of this mess from my understanding. It is the banks and other mortgage lenders who made risky loans without proper financial documentation.[/quote]
Well; Flipantly; Estate Agents set the prices and are always trying to drive prices upward (more commision for them). Therefore stretching purchasers to borrow more to afford it i.e. 100% Mortgages. Then they loose their job/default on payment...... I don't need to spell it out .DO I..

[quote]Estate Agents set the prices and are always trying to drive prices upward (more commision for them). Therefore stretching purchasers to borrow more to afford it i.e. 100% Mortgages[/quote]

Actually market forces set the price - a house is only worth what someone is prepared to pay. It is the banks who have got us in the current mess with sub prime lending and little forward planning. I remember after the last property slump of the late 80's banks and building societies saying there would be no more 100% plus mortgages. How soon they forget and once again in times of feast they happily lend large multipliesof salaries with nary a backward glance.

As usual the only people to suffer are those who struggled to get on the property ladder to start with or who, encouraged by the bank's optiimism, overstreched themselves.

Jackie

Well I think pgerrard has a valid point of view in pointing the finger - not at estate agents in their role as sellers, but in their role as 'valuers'. In all market transactions the 'ratings agencies' assume that they define the price (accepted that it is the final buyer who accepts that rating) but for an individual going against 'the agency' can get pretty torrid.

Face up to reality - the sheeple were suckered in to a bubble. Now I have some lovely tulip bulbs for sale....the only consolation is that nobody was a winner either in Holland or this time around. Smoke and mirrors.

This should reinforce the idea that some of us have been "preaching" in this Forum for a long time. Be very careful when buying a property and check everything, including the price of similar properties. And don't get into excessive debts or mortgages. Economic circumstances can vary in a matter of a few months destroying all our plans.
If you are careful, this is a buyer's market, but only if you have the money to buy in the bank.... or in a sock.....

[quote=Gala Placidia;104916]This should reinforce the idea that some of us have been "preaching" in this Forum for a long time. Be very careful when buying a property and check everything, including the price of similar properties. And don't get into excessive debts or mortgages. Economic circumstances can vary in a matter of a few months destroying all our plans.
If you are careful, this is a buyer's market, but only if you have the money to buy in the bank.... or in a sock.....[/quote]

Hi Gala,

These are my sentiments as well.

[quote=pgerrard;104893]Well; Flipantly; Estate Agents set the prices and are always trying to drive prices upward (more commision for them). Therefore stretching purchasers to borrow more to afford it i.e. 100% Mortgages. Then they loose their job/default on payment...... I don't need to spell it out .DO I..[/quote]

Estate agents aren't necessarily the ones to set prices. The owners often are and they have seen what other buyers have been willing to pay. However, whatever happened to buyer beware? The intelligent househunter will do their homework, research what similar properties have sold for and talk with neighbors of the house they are considering, geometras and friends, if they have any in the area. It is also important to meet with many estate agents and try to use local ones, not those who mainly cater to foreign clients. Also, the purchaser should never offer full price as I understand quite a few foreigners do. You also need to factor in fluctuation in currency if taking out a mortgage. No one forces the buyer to purchase a house that is a real stretch and I believe it is always best to live below one's means.

I still feel that it is misguided to condemn estate agents for the current economic meltdown. It is very easy to cast blame instead of reflecting on one's own culpability.

Here is a link to an interesting article in the NY Times today -

"Debt Watchdogs: Tamed or Caught Napping" [url]http://www.nytimes.com/2008/12/07/business/07rating.html?_r=1&hp[/url]

Ok I give in ESTATE AGENTS were not to blame( I'm not that nieve); but I think their friends have infiltrated this site....................LOL

[quote=pgerrard;104933]Ok I give in ESTATE AGENTS were not to blame( I'm not that nieve); but I think their friends have infiltrated this site....................LOL[/quote]

Sorry but I find your insinuation rather offensive. I have absolutly no connection with any realtors. I do notice, however, that you do have a link on your website to estate agents in your area! My husband is a veterinarian and we run a family business. I just feel that it is very unfair to blame them when they ultimately are not the cause of the problem. It is all too easy to find a scapegoat rather than examine the root of the current financial crisis.

Gosh! Lighten up Lisa. I am not about character assasination here. If we can't be a bit flipant about the situation it's about time to give up LOVE.
:no::laughs:

Lisa C. has just answered on my behalf, as well. I have no interest in promoting real estate agents, there are good ones and bad ones as in any profession.
At least, you can say that you have purchased a property in an area which is worth much more than current market values. This is my honest opinion and I have no hidden interest in real estate except from the fact that we own a property.
Buyers should be more careful when they decide on a purchase. It is basic common sense.