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Should We Have Seen The Recession Coming?

If we could go back in time to this time last year when all was going well, house prices were on the up, stock markets were doing well and employment was on the rise, should we have seen the signs of a slowdown?

Many people have been scratching their heads and looking back to the summer of 2007 and the problems which stemmed from the US credit crunch. Were the signs there? Should we have spotted them earlier? What could actually have been done?

While it would be easy to say the signs were not there, they were, in the shape of a US housing market which had two distinct levels - those who could afford their mortgages and those who could not. As the later groups started to grow many buried their head in sand and continued to spend, spend, and spend, with US savings falling to an all time low. So what about the UK?

In the UK the property market was showing signs of running out of steam in certain areas of the country, but the headlines still said prices were rising. Personal debt hit new highs in the UK and every element of the economy was stretched, from business investment to profit margins to wage demands. Something had to give!

It is easy to look back and see what was happening, but frankly there was very little that could be done at the time, even if the authorities had taken preventative action. Boom and bust was on the way, but the cycle reversed quick than ever seen in recent history.

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