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It's easy to predict downturns because there are ALWAYS downturns. Anyone who wasn't daft in 2005-2007 knew that housing was in an absurd bubble; it didn't take a genius to look at a graph of housing values and see that. I remember one of my college professors in 2005 telling us that sub-prime loans were going to be a problem, that the economy looked good on paper but not in reality because of credit.
What most of us didn't realize was how bad the downturn was going to be. I think most people thought it was going to be like 90-91 or 2000-01. We didn't realize how over-leveraged the big banks were, how irresponsible they'd been - that a too-fast downturn would destroy them and bring about a Great Depression. We didn't see that because they did their best to hide it from us. We knew firms like Enron had engaged some shady accounting but we didn't think all the big banks were into it and that they couldn't withstand what should have been a moderate correction due to sub-prime mortgages.
I think we're on a slow burn rather than a blue-hot fire and then flame out like last time. Income/wealth inequality is the central problem - eventually that will come home to roost when demand across the economy craters, but it'll take time; you can build for a while on a sinkhole before your surface layer collapses exposing the fundamental weakness.
My guess is it'll be the mid to late 2020s when another major crisis happens on the scale of 2008. We'll probably have a couple recessions in between that though, my guess is 2017-18. It'll be a kind of great irony if a major crisis occurs around the 100th anniversary of the start of the Great Depression.
These things tend to happen in 7 year cycles and we're currently in year 5 since beginning to cycle out of the last recession.
I should move to Internet radio but still rely on what I can bring up on my radio where I live which is FM music, religion or sports, or on AM dial, Rush, the 9 9 9 man, religion or sports.
So I listen to a lot of right wing talk which is sponsored by chicken little. Ads for dry foods, fire arms, gold, and many financial touts since banks are "bad."
Every ad starts off that we are on the eve of destruction. They have been using fear to promote their products which always involves limited time offers. Over and over.
Other than trolling the Internet to scan every kind of news and self help station, are there news and information sources that are Independent and Balanced. No, not Fox.
Certain " leaders" if you watch and dissect always shout "FEAR"-- always! between some news stations and these leaders, we should have all fell into a huge ditch along time ago-and been in WW10!
let Hollywood scare us with the monsters -aliens- viruses and end of world movies!
Hollywood is the scare. It is the source of liberal monsters, aliens, viruses and the end of the world.
I don't think that is sufficient to prove that you have good instincts on this stuff. I'm not saying you are not a capable investor, you may be, but "instincts" have nothing to do with investing. Further, guessing when to pull an investment and happening to be right may simply be an indicator of luck. Again, I'm not saying anything about your actual investing ability, I'm only responding to the line of logic that says "Since I got X right, I must really know what I'm doing."
As for the idea that the economy is about to collapse, that is contrary to just about all available economic data. Sure, there will at some point in the future be another recession. If you proclaim gloom and doom long enough, you're likely to eventually be right. But there is no evidence that such implosion is in the immediate future. In fact, the fed is almost certainly going to raise rates this summer, which is a move that simply would not happen if it was likely that we were headed for a recession.
When will the present one end? Have you been across the country and seen how things are away from big cities? I am in the DC area and if using this area for a gauge you would be sadly mistaken.
How I see it...can the nation's capital be seen as ruins in disrepair - Detroit - when foreign dignitaries visit?
The rose colored glasses group does not know that there are 93,000,000 Americans not working. That number is HUGE.
Barack Hussein Obama has accumulated more debt than the total of all prior presidents back to George Washington. We cannot pay it back - ever. So what happens? Once again, the price of gold and the DJIA will cross.
Again? Yes, it has appended before and most recently under Jimmy Carter.
Greece has already announced that they're going to default on their loans and that's going to affect things. They're trying to work with them to stave off the change in currency valuation but if it happens they'll be out of the eurozone. This has been put off for several years now with temporary band-aids and another month isn't going to make a bit of difference. Once it occurs it will be a domino affect.
The problem with Greece has already been priced into the value of the Euro over the past two years, so has Europe's version of QE. But if they continue QE program over an extended period, then more downward pressure will follow.
Opposing forces will always have the extremes of "doom and gloom" vs "everything's fine."
I think the answer resides in discriminating the balance, which comes from instincts based on information, not "magical thinking".
Since I read/watch a wide variety of news views, including international, I was aware of some of the financial controversy.
I think as humans we can range from naivete/everything is wonderful to anxious/the end of the world is coming.
Kind of depends on your bank account and your nervous system... and probably in that order ;-)
I pulled my money out in 07/08 because I needed cash flow, not because I thought there would not be a rebound--yes, things do go in cycles.
Wall St friends at the time were like Pearl Harbor before the attack--their collective thinking was I was "being reactionary", but I was being self-protective and they were deluded in group think.
My sense is we are in a delicate balance unforeseen in the history of the US and the world, and there are so many factors it's complicated.
Imbalances like this are always, ultimately, corrected, it's just a matter if the correction will be gentle/gradual or tragic/shattering.... or a mess in between.
One thing that I'm pretty confident of, is that (Captain Obvious) there are things of which we have no idea that could impact the US in significant, unforeseen ways. Perhaps it's those things that most concern me.
In the meantime, we plan for the worst as best we can.... and enjoy the moment to the absolute fullest.
Happy summer, and thanks for all your contributions. Your debate points are well taken and appreciated.
I would post direct quotes, but I don't know how to do it all in one post--sorry.
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The Sky is Falling
