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View Poll Results: When do you think the next recession will occur?
There will never be another recession 1 1.08%
Probably within the next 3 years 72 77.42%
Probably in the next 4-6 years 15 16.13%
Probably in 7+ years from now 5 5.38%
Voters: 93. You may not vote on this poll

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Old 05-06-2018, 04:41 PM
 
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12-18 months and it’s going to tank hard.
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Old 05-06-2018, 05:27 PM
 
Location: Ohio
18,053 posts, read 13,262,843 times
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Quote:
Originally Posted by nep321 View Post
Under the surface, the American economy is in even worse shape today than it was before the 2008 recession.
I'm not seeing any evidence of that.

Quote:
Originally Posted by nep321 View Post
Corporations are more leveraged than ever.
Corporations have been indebted for quite some time, for about the last 5 years at least.

Note that publicly-traded corporations only constitute 3% of all businesses in the US.

Publicly-traded corporations, and even private companies, often carry debt, just like people. The debt is only an issue when it is excessive and functions as a bar to acquiring new debt needed specifically for expansion or research and development.

Quote:
Originally Posted by nep321 View Post
Housing bubbles have formed in major metropolitan areas throughout the country and wages have not kept up.
So? That's a localized phenomenon. Those cities have more people than housing, so it's a function of Supply & Demand. Those particular cities have always had expensive housing and rents, because Supply has always exceeded Demand, so it's nothing new, and certainly not shocking.

Wages are unrelated to housing costs. Wages/salaries are determined by the Supply & Demand of Labor for a specific Skill-set (and the federal government identifies more than 800 Skill-sets), in a given Labor Market. The size of a Labor Market is determined by access to the Market, which is often how far people are willing or able to commute.

Quote:
Originally Posted by nep321 View Post
The national debt is now up to $21 trillion and growing.
Federal debt has no bearing on the economy, until it reaches a point where foreign States, foreign banks, foreign corporations and private companies, and foreign investors are unwilling or unable to purchase US treasury notes, bills or bonds. Obviously, it will be a problem when US federal debt exceeds World GDP. Right now, federal debt is only 1/4th of World GDP, reaching 1/3rd of World GDP in less than 10 years from now.

Quote:
Originally Posted by nep321 View Post
The U.S. dollar had it's worst year ever in 2017.
That has very little to do with economic expansion.

Quote:
Originally Posted by nep321 View Post
The stock market is now showing signs of volatility, which is indicative of a problem.
That has no bearing on the economy. As history shows, the Stock Market has set records while the US economy was in a recession or otherwise performing poorly, and then the Stock Market crashed during periods of peak economic performance and output.

The only thing the Stock Market does is show where investors are putting their money.

During the 1990-1991 Recession, the Dow Jones went from 2,610 to 3,004.

That's a 15% increase.

Any of you who still maintain the fantasy that stock markets cause recessions/depressions or perform poorly during recessions/depressions, better think again, because history does not support your fantasies.

Quote:
Originally Posted by nep321 View Post
Home lending standards are relaxing a bit, with some now offering "nonprime" mortgages and many lending with small down payments.
Lending practices were not the cause of the last recession and the requirement for a 20% down-payment went the way of the buggy-whip in the early 1990s.

Quote:
Originally Posted by nep321 View Post
Income inequality is at an all time high since the gilded age, with one in three Americans now unable to afford basic living necessities.
And yet 75% of households have cable or satellite TV.

Americans are financially illiterate and make poor choices when it comes to money.

Quote:
Originally Posted by nep321 View Post
Interest rates are now increasing.
That is not evidence of a poor economy. In and of itself, it means nothing. However, taken with heavily indebted companies, it could limit or reduce economic expansion. It primarily affects private companies who cannot issue stocks or bonds.

Quote:
Originally Posted by nep321 View Post
And the national debt to GDP ratio is higher than ever.
It's "federal debt," not "national debt", since States have no ethical, moral or legal obligations to federal debt under federal or international law.

Federal debt has no bearing on economic expansions or contractions.

Quote:
Originally Posted by nep321 View Post
I predict that the bubble will burst within the next few years and the stock market will crash.
That's vague and unspecific.

The current economic expansion is 106 months, tying second place as one of the longest economic expansions in US history. June will mark the 107th month, making it officially the second longest economic expansion in US history. The longest expansion ever was 120 months, and that could possibly be broken in August 2019.

Long economic expansions are rare, and statistically speaking, it's highly unlikely an economic expansion would exceed 120 months by any great length of time, like 12 additional months or more.

Pretty much any fool can claim a recession will happen, because statistically, the odds are in their favor.

A real prediction would actually state the quarter in which the recession would start.

1,555,000 more Americans were working in February than January. That number is always suspect, because BLS makes changes in January due to the fact that its Business Birth-Death Model is flawed. It's better to look at total private employment, which increased by 775,000 from January to February.

474,000 new jobs were added in March and 471,000 were added in April. Those numbers are the raw data, supported also by total private employment, and not the statistically manipulated "seasonally adjusted" nonsense, which is someone's idealized vision of what a graph should look like.

So long as employers are hiring, the economy is expanding. Even when employers aren't hiring, the economy can still expand.

And stock market crashes are irrelevant.

Even when stock markets crash, there has never been a case when they have not recovered and set new records.

Few people actually lose money during stock market down-turns.

The value of stocks and your stock portfolio is only theoretical. To determine the actual value, you have to liquidate the stocks, and the price at which you liquidate the stocks becomes the real true actual value.

If you invest $100,000 in stocks and the theoretical value becomes $1 Million and then the market crashes 50%, your stocks are still theoretically valued at $500,000, but you haven't lost a single dime, since your original $100,000 cash investment is still there untouched.

The stock price would have to drop more than 90%, before you actually lost anything.

Quote:
Originally Posted by nep321 View Post
Most experts such as Peter Schiff, Bill Gates, Robert Kyosaki, etc., say that the economy will crash much harder than it did in 2008, within the next couple of years...possibly even this year.
Bill Gates is not an expert on anything, except Bill Gates and how to screw people out of money.

Gates didn't invent MS-DOS, he bought it. It was originally called QDOS. Gates paid something like $30,000 for the rights and in the contract, he promised to hire the inventor as a consultant with consulting fees attached. Gates reneged on the contract and never used the guy as a consultant, and then Gates and the idiots he hired didn't understand QDOS and they totally messed it up.

The end result was that MS-DOS had a lot of unusual quirks. If you attempted to write 0 bytes to a file, it would truncate the file where ever the file pointer happened to be located. Some clever people discovered that, wrote a neat little program of only a few bytes, and then stuck it on the internet where people could unknowingly down-load the virus. Every time they hit a certain key on the keyboard -- whatever key the programmer chose -- it would truncate your files, and they became all corrupted.

Gates didn't invent Windows, either. He bought that from a company called The Software Group who had created a neat little program called Enable. Enable was a software suite consisting of a word processor, spread-sheet, database and telecommunications program -- because you had to manually operate your modem back then. You could have as many as eight windows open at a time. Open up two different word processor templates, a spread-sheet with data, your mailing list database, then your telecommunications window then dump the contents of the two word processors and the spread-sheet data into a new document in another window, and send it to the people in your mailing list database using your modem.

That program cost $2,499 in 1984, and it was really advanced software for 1984. I used it at TRADOC Headquarters when we were crafting Division '86, Air-Land Battle 2000, and doctrine for geo-political regions.

Gates is a rather unremarkable "businessman" whose ethics are questionable and who happened to be at the right places at the right times.

To suggest he's an "expert" on the economy is absurd.

And Peter Schiff is a total failure who gets everything wrong.

You know, look, I know inflation is going to get worse in 2010. Whether itís going to run out of control or itís going to take until 2011 or 2012, but I know weíre going to have a major currency crisis coming soon. Itís going to dwarf the financial crisis and itís going to send consumer prices absolutely ballistic, as well as interest rates and unemployment.


Then when he gets it wrong, he blames the Federal Reserve. Wrong again, since it's the Bureau of Labor Statistics that calculates Inflation.

Prices are inflated by 47% since January 2000.

That's about 2.5% per year, which is stellar, since few countries do better. In fact, historically, only Britain and Switzerland have done better, and they only do so occasionally.

Then Schiff claims the government manipulates the data to hide inflation, which is nonsense, since the data is available to anyone who wants it.

The CPI is an average, which means some people pay more (and some a lot more), while others pay less (and some a lot less).

Just because in some places a house costs $1 Million and a studio apartment rents for $3,000 doesn't mean everyone pays that amount. Some people rent a two-bedroom for $450/month, and you can still buy nice homes for $50,000 to $150,000 in a large number of areas in the US.

In any event, Schiff is the last person from whom I would accept advice (of any kind).

Quote:
Originally Posted by nep321 View Post
I just don't see how home values and stocks can just keep going up and up forever. That has never been the case.
They haven't gone up forever.

You must be completely ignorant of recent stock market activity.

If you think stocks are going to lose 40.9% of their value over a period of 959 days (like it did when the economy was averaging a stonking 12.5% GDP growth per quarter) or lose 86% of its value over 813 days (like it did between April 1930 and July 1932), which is unarguably the worst crash ever, that just ain't gonna happen.

The nature of the World, the economy and the stock market itself, not to mention the nature and type of investors in the market, has changed dramatically. You'll never see anything like that again.

And, so what if the market drops 25%?

It doesn't have any bearing on anything.

As I proved earlier, very few people, probably less than 1% of actual investors, truly lose money.

So some retiree's stock portfolio was diminished in theoretical value from $1 Million to $750,000.

Unless that retiree was going to spend $1 Million tomorrow, it has zero effect on the economy and zero effect on the retiree.

The retiree is still going to draw down $30,000 to $50,000 a year to fund their retirement, and within a few weeks to a couple of years, it will theoretically have a value $1 Million again.

So, what has the retiree lost? Nothing. What harm was done? None. It's just as if it never happened.

In any event, neither India, Central Asia nor sub-Saharan Africa are ready for economic advancement yet, so there's no place to "off-shore" jobs, like when all the jobs went to China, Vietnam and Thailand in the early 2000's, which is what caused the last recession.

The economy will continue to grow until it no longer can, and the stock market won't have anything to do with that. Minimum wage laws, interest rates, and government policies will have a greater effect on economic growth than whatever the stock market does.
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Old 05-07-2018, 11:32 AM
 
Location: Paranoid State
12,685 posts, read 9,455,990 times
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Quote:
Originally Posted by nep321 View Post
Peter Schiff correctly predicted the 2008 crisis, so he has excellent credibility.
This statement lacks evidence of any fundamental economic analytical thought.
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Old 05-07-2018, 11:40 AM
 
Location: Paranoid State
12,685 posts, read 9,455,990 times
Reputation: 14953
Quote:
Originally Posted by nep321 View Post
The facts and economic conditions speak for themselves.
Yes they do, and the data are all quite positive.

A related question is "how well do economists forecast recessions?". The following paper crossed my desk recently:

IMF Working Paper
Research Department
How Well Do Economists Forecast Recessions?
Prepared by Zidong An, Jo„o Tovar Jalles, and Prakash Loungani
Authorized for distribution by Chris Papageorgiou
March 2018

https://www.imf.org/en/Publications/...cessions-45672

The answer is that economists are not good at forecasting recessions. They are not very good in the USA, or anywhere else around the globe.
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Old 05-07-2018, 04:19 PM
 
Location: Jacksonville, FL
11,038 posts, read 13,389,730 times
Reputation: 6755
Quote:
Originally Posted by SportyandMisty View Post
Yes they do, and the data are all quite positive.

A related question is "how well do economists forecast recessions?". The following paper crossed my desk recently:

IMF Working Paper
Research Department
How Well Do Economists Forecast Recessions?
Prepared by Zidong An, Jo„o Tovar Jalles, and Prakash Loungani
Authorized for distribution by Chris Papageorgiou
March 2018

https://www.imf.org/en/Publications/...cessions-45672

The answer is that economists are not good at forecasting recessions. They are not very good in the USA, or anywhere else around the globe.
All the economic data also looked fabulous just before the 2008 crisis. No one saw what was coming.
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Old 05-08-2018, 12:09 PM
 
2,253 posts, read 1,396,923 times
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Mircea, I usually love/agree with your posts, but I’m curious about how you can say recessions and depressions are not effected by the stock market and that they are “irrelevant”. The stock crashes certainly weren’t THE reason for the Great Depression or Great Recession, but they were definitely a part of the reason these events were so painful.

For example, when company stock prices are tanking, Fortune 500s might start wide spread layoffs. They tend to put off cap ex. When large numbers of companies are shedding jobs, this can affect wage increases or the localized housing markets. Employees may fear for their jobs and spend less.

Households who are losing wealth in the stock market tend to do things like stop 401k contributions, put off retirement (boomers took up space in the workforce longer), shift capital from risky to less risky investments (avoiding risk and generating smaller return). They may cut out vacations or home improvement. People fear for their jobs and begin to clear off debt.

When people lose their stock wealth, their willingness to consume and spend on big ticket purchases curtail. Businesses and consumers alike get their borrowing ability constrained when their net worth, includeing assets like stocks, decline.

I just really don’t understand how bad news in the stock/bond market wouldn’t spill into the world of factories and employment. I’m actually interested in learning why you would say that it doesn’t have an effect.

The expectation that stocks will grow can turn into a self fulfilling prophesy. The banks use this wealth as the basis to extend the credit base for consumption by consumers and businesses alike. The same works in reverse when people are pessimistic. Granted, there can be considerable lag and the “real” economy can definitely decouple from Wall Street (obviously this tension snaps and can lead to economic suffering)


I also heavily disagree with the idea that stock gains realized aren’t “real” because you haven’t recognized them. That’s like saying if you were up $1,000 at the casino, and you eventually lost all of it that you didn’t lose money. Of course you did. You may have not lost your original basis (to generate say a book/tax loss) but those losses are still real. You could have walked away with the money at anytime. You had realized the gain, you were just too greedy to recognize it from a book perspective.

Last edited by Thatsright19; 05-08-2018 at 12:21 PM..
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Old 05-08-2018, 02:23 PM
 
Location: Olympus Mons, Mars
5,000 posts, read 8,045,656 times
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I predicted the 2008 crisis as well, do I get credit? LOL.. it was pretty easy to predict it, the writing was all over. Those that were homeowners, realtors and mortgage professionals were the only ones saying all was fine due to their rose colored glasses perspective.
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Old 05-08-2018, 03:54 PM
 
Location: Myrtle Creek, Oregon
11,075 posts, read 11,482,914 times
Reputation: 17248
Quote:
Originally Posted by Mircea View Post

Federal debt has no bearing on the economy, until it reaches a point where foreign States, foreign banks, foreign corporations and private companies, and foreign investors are unwilling or unable to purchase US treasury notes, bills or bonds. Obviously, it will be a problem when US federal debt exceeds World GDP. Right now, federal debt is only 1/4th of World GDP, reaching 1/3rd of World GDP in less than 10 years from now.
There is no hard and fast line. In the first quarter of 2018, the US Treasury borrowed $488 billion. This has pushed the 10 year treasury bond to 3%. The government has to compete with all other borrowers on the open market, and those borrowers have to compete with the federal government for money. Existing debt has little effect, but the deficit has a profound effect on the availability of capital. It makes no sense to write a 3% mortgage when you can buy a federal bond for the same rate with lower risk. With inflation pushing past 4.5%, investors can be excused for moving their money to more stable currencies. If the Fed decides to tighten money supply to bring down inflation, the recession feedback cycle will have started.

Quote:
Originally Posted by Mircea View Post
Lending practices were not the cause of the last recession and the requirement for a 20% down-payment went the way of the buggy-whip in the early 1990s.
Lending practices may not have started the recession, but they caused immense damage. Ask anyone who owned WaMu or Lehman stocks or bonds. Locking up credit brought down Chrysler. Bear Stearns stockholders got back less than 8 cents on the dollar, and of course bond holders got nothing. Mortgage backed securities were the heart of the problem, and the problem was caused by lending practices.
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Old 05-08-2018, 04:04 PM
 
Location: Myrtle Creek, Oregon
11,075 posts, read 11,482,914 times
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Quote:
Originally Posted by nep321 View Post
All the economic data also looked fabulous just before the 2008 crisis. No one saw what was coming.
That's nonsense. Federal policy has been to keep a faltering economy from collapsing since 2006. Tax cuts. Falling interest rates. Having a war. Bush/Cheney gambled on things holding together until after the election, and they almost made it. You would have to have been blind not to see what was coming.
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Old 05-08-2018, 07:05 PM
 
4,768 posts, read 2,273,078 times
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Quote:
Originally Posted by nep321 View Post
Peter Schiff correctly predicted the 2008 crisis, so he has excellent credibility.
So Schiff gets credit for being the broken clock, then you ignore the ensuing decade of incorrect predictions by Schiff of market crash, dollar crash, gold boom, hyperinflation, etc.

Why the bizarre filter where you assign him credibility for finally being right after so often being wrong, then ignore all the dumbass predictions he has made since that haven't panned out?
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