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Old 08-07-2019, 02:11 PM
 
26,298 posts, read 33,289,920 times
Reputation: 32822

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I think it will be ugly. But I don’t think it will be anything like 2008.

Heck we are already nearly 2 years into a “no gains” time frame. I don’t know why anyone thinks this just started.
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Old 08-07-2019, 02:52 PM
 
13,409 posts, read 17,968,089 times
Reputation: 20221
Quote:
Originally Posted by bawac34618 View Post
It looks like the party is over and we are about to have a recession. Do you think this will be as bad as 2008? Will it be worse?

I'm currently stuck in a dead end call center job in a town I hate and was planning on moving in a few months to a larger city in hopes of finding a better job and better life, but now I'm having second thoughts.
Business as usual?
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Old 08-07-2019, 03:33 PM
 
5,617 posts, read 2,397,123 times
Reputation: 16761
Quote:
Originally Posted by aridon View Post
Move. No reason not too. You can't sit and wait for the world economy to do its thing. You work at a call center, you aren't likely to do much worse by moving. Its not like you are planning a 30m capital expenditure and worried about demand.

Yep. If you're in a dead end job in a dead end town, staying put won't make it better. Better to move now to a state like Texas take your chances than put up with the slim pickings where you are.
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Old 08-07-2019, 04:01 PM
 
3,988 posts, read 1,558,817 times
Reputation: 7876
since i have failed to time the market, i do not trust my recession predictions.
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Old 08-07-2019, 04:01 PM
 
Location: The Big D
131 posts, read 83,501 times
Reputation: 194
I'm overall sympathetic to the market indications a recession is coming. However, depending on how the next election goes, student loan debt forgiveness could be enough of a stimulus to stave of said recession for another couple of years. Just a thought.
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Old 08-07-2019, 05:48 PM
 
Location: Ohio
20,171 posts, read 14,378,703 times
Reputation: 16369
Quote:
Originally Posted by bawac34618 View Post
It looks like the party is over and we are about to have a recession.
Well, you would say that just because you saw two birds in a tree.

Quote:
Originally Posted by bawac34618 View Post
Do you think this will be as bad as 2008? Will it be worse?
Quote:
Originally Posted by SWFL_Native View Post
Bad very bad... think much wider and deeper than 2008.
Quote:
Originally Posted by ChessieMom View Post
I think it will be ugly.
You're all wrong.

Recessions never "just happen." There's always a causal factor.

The stock market is not now, nor has it ever been, nor could it ever be a factor and none of you could ever prove it is a factor so you can all put that silly nonsense out of your minds now.

Recessions happen because economic growth stops. Not only does expansion stop, it actually contracts.

The contraction is what results in negative GDP growth, rather than positive GDP growth. When the economy contracts for two consecutive fiscal quarters, we call that a "recession."

If an economy ceases to expand, it's because there is a bar to growth.

One such bar to growth is high interest rates.

All businesses borrow money to operate. All business have borrowed money to operate since the very first business opened in Mesopotamia 11,000 years ago.

All businesses have an account at a bank. That account is a revolving credit account, like a credit card, only different. Like a credit card, that revolving account has a credit limit and interest is charged on purchases. The interest rate is determined by the bank and the account holder's credit history and the Supply & Demand of credit and the prime rate set by the central bank.

You borrow money to buy "stuff." Stuff is raw materials, semi-finished goods and intermediate goods and you buy stuff whether you're making soap or TVs or cell-phones or cars or furniture or clothing.

You sell what you make, and that's your revenues, and you use your revenues to pay employee wages and benefits, your operating costs, and pay down your debt. Whatever's left is your gross profit and after you pay all of your taxes and regulatory fees, whatever's left is your net profit.

It's a little different for service providers. As a massage therapist you need to buy supplies, but you're not spending nearly as much as a cell-phone service provider who is buying microwave transceivers and the towers or renting space on a roof-top to mount them.

Contrary to popular belief, the profit margin of companies isn't 10,000%. The average is 10.7% and for many companies it's less than 5%.

When interest rates rise, it starts eating into profit margin, then your profits evaporate and then you're actually losing money, at which point the lay-offs start.

Laying off workers may seem counter-intuitive, but production is an art, not a science. It's easy for inventory to pile up and when it piles up it's necessary to lay-off workers until inventory draws down.

When interest rates are low, high inventories don't really matter much, although over the long-term they might.

Anyway, that's what caused the 1952-1953 Recession and a few others.

Another causal factor is liquidity. It's sometimes called a credit crisis or credit crunch.

It can be economy-wide, but that wasn't the case in 2008.

It can also be industry-wide, but that wasn't the case in 2008, either.

The next tier is sector-wide, and that was the case in 2008.

The credit crunch affected the housing market, but had no bearing whatsoever on the automotive industry, or the automotive parts industry, or the export industry, or healthcare, or telecommunications, or technology or retail or hospitality or grocery or manufacturing or anything else.

It only affected housing.

That wasn't the cause of the 2008 Recession, but the next factor, Capital reallocation, was.

The most obvious instance of Capital reallocation is demobilization after a war or major conflict. The 1946 Recession was caused by Capital reallocation.

The 1991 Recession was caused by Capital reallocation, too.

Bush had signed the IFR Agreement to withdraw the US VII Corps from Germany, so that was a clear and convincing signal that military contracts would be cancelled or reduced. You also had the INF Treaty requiring the withdraw of the Pershing II and BGM-109G missile systems, so Boeing and Martin-Marietta take a hit and have to lay-off employees. The German air force surrendered its Pershing IA's voluntarily, so Martin-Marietta takes another hit and more employees are laid off. Then Bush orders the withdraw of the Lance short-range ballistic missile system, so LTV takes a hit and has to lay-off employees, and Bush cancels the Pershing IIB follow-on to the Lance so Martin-Marietta takes another hit. And of course the Navy and Air Force get down-sized so there's even more cancelled military contracts and more job lay-offs.

Then comes the investors.

Investors are selling their stocks or calling their promissory notes because they see either no growth or limited growth in those companies and in that sector of the economy.

So, you have an 8-month recession while Capital -- money, labor, resources etc -- are reallocated and reintegrated into your economy.

Monetary Inflation and Wage Inflation are also causal factors.

Your first historic expansion of 106-months ended due to Wage Inflation. You had a double-dip and the second dip was more severe than the first, but nothing like the Great Recession.

Your second historic expansion of 120-months ended with a double-dip, too. Both were mild.

That expansion would have ended in 1997-1998 had it not been for Y2K Horror.

Everyone is hedging their bets.

Remember contract law is only concerned with performance. Either you performed, or you did not, and "I couldn't perform because Y2K cut me off from suppliers" is not an affirmative defense.

Case law says the only defense is natural disaster, since natural disaster is unforeseeable.

Y2K was foreseeable, especially since people had been yipping and yapping about it since at least 1995.

So, if you couldn't perform on a contract because you didn't stock up to hedge against Y2K then it sucks to be you.

And the hiring. All the software was in FORTRAN and COBOL and those guys all retired in the 1980s and everyone was trained in C language.

There was a massive hiring effort, not to mention a massive training effort to train enough people in FORTRAN and COBOL to re-write all the Billions of lines of code.

Your 2008 Recession was caused by Capital reallocation and a facet of that called Capital Flight.

Capital is not just being reallocated in the US, it was also fleeing the US for several years heading to China, Vietnam, Thailand, the Philippines et al which was the actual cause of the Great Recession.

If you have another recession, it's more likely to be caused by high interest rates, although Capital reallocation is a possibility. That might possibly be triggered by tariffs, then again it might not. Tariffs can also have an effect similar to interest rates.

Every product or service is bound by price elasticity. If you raise prices, any of the following can happen:

1) revenues and profits increase
2) revenues increase while profits remain the same or decline
3) revenues decrease but profits increase
4) revenues and profits decrease

What actually happens depends on the elasticity of the good or service, and that depends on availability of substitutes.
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Old 08-07-2019, 06:59 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,854 posts, read 40,335,131 times
Reputation: 24161
So how bad is it going to get?

This is bad? (don't think so)

Normal and needed 'pull-back'

Don't tie your emotions to your trading (or your work, or your business relationships...)

Have a plan

Execute


If you MUST make a change to the plan... you best have a very well documented and proven need to change the plan, and it should never be 'significant' (or you have a very bad plan that was bound to fail anyway)

What is your plan? Thus you will know EXACTLY what to do tomorrow / next week / next month

Consider the zillions who are 'retired' / have no ability to go back to work / recover significant investment losses...

Get a 'seasoned' mentor. They could add stability to your life and investments!

Enjoy... these are some of the BEST of times!
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Old 08-07-2019, 09:19 PM
 
1,493 posts, read 336,228 times
Reputation: 2175
Quote:
Originally Posted by bawac34618 View Post
It looks like the party is over and we are about to have a recession. Do you think this will be as bad as 2008? Will it be worse?

I'm currently stuck in a dead end call center job in a town I hate and was planning on moving in a few months to a larger city in hopes of finding a better job and better life, but now I'm having second thoughts.

Record debt at all levels of government, record corporate debt, and record consumer debt including $1.5 trillion in student loan debt. Rates almost at 0 already. Global trade and currency wars. Pensions vastly underfunded and getting crushed further with record low rates. It ain't going to be pretty......
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Old 08-07-2019, 10:22 PM
 
Location: Ft. Myers
17,953 posts, read 11,384,244 times
Reputation: 38153
Here is the problem. People didn't learn a darned thing from the last recession. They went right back to their spending every penny they have, going deeper into debt ways. I bet people now do not have any more money in the bank than they did in 2008.


I already see signs of companies pulling their horns in and cutting back on staff and inventory. Plus, Trump's programs have not been exactly productive or encouraging.


Everything is cyclical and we will see another downturn at some point, I just hope it isn't what we saw 11 years ago.
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Old 08-07-2019, 10:47 PM
 
Location: Montgomery County, PA
14,822 posts, read 9,873,267 times
Reputation: 12407
Quote:
Originally Posted by bawac34618 View Post
It looks like the party is over and we are about to have a recession. Do you think this will be as bad as 2008? Will it be worse?
Again?

You couldn't wait 24 hours before declaring the end of the world? It's back up again.
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