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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.
Why do you think we are about to have a recession?
Trump's trade war. There are more and more signs that it's about to take down the global economy. Look at the yield curve, the bond market, and the actions of the Fed. All of the signs are there.
A real worry is that it will collapse oil prices to the point we see a massive bust in the shale industry which will then take down big banks. That's basically a ticking time bomb. Combine that with exploding U.S. debt and the fact that the government doesn't have the kind of ammunition to stave off a depression like it did in 2008. Then add in the incompetency of the Trump administration. I worry that we currently have a perfect storm and are witnessing the beginning of a second Great Depression. This would have happened anyways but Trump's trade war has pushed it up to now as opposed to in 5-10 years. With smart policy we might have even been able to prevent it.
There is far less lead in the pencil deal with this recession unlike the last one. We have been spending and borrowing at an unsustainable rate while increasing the money supply year/year to feed the consumption hamster wheel. There will be very limited tools left in the government arsenal with the next one. Stimulus will be ineffective and actually can be self cannibalizing when they go to that well.
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Under these conditions, a severe enough shock could usher in a global recession, even if central banks respond rapidly. After all, in 2007-2009, the Fed and other central banks reacted aggressively to the shocks that triggered the global financial crisis, but they did not avert the “Great Recession.” Today, the Fed is starting with a benchmark policy rate of 2.25-2.5%, compared to 5.25% in September 2007. In Europe and Japan, central banks are already in negative-rate territory, and will face limits on how much further below the zero bound they can go. And with bloated balance sheets from successive rounds of quantitative easing (QE), central banks would face similar constraints if they were to return to large-scale asset purchases.
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.
Not nearly as bad as 2008. Our recovery has been broad. Banks and financials are more stable and resistant. Everyone on your block along with communities all over the world no longer have huge unsustainable or fraudulent investments.
Not nearly as bad as 2008. Our recovery has been broad. Banks and financials are more stable and resistant. Everyone on your block along with communities all over the world no longer have huge unsustainable or fraudulent investments.
Also, household debt service as a percentage of disposable income is at the lowest point it's been since the 1970s.
You know the adage that generals are always planning to fight the last war? People are always thinking the next recession is going to be like the last one.
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.
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.
Also, household debt service as a percentage of disposable income is at the lowest point it's been since the 1970s.
You know the adage that generals are always planning to fight the last war? People are always thinking the next recession is going to be like the last one.
It will be different, maybe started up by some other as yet unknown Black Swan. I just don't see the seriousness of 2008. Aside from the US stock market, the bulk of our economy is not actually flying so high.
It will be different, maybe started up by some other as yet unknown Black Swan. I just don't see the seriousness of 2008. Aside from the US stock market, the bulk of our economy is not actually flying so high.
I can't remember who said it, but I remember the quote: "Stock market crashes have predicted eight of the past three recessions."
Do I think we come out of this ridiculous trade war unscathed? Not for a minute. But I do think the Chinese are far more vulnerable than we are in this situation. My biggest concern, my Black Swan, is geopolitical. Namely that Xi or Putin will try some shenanigans in order to rally increasingly restive populations.
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