# Are we heading into a global recession?



## Purple (28 Jan 2022)

The era of cheap money is over. The global economy is very fragile with very high government debt, inflation, bloated stock markets what gorged themselves on that cheap money, high energy prices and the risk of war in Europe. Are we about to have another crash?


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## Protocol (28 Jan 2022)

We had a very severe, sharp, deep, but short recession in 2020.

Surely there won't be another one two years later???!!!

The Fed increasing interest rates is in response to strong economic growth and rising inflation.

It is a good sign that QE is being phased out, that is a signal of a return to normal.


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## Purple (28 Jan 2022)

This is what they are saying in Forbes.


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## newirishman (28 Jan 2022)

Purple said:


> This is what they are saying in Forbes.



Quoting from there:


> If the Fed avoids recession in 2023, then look for a more severe slump in 2024 or 2025



So a recession is *definitely* on its way. I'll better dust off my own crystal ball though...


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## Purple (28 Jan 2022)

newirishman said:


> Quoting from there:
> 
> 
> So a recession is *definitely* on its way. I'll better dust off my own crystal ball though...


A bit more to it than that though, in the article that it.


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## PebbleBeach2020 (28 Jan 2022)

Purple said:


> The era of cheap money is over. The global economy is very fragile with very high government debt, inflation, bloated stock markets what gorged themselves on that cheap money, high energy prices and the risk of war in Europe. Are we about to have another crash?


I wouldn't agree with your views. It isn't the first time I've said that mind lol


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## AAAContributor (28 Jan 2022)

Purple said:


> Are we about to have another crash?



Perhaps. 

Market events and geopolitical developments could claw back the run up in asset prices we have seen in the last decade. 

It could even be severe enough to dampen the enthusiasm of the AAM 1%'ers pushing for wealth taxes 

What the Lord giveth, the Lord taketh!


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## Leper (28 Jan 2022)

I'm around since the early 1950's and as far as I am concerned we've just being going for one recession to the next. Recession seems to be our normal position regarding international/national finance. We've got over every recession in the past; we'll get over the next one whenever it comes. Don't go looking for one though; it'll find you soon enough. We live in precious times and let's keep them precious.


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## Protocol (28 Jan 2022)

Purple said:


> The era of cheap money is over. The global economy is very fragile with very high government debt, inflation, bloated stock markets what gorged themselves on that cheap money, high energy prices and the risk of war in Europe. Are we about to have another crash?



A crash in what?

House prices? = no, as there isn't excessive credit or construction

Comm property prices? retail property values are falling, already

Share prices?


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## Purple (28 Jan 2022)

PebbleBeach2020 said:


> I wouldn't agree with your views. It isn't the first time I've said that mind lol


I'm asking a question here, not offering an opinion.


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## Purple (28 Jan 2022)

Protocol said:


> A crash in what?
> 
> House prices? = no, as there isn't excessive credit or construction
> 
> ...


We are very exposed to international factors so demand within the domestic economy isn't be the main driver.


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## Steven Barrett (28 Jan 2022)

Earnings for end of Q4 2020 are coming out. Apple exceeded their projections with $123.b bn in revenue in the final quarter. Fed is taking measures to curb inflation and wage demands. ECB won't until next year. 

Wondering what is going to cause the recession?


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## Protocol (28 Jan 2022)

Leper said:


> I'm around since the early 1950's and as far as I am concerned we've just being going for one recession to the next. Recession seems to be our normal position regarding international/national finance. We've got over every recession in the past; we'll get over the next one whenever it comes. Don't go looking for one though; it'll find you soon enough. We live in precious times and let's keep them precious.




This is false.

1980-1982 = bad recession

2008-2012 = bad recession


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## ClubMan (28 Jan 2022)

What's a good recession?


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## Protocol (28 Jan 2022)

Very funny.

I mean those periods were deep or sharp or prolonged recessions.

There were other, milder slowdowns.


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## noproblem (28 Jan 2022)

Whatever about recessions, I'm off to the Canaries for a few weeks on Tuesday next. I'll see what happened to the bit of money I have invested when I get back. If it has increased I'll be off again sooner than most, if it's gone then so be it. No big deal, we'll survive. On a brighter note, the Easter eggs are in Tesco this morning where I live, hope they all hatch.


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## Odea (28 Jan 2022)

Protocol said:


> Very funny.


He can never resist.....


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## Pinoy adventure (28 Jan 2022)

ClubMan said:


> What's a good recession?


Celtic tiger.
Celtic tiger part 2


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## odyssey06 (28 Jan 2022)

ClubMan said:


> What's a good recession?


One where you don't lose your job.

Dot come crash - guy sitting next to me loses his job (+12 others).
Post 2008 crash - I lose my job (+120 others).


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## cremeegg (28 Jan 2022)

It is hard to tell the future.

Of course there will be a recession, but whether the will be next year or in a decade who knows.

Personally I was expecting inflation to soar after interest rates were slashed and CBs started increasing money supply in 2008, I am still waiting, maybe this year.


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## MrEarl (28 Jan 2022)

I'll go with that infamous old phrase..."it'll be a soft landing"  

I expect the US stock markets to step back by about 15% more this year, primarily led by the "growth" stocks, who have failed to make profits, or fly enough people to the moon etc. However, the "value" stocks will keep delivering, by in large, and paying dividends that satisfy investors, for another couple of years (by which time, interest rates will have increased to the extent that investors have moved more money into the Bond market, and the "value" stock businesses will be starting to either miss quarterly targets, or cut back on forecasts to the extent that they'll lose support, and start to drop in value.

Significant job losses will hit the States from early 2024 - primarily as a consequence of what's happening with companies referred to above. Once forecasts start looking shaky, it's cut and burn time, so the poor old employees will get it.

Much of the commercial property market will lose money, with more retail and office space becoming vacant, or attracting lower rents, in order to obtain / retain tenants. Online shopping, coupled with working from home, will be the cause.

Gold may increase, but not as significantly as its done in previous recessions - in part, because investors will still be putting money into all sorts of other "assets", be they cryptos, bottles of fine wine that later get drunk etc. Then, having lost a fortune at that, insist on keeping more of their remaining wealth in cash, rather than gold.

By the end of 2024/early 2025, many of the western economies will be in (technical) recession, albeit, it'll be less server given most governments have placed significant portions of their national debt on low rates, and over long terms.

Ireland, unfortunitely, will suffer worse than many other western economies, with a rediculously high cost base resulting in many of the MNCs relocating thousands of jobs to other counties. We're in for a miserable period, thereafter, as we struggle to find money to pay overly generous prensions to former state employees, made worse by having to watch reruns of RTE's 20 most hated programmes, presented by their Top 10 earners, who will then be earning about €6m a year!

I'm available to read tea leaves, on Wednesday afternoons, btw


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## HyperionDayz (29 Jan 2022)

A soft landing sounds oddly similar to transitory inflation. Maybe RTE should get Bertie in to tell everyone what he thinks and then we can do the exact opposite.

When it comes to residential property, we don’t seem to be at the Celtic Tiger level yet. Prices have risen to levels similar to 2008, but that was 14 years ago and average wages have risen from €34k to €42k in that time. Credit controls of 3.5 times wages are still in place with precious few exceptions. Construction volume is still way down with ~30k units vs 90k units. If you believe in the 18 year property cycle there’s still 4 years to go until the next peak in 2026. So the question then is: Are we in 2004?

Commercial property went bananas long before residential. There’s no way companies can justify a cost of 20-30k per employee to house them in glass and steel, especially when it seems that working from home is 13% more productive. Companies will always go with the most cost effective route, so if they’re close to lease renewal they’ll reconsider, but not so sure they’ll break leases. As MrEarl says, the high street will continue to be in trouble.

The stock market has completely detached from reality and I read somewhere that ~60% of all stimulus money in the US flooded into it. The valuations of many companies are outright comedy at this stage e.g Tesla is the most valuable car company that only makes 500k cars a year. Hard to make the argument that you’re saving the world with the cheapest model at €50k - The real experts in manufacturing are coming to eat their lunch. Having a minor increase in interest should not crash the market, but out of control inflation could. Timeline is anyone’s guess, but lots of the usual commentators are predicting a crash in Q2 2022.

Crypto is of course just a speculative asset with no inherent value. The HODL mantra would suggest this is not a currency and has more in common with a casino chip. Expect more peaks and troughs, but it is not a safe store of value.

If I knew the future I’d be fabulously wealthy, but unfortunately I’m not.


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## Purple (31 Jan 2022)

cremeegg said:


> It is hard to tell the future.
> 
> Of course there will be a recession, but whether the will be next year or in a decade who knows.
> 
> Personally I was expecting inflation to soar after interest rates were slashed and CBs started increasing money supply in 2008, I am still waiting, maybe this year.


Inflation did soar, but not in the rich world. It soared where Labour was relatively cheap.


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## joe sod (31 Jan 2022)

MrEarl said:


> (by which time, interest rates will have increased to the extent that investors have moved more money into the Bond market, and the "value" stock businesses will be starting to either miss quarterly targets, or cut back on forecasts to the extent that they'll lose support, and start to drop in value.


But surely if interest  rates are rising investors  will only  be interested in buying  the newly issued bonds at those higher interest  rates, the value of the existing  bonds especially  those at negative  interest  rates  will keep  falling.  This is the first  sustained  inflation  trend  since  the early  80s.
As for  value  stocks they still have an awful  long way  to rise in order to get back to their  long term values,  or growth  stocks  still have  a long way to fall


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## newirishman (31 Jan 2022)

Purple said:


> Inflation did soar, but not in the rich world. It soared where Labour was relatively cheap.



Arguably, inflation soared also in the rich world - specifically for those that have to count the pennies.
There's some discussion going on reg. below article but to quote one of the headlines:
- M&S ready meal for 2 has been £10 for the last 10 years (zero inflation)
- "[...] Last year the Smart Price pasta in my local Asda was 29p for 500g. Today, it is unavailable, so the cheapest bag is 70p; a 141% price rise for the same product in more colourful packaging."









						We’re pricing the poor out of food in the UK – that’s why I’m launching my own price index | Jack Monroe
					

A whole section of society is being cut adrift by the rising cost of supermarket shopping




					www.theguardian.com


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## MrEarl (31 Jan 2022)

joe sod said:


> But surely if interest  rates are rising investors  will only  be interested in buying  the newly issued bonds at those higher interest  rates, the value of the existing  bonds especially  those at negative  interest  rates  will keep  falling.  This is the first  sustained  inflation  trend  since  the early  80s.
> As for  value  stocks they still have an awful  long way  to rise in order to get back to their  long term values,  or growth  stocks  still have  a long way to fall


Hello,

We agree 100% on the point about Bonds - I didn't specify, but took it as read, that newer, shorter term, higher rate bonds would be bought,  for the next while.

For me, it's a notable drop on the price of growth stocks, rather than an increase in the price of value stocks, that's coming. Most equities are priced at fairly aggressive yields, and this will become more and more a concern, as the world see's interest rates start to rise.


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## joe sod (4 Feb 2022)

The environment now seems to be a cross between the early 2000s and the early 70s. The similarities with early 2000s are because of the huge valuations in the tech and growth stocks, the 25% drop in Facebook shares yesterday is almost identical to what happened then. However investors could go back into bonds at 4 or 5 % interest rates back then , they can't do that now with ultra low interest rates.

It's like the early 70s because of the energy crisis and Russia using energy like OPEC did back then. Inflation on the rise and becoming embedded and interest rates about to go back up. However the energy , financials and the tobacco and alcohol stocks are doing very well now


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## roker (9 Feb 2022)

Purple said:


> The era of cheap money is over. The global economy is very fragile with very high government debt, inflation, bloated stock markets what gorged themselves on that cheap money, high energy prices and the risk of war in Europe. Are we about to have another crash?


The energy crisis could ease if Iran starts producing oil on the open market. The USA is in advanced talks over the nuclear issue


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## joe sod (9 Feb 2022)

roker said:


> The energy crisis could ease if Iran starts producing oil on the open market. The USA is in advanced talks over the nuclear issue


it might take some of the heat out of it temporarily but demand has risen much faster now that covid has receded than supply has come on stream. The fundamental problem is that the big oil companies have not been investing in new reserves to replace existing ones due to the depressed oil prices and due to the fact that "big finance" is not investing in oil and gas due to them not being ESG compliant.
Unfortunately this looks to be completely premature as 85% of our energy still comes from oil and gas and this is only going to reduce slowly while our total energy consumption is only going up, therefore all those lovely renewables will be swallowed up but also total oil consumption will continue to rise aswell. The modern world is becoming more and more energy dependant not less. We are not moving away from fossil fuels for a very long time yet


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## roker (9 Feb 2022)

Whatever happened to peak oil? When I was working in S Arabia, half the plants on the oilfield were shutdown  because there wasn't enough demand for production


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## Purple (10 Feb 2022)

roker said:


> The energy crisis could ease if Iran starts producing oil on the open market. The USA is in advanced talks over the nuclear issue


Their infrastructure is very out of date due to the trade embargoes. It would take years to get them up to standard and because of the downturn the oilfield services companies and reduced their capacity and much of their supply chain has either gone or pivoted into other areas.


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## Purple (10 Feb 2022)

joe sod said:


> it might take some of the heat out of it temporarily but demand has risen much faster now that covid has receded than supply has come on stream. The fundamental problem is that the big oil companies have not been investing in new reserves to replace existing ones due to the depressed oil prices and due to the fact that "big finance" is not investing in oil and gas due to them not being ESG compliant.
> Unfortunately this looks to be completely premature as 85% of our energy still comes from oil and gas and this is only going to reduce slowly while our total energy consumption is only going up, therefore all those lovely renewables will be swallowed up but also total oil consumption will continue to rise aswell. The modern world is becoming more and more energy dependant not less. We are not moving away from fossil fuels for a very long time yet


Yep, as I've said many times nuclear is the only viable green energy.
We should forget about fusion and concentrate on the new fission technologies that are clean, safe and work.


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## joe sod (10 Feb 2022)

roker said:


> Whatever happened to peak oil? When I was working in S Arabia, half the plants on the oilfield were shutdown  because there wasn't enough demand for production


They are probably still offline because Saudi Arabia is a swing producer,  they control the oil price again now. They always have substantial excess capacity but the fact that the western oil companies are cutting back on production is moving the power balance back towards Saudi Arabia and Russia. Probably one of the main reasons for putin's actions in Ukraine is to keep the upwards pressure on global energy prices


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## Purple (10 Feb 2022)

joe sod said:


> They are probably still offline because Saudi Arabia is a swing producer,  they control the oil price again now. They always have substantial excess capacity but the fact that the western oil companies are cutting back on production is moving the power balance back towards Saudi Arabia and Russia. Probably one of the main reasons for putin's actions in Ukraine is to keep the upwards pressure on global energy prices


Plus the oil service companies are relocating manufacturing to Saudi Arabia at the insistence of Saudi Aramco, the biggest and most profitable company in the world, as well as other lower cost countries. Europe couldn't be doing more to undermine it's own energy independence. At least the Americans have massive oil and gas reserves, even without counting the almost limitless amount of oil they'll get from Fracking. We are going out of our way to be energy, and therefore economically, dependent on Russia.


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## Purple (16 Mar 2022)

Energy prices are soaring, the price of metals is going through the roof, inflation could be in double digits this year. We have unprecedented levels of debt. It seems likely that we are now heading into a recession. How well positioned are we to deal with it?
I found this interesting.


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## PebbleBeach2020 (16 Mar 2022)

Purple said:


> Energy prices are soaring, the price of metals is going through the roof, inflation could be in double digits this year. We have unprecedented levels of debt. It seems likely that we are now heading into a recession. How well positioned are we to deal with it?
> I found this interesting.


I don't know. What do you think yourself Purple? Are/Were you a teacher, you love asking questions without providing any answers.


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## Steven Barrett (16 Mar 2022)

Purple said:


> Energy prices are soaring, the price of metals is going through the roof, inflation could be in double digits this year. We have unprecedented levels of debt. It seems likely that we are now heading into a recession. How well positioned are we to deal with it?
> I found this interesting.


I was talking to someone about this yesterday. It does appear like we have entered a period of stagflation. But why aren't people freaking out like in 2008? Jobs. People are as busy as always. In 2008, building sites shut overnight. There were mass redundancies and massive pay cuts across the board. 

Also we are more experienced. We haven't loaded up on debt. We didn't put all our savings into Indian equities or some geared property fund in Bulgaria. As well as still having our job, we kept cash on hand and invested in more diversified assets with lower risk (unless you bought crypto or nfts). 

The worst thing the ECB can do now is increase interest rates to control inflation and slow down the economy. 


Steven
www.bluewaterfp.ie


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## Raey (16 Mar 2022)

Steven Barrett said:


> I was talking to someone about this yesterday. It does appear like we have entered a period of stagflation. But why aren't people freaking out like in 2008? Jobs. People are as busy as always. In 2008, building sites shut overnight. There were mass redundancies and massive pay cuts across the board.
> 
> Also we are more experienced. We haven't loaded up on debt. We didn't put all our savings into Indian equities or some geared property fund in Bulgaria. As well as still having our job, we kept cash on hand and invested in more diversified assets with lower risk (unless you bought crypto or nfts).
> 
> ...


I disagree.

The freaking out will come soon if peoples buying power continues to erode. 

Without wage inflation, the jobs you refer to become worth a lot less. With wage inflation we get into an inflationary spiral - the 1970s had a wage inflation and it was not pretty.

Additionally, all this inflation will erode the cash on hand you mentioned people having.

Raising interest rates is the best (only?) solution available. It's not perfect but it is certainly better than the alternative.


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## Purple (16 Mar 2022)

PebbleBeach2020 said:


> I don't know. What do you think yourself Purple? Are/Were you a teacher, you love asking questions without providing any answers.


I don't know. If I had to guess I'd say that we are.
Rising energy costs will cause inflation across the board. The first and fifth biggest grain exporters in the world are at war so that will have a serious knock-on effect on global food costs. Ukraine alone produced enough grain to feed 400 million people.
The world has unprecedented levels of debt and quantitative easing has resulted in a higher proportion of wealth being concentrated in capital rather than labour than at any time in modern history (the main reason housing is so expensive). That all means that there's a bigger mountain to fall on us all as "growth" really means wealth created through labour.

If we increase interest rates that will further reduce economic activity but if we don't we'll see higher levels of inflation.
Both are recessionary factors in the medium term.
I wonder if we'll be having discussions about sovereign debt defaults in places like Italy and Greece again soon.

It's safe to say that I'm not optimistic.


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## Firefly (16 Mar 2022)

Purple said:


> Energy prices are soaring, the price of metals is going through the roof, inflation could be in double digits this year. _We have unprecedented levels of debt_. It seems likely that we are now heading into a recession. How well positioned are we to deal with it?
> I found this interesting.


I think governments are in a real bind given how much debt they are carrying....if interest rates rise to combat inflation, then government debt financing will rise and could create a debt spiral - borrowing to make interest payments. Some of us here have been warning about the national debt for years, but it's always been explained away that it doesn't really matter once the rate of growth is larger....but what happens if growth slows/stops...we can't then just magically disappear the debt. Others have repeatedly offered that the government should borrow even more as rates are so low.......I don't hear those arguments of late.....


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## joe sod (16 Mar 2022)

Steven Barrett said:


> The worst thing the ECB can do now is increase interest rates to control inflation and slow down the economy.


They have to fight the battle at hand which is inflation,  if they are too late to raising interest rates which is now baked into market expectations anyway well then inflation really kicks off. The US and UK are raising interest rates   , if the euro doesn't follow well then its exchange rate will continue to fall exasperating inflation. The most important commodities like oil are priced in dollars therefore it is vitaly important that this exchange rate is stabilised in order to control inflation 

During the financial crash the ECB was years too late in reducing interest rates until they ditched Trichet,  now they are too late in fighting the current problem which is inflation,  Will we have to wait until Lagarde is also moved on to tackle it?


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## Steven Barrett (16 Mar 2022)

joe sod said:


> They have to fight the battle at hand which is inflation,  if they are too late to raising interest rates which is now baked into market expectations anyway well then inflation really kicks off. The US and UK are raising interest rates   , if the euro doesn't follow well then its exchange rate will continue to fall exasperating inflation. The most important commodities like oil are priced in dollars therefore it is vitaly important that this exchange rate is stabilised in order to control inflation
> 
> During the financial crash the ECB was years too late in reducing interest rates until they ditched Trichet,  now they are too late in fighting the current problem which is inflation,  Will we have to wait until Lagarde is also moved on to tackle it?


The UK is overweight energy so hasn't been hit as hard by the war in Ukraine. The US is somewhat insulated from it due to its location. Europe has been hit hard by the war given its reliance on Russian energy as well as its proximity. An increase in interest rates will cause share values to fall further. To not do it will mean inflation will continue. Decisions on whether to increase rates or not will have repercussions either way.


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## Purple (16 Mar 2022)

Steven Barrett said:


> The UK is overweight energy so hasn't been hit as hard by the war in Ukraine. The US is somewhat insulated from it due to its location. Europe has been hit hard by the war given its reliance on Russian energy as well as its proximity. An increase in interest rates will cause share values to fall further. To not do it will mean inflation will continue. Decisions on whether to increase rates or not will have repercussions either way.


Yep, each option is inflationary and deflationary depending on the timing and scale of its application.


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## Truffade (22 Mar 2022)

Surely the real question is 'how can I make good personal choices that will minimise my losses and maximise my gains in the event of recession?'


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## Purple (23 Sep 2022)

It looks like the recession is starting.  
Worldwide borrowing costs to their highest level since June 2009 at nearly 3.8 per cent. They were about 1.3 per cent at the end of last year.

The US Fed has more or less said that a recession is necessary in order to reduce inflation. 
Jay Powell, the FED Chairman said, “We have got to get inflation behind us. I wish there were a painless way to do that." "There isn’t.”
Despite, or maybe because of that the Dollar is strengthening as there is a flight to quality.


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## joe sod (23 Sep 2022)

The central banks printed too much money during covid  ,then the lockdowns shut down factories   ,hospitality and foreign travel which meant there was nowhere for this money to go  , demand was shunted into the sectors and products that were still open which sparked inflation in those areas , this inflation then continued onto other areas as they opened up and struggled to get workers. Inflation was well entrenched by the time of the Ukraine invasion which threw petrol on the flames. But it is a mistake to blame inflation on the Ukraine war it had already taken hold during the lockdowns.

The lockdowns were the first time the world economy was basically shut down in the modern era. While its easy to shut things down its a completely different story trying to open everything up again.  Lots of workers working in difficult jobs or anti social hours decided not to return to their previous jobs. Because there was so much money out there after covid and money printing they didn't need to. Now that the central banks are pulling all that money back in again it will probably force workers back into those sort of jobs again as a recession arrives. That looks to be the game plan


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## Purple (23 Sep 2022)

joe sod said:


> The central banks printed too much money during covid


They've been printing it since the 2008 crash. Covid was just (a lot) more of the same.


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## joe sod (23 Sep 2022)

Purple said:


> They've been printing it since the 2008 crash. Covid was just (a lot) more of the same.


But production was shut down aswell,  that's the crucial factor,  that's what really sparked the inflation because there was nowhere for that money to go


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## Purple (23 Sep 2022)

joe sod said:


> But production was shut down aswell,  that's the crucial factor,  that's what really sparked the inflation because there was nowhere for that money to go


True, but most (85% as far as I know) of all the QE money had gone into the stock market and property so shutting down production just drove the rest in the same direction.


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## joe sod (23 Sep 2022)

Purple said:


> True, but most (85% as far as I know) of all the QE money had gone into the stock market and property so shutting down production just drove the rest in the same direction.


Since the financial crisis, alot of QE went into asset prices  ,that's true, but also to fill the hole in the financial sector left by financial crash. 
However covid changed that and now inflation that was largely absent from goods and services came back with a vengeance,  so now we have real inflation in goods and services which can't now be ignored.  The inflation in goods and services has the potential to such money out of everything else and possibly collapse the asset bubble


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## Purple (23 Sep 2022)

joe sod said:


> Since the financial crisis, alot of QE went into asset prices  ,that's true, but also to fill the hole in the financial sector left by financial crash.
> However covid changed that and now inflation that was largely absent from goods and services came back with a vengeance,  so now we have real inflation in goods and services which can't now be ignored.  The inflation in goods and services has the potential to such money out of everything else and possibly collapse the asset bubble


I agree. The QE driven asset price bubble has been ignored. The price inflation is has caused has incorrected been attributed to demand, especially in the case of property.


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## Purple (1 Nov 2022)

Ten potential economic disasters loom, warns top US economist Nouriel Roubini

More on Youtube.


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## Purple (4 Nov 2022)

Paul Singer, head of Elliott Management, one of the biggest Hedge Funds in the world, has warned that the world is facing hyperinflation and could be heading towards the worst financial crisis since the Second World War. 

_While hyperinflation is not inevitable, Elliott said it would cause “global societal collapse and civil or international strife” if it does occur._

Elliott stated that markets face an array of “frightening and seriously negative possibilities” – with a 50% decline in equities a “normal” potential outcome given the risks.

The firm also took aim at the Fed and other central bankers, accusing policymakers of exacerbating the current trouble and being “dishonest” about the root causes of the decades-high inflation currently plaguing American consumers.
Source NY Post

Michael Burry, of The Big Short fame also predicts a 50% decline in the Markets.


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## interested21 (4 Nov 2022)

These guys are all out predicting doomsday because they want the Fed to pivot and stop raising interest rates so that their stock portfolio can start going up again. Hedge fund managers aren't making statements for the good of the general public.


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## cremeegg (4 Nov 2022)

interested21 said:


> These guys are all out predicting doomsday because they want the Fed to pivot and stop raising interest rates so that their stock portfolio can start going up again. Hedge fund managers aren't making statements for the good of the general public.


Do you have anything to say about the merits of their arguments, or are you happier with the cynical approach.

It is perfectly true that there has been at least 15 years of very loose fiscal policy. The surprising thing about that is that it has not lead to inflation before this.


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## Purple (7 Nov 2022)

interested21 said:


> These guys are all out predicting doomsday because they want the Fed to pivot and stop raising interest rates so that their stock portfolio can start going up again. Hedge fund managers aren't making statements for the good of the general public.


When the oil crisis hit in the 1970's global debt was equal to about 100% of global GDP.
Global debt is now 350% of global GDP. 

I don't think that's a good thing.


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## interested21 (7 Nov 2022)

Purple said:


> When the oil crisis hit in the 1970's global debt was equal to about 100% of global GDP.
> Global debt is now 350% of global GDP.
> 
> I don't think that's a good thing.


I am not saying there isn't challenging times ahead economically.

I am saying I put no value in the public statements of hedge fund managers.


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## Purple (7 Nov 2022)

interested21 said:


> I am not saying there isn't challenging times ahead economically.
> 
> I am saying I put no value in the public statements of hedge fund managers.


Okay, but what is it that you disagree with?

The counter argument is that the US economy is strong; wages are keeping pace with inflation, they have very high levels of personal saving, their first time home purchaser has a much better credit rating than during the last recession, unemployment is low and consumer expectation is that inflation will not remain high. Internationally increases in prices of everything from gas to second hand cars is moderating and because the Chinese economy is screwed they are, in effect, exporting deflation.

That ignored the fact that recessions are almost never caused by the same thing twice in a row. After the 2008 recession we just nationalised private debt and funded it with QE. We then artificially depressed the cost of debt. That just kicked the can down the road. I think we've run out of road.


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## interested21 (7 Nov 2022)

Purple said:


> Okay, but what is it that you disagree with?
> 
> The counter argument is that the US economy is strong; wages are keeping pace with inflation, they have very high levels of personal saving, their first time home purchaser has a much better credit rating than during the last recession, unemployment is low and consumer expectation is that inflation will not remain high. Internationally increases in prices of everything from gas to second hand cars is moderating and because the Chinese economy is screwed they are, in effect, exporting deflation.
> 
> That ignored the fact that recessions are almost never caused by the same thing twice in a row. After the 2008 recession we just nationalised private debt and funded it with QE. We then artificially depressed the cost of debt. That just kicked the can down the road. I think we've run out of road.


I broadly agree with everything you've posted here. How does this lead to the "global societal collapse" of your previous post?


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## Purple (7 Nov 2022)

interested21 said:


> I broadly agree with everything you've posted here. How does this lead to the "global societal collapse" of your previous post?


I don't think there'll be a global societal collapse but I do think we are heading into a prolonged period of stagnant growth or recession with a strong risk of along period of Stagflation. 
Climate Change will also be a major factor as floods and droughts increase food costs, political instability and migration. It will also increase insurance costs for everything since all insurance prices are linked through the reinsurance market. 

As usual that will cause inconvenience in the developed world and famine, starvation and death amongst the bottom billion.


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## noproblem (7 Nov 2022)

Purple said:


> I don't think there'll be a global societal collapse but I do think we are heading into a prolonged period of stagnant growth or recession with a strong risk of along period of Stagflation.
> Climate Change will also be a major factor as floods and droughts increase food costs, political instability and migration. It will also increase insurance costs for everything since all insurance prices are linked through the reinsurance market.
> 
> As usual that will cause inconvenience in the developed world and famine, starvation and death amongst the bottom billion





Purple said:


> Your take on it comes across as saying, we'll have more weather tomorrow.


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## Purple (7 Nov 2022)

@noproblem, I'm not sure what you mean by that.

My take on it is that there will be a major global recession and that the debt overhang will be a big problem. 

The fact that the second largest economy in the world is closer to a Command Economy than it has been in 30 years will also be a major factor. I think China is, in the medium term, screwed. Its demographics alone is enough to screw its economy. Corruption, debt and political interference also mitigate against it.


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## Purple (7 Nov 2022)

Good information on China's property developer woes, China's $1 Trillion Problem: The Property Developer Debt Crisis Intensifies


> Property development represents about 30% of China’s GDP, and China Evergrande Group is only the tip of the iceberg. Ongoing defaults could eventually convert into bankruptcy filings that would shake up the industry. Although the risk is confined to China for now, these issues could spread into other high yield markets, such as the $3 trillion U.S. leveraged finance market


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