1. When will the next recession hit?
2. Where will be impacted geographically?
3. What industries will be hit hardest?
4. How long will it last?
Two big problems at the moment: Brexit and the US-China trade war. Both of these events are extremely stupid and bad for all sides, and I don't expect a good resolution for either of them. So, 2-3 years to a recession, maybe less.
It will hit the China, the USA and the UK the worst, probably in that order. China has huge private and government debt that is only being staved off by growth, if that growth falters any more than it has, you've got an economic collapse and real social unrest on their hands. That's why China is unwilling to trade in fair terms with outside nations/corps - anything that would restrict growth is off the table.
In the UK, the financial sector may leave for continental Europe. This would be very bad for the UK, as it would probably never come back. It's basically the worst possible outcome of Brexit for the UK. Banking will probably get hit hard in the USA, just like last time, as regulations get loosened and idiots get greedy. But I'd expect across the board reductions rather than certain industries getting hit super hard, as the US internal economy is still really big. At some point their military economy has to take a hit, as their military spending is so huge compared to the rest of the world.
How long it lasts will depend on how ruthless the governments are willing to be. During recessions, if you let the failing businesses FAIL, the remaining ones grow and prosper and the recover is faster. If you prop up crappy industries (Japan), you either long recessions or stagnation. Some industries are too critical to allow to fail, but in China, many industries are supported heavily by the government with low cost loans, free money or regulatory support. If they don't let industries fail that should, they'll drag the whole economy with them. And China can't afford to have industries fail (see above) as that would also collapse their social order.
Also, the USD is no longer the only reserve currency (or petrodollar) around, so the USA can't just spend its way out of a recession like it could in the past. It could be a long one.
hotsauceman1 wrote: We are out of a recession?
Could have fooled me and my entire generation
That's because growth is based on an overall increase in a countries output not the proportion of people that see the benefit. A countries output may, however, proportionally impact a small number of people (i.e. the small number of very wealthy people) best placed to capitalise on such growth. This offsets that a massive number of people see little or no gains from that economic growth. It is a huge flaw in the current system. The principle of a capitalist society is that growth trickles down and benefits everyone. Except it is failing badly in its current form to the point that some generate wealth for wealth's sake (i.e. greed) and see no benefit to trickle that benefit down unless it benefits them personally. This is costing both society and the environment. Those with money then have the time and resources to ensure that those making the decisions make it for their benefit and the cycle repeats.
@John Prins- honestly I suspect the US will end up worse off than China, China has other options for markets, the US really doesn't in many cases (at least not on the scale required), and in areas where it does, those markets are being alienated and offended simultaneously. Even long time allies and neighbors.
And since the US is heavily reliant on trade for import AND exports, the current path leads to a complete breakdown.
The U.K. will probably end up in a bad state, but there isn't much to be done about it. Taking your ball and going home doesn't work as an economic option. If a nation wants to marginalize itself into irrelevance, there is very little anyone outside can do about it.
Wouldn't you need savings rates to be high then? If I recall, most of the population has a ridiculously low savings rate.
However, saying that the average public's savings rate may not matter; as you maybe referring to larger investors such as corps and big investment groups?
Care to elaborate? I admit my knowledge of the specifics is rather layman's at best.
Voss wrote: @John Prins- honestly I suspect the US will end up worse off than China, China has other options for markets, the US really doesn't in many cases (at least not on the scale required), and in areas where it does, those markets are being alienated and offended simultaneously. Even long time allies and neighbors.
And since the US is heavily reliant on trade for import AND exports, the current path leads to a complete breakdown.
The U.K. will probably end up in a bad state, but there isn't much to be done about it. Taking your ball and going home doesn't work as an economic option. If a nation wants to marginalize itself into irrelevance, there is very little anyone outside can do about it.
Actually, the USA has enormous resources and a huge internal economy. For example, they don't need to import oil, they've got tons of capped wells waiting for the 'cheaper' oil reserves of other nations to dry up. The USA is one of the few nations on Earth that could tell other nations to take a hike. It wouldn't be GOOD for their economy, but they could do it. It's just cheaper (and easier) to import stuff while people are happy to buy up US debt.
China's getting less dependent on exports, but it still very dependent upon imports, and is scrambling to secure resources outside their borders (One Belt One Road Initiative). Their internal economy is heavily propped up by garbage investments - empty cities and housing projects that won't last 5 years without falling over. If you're Chinese and rich, you're buying property outside of China, because they know it cannot last and property in the USA/Canada/Europe holds value. Capital flight is a huge concern for the CCP! When people are eager to get their money out of a country with a positive (claimed) growth rate, that's a BAD sign.
Voss wrote: @John Prins- honestly I suspect the US will end up worse off than China, China has other options for markets, the US really doesn't in many cases (at least not on the scale required), and in areas where it does, those markets are being alienated and offended simultaneously. Even long time allies and neighbors.
And since the US is heavily reliant on trade for import AND exports, the current path leads to a complete breakdown.
The U.K. will probably end up in a bad state, but there isn't much to be done about it. Taking your ball and going home doesn't work as an economic option. If a nation wants to marginalize itself into irrelevance, there is very little anyone outside can do about it.
Actually, the USA has enormous resources and a huge internal economy. For example, they don't need to import oil, they've got tons of capped wells waiting for the 'cheaper' oil reserves of other nations to dry up. The USA is one of the few nations on Earth that could tell other nations to take a hike. It wouldn't be GOOD for their economy, but they could do it. It's just cheaper (and easier) to import stuff while people are happy to buy up US debt.
Oil is an exception. Much of the raw materials and raw materials processing are long gone overseas. At the same time, high end manufacturing (like Apple) is mostly overseas. Farms grow crops specifically for export, specifically stuff that doesn't have much of an internal market (soybeans and whatnot). Could everything be retooled and brought internal? Eventually, maybe, but it might well not be worth it.
As for people buying up US debt... that's actually rather bad. Its split between Social Security, retirement programs and foreign investment. If the US gov't defaults on debts, millions of people (mostly US citizens) get their retirement plans utterly wrecked.
The U.K. is circling a recession. You can guess why.
And I genuinely fear this will hit far harder than 2007/2008.
Why?
The PPI ‘scandal’. Trust me when I say when it comes to PPI, I’ve (genuinely) forgotten than you’ll ever know about the ins and outs of that specific insurance product.
See, since it all kicked off around, ooooh, 2010? All forms of PPI were seen to be toxic. And many were pretty worthless. Either stupidly restrictive terms, or not worth the cost.
But Mortgage PPI (MPPI)? Why wouldn’t you want a policy to cover your mortgage payments for (in most cases) up to 12 months? Which would pay out alongside any other similar policies? And, given what you stood to gain, a pretty nominal cost?
You’re right, it does make sense. Because the only certain thing in life is that things are uncertain.
Yet, because PPI as an umbrella product group has a not undeserved bad reputation? There are tens of thousands of mortgage holders that cancelled their MPPI policies. And that means when redundancies start hitting? All of them are at heightened risk of repossession. And from there, negative equity.
So. Yeah. Regardless of the root cause of the next recession in the U.K.? It gonna be far, far worse.
Oil is an exception. Much of the raw materials and raw materials processing are long gone overseas. At the same time, high end manufacturing (like Apple) is mostly overseas. Farms grow crops specifically for export, specifically stuff that doesn't have much of an internal market (soybeans and whatnot). Could everything be retooled and brought internal? Eventually, maybe, but it might well not be worth it.
Keep in mind that a lot of manufactured goods coming out of China aren't critical in the short term. If the supply of cell phones dries up, people use their old ones for longer, rather than replacing them every 2 years (or less). No cheap goods at Walmart? Standard of living drops, but it's not the end of the world - the standard of living in the USA can drop a heck of a lot further than in many other places on Earth. Ore processing can be rebuilt state-side if it's profitable. They sent it overseas to avoid pollution regulation more than anything else, and China is now hellishly polluted as a result.
As for people buying up US debt... that's actually rather bad. Its split between Social Security, retirement programs and foreign investment. If the US gov't defaults on debts, millions of people (mostly US citizens) get their retirement plans utterly wrecked.
It's a poison pill for everyone. US debt holders need the US economy to prosper if they want their debts to be honored. And nations that aren't holding US debt but are using the USD as a reserve currency are just as invested in US prosperity. And it's those reserve currencies that have allowed the US to print trillions of extra dollars without staggering inflation.
And I think it's inevitable that social security/pensions get wrecked, government pensions are probably unsustainable unless you raise the retirement age significantly. Without a growing population and tax base, you can't fund that stuff.
Wouldn't you need savings rates to be high then? If I recall, most of the population has a ridiculously low savings rate.
However, saying that the average public's savings rate may not matter; as you maybe referring to larger investors such as corps and big investment groups?
Care to elaborate? I admit my knowledge of the specifics is rather layman's at best.
Yes and no saving rates are relative.
Compared to the interest rate the rate of savings is astronomical. Atleast here in switzerland.
Also the savings of the super rich + companies in bigger then ever, yet still real economics are not growing. Only the paper markets.
The economy collapsed in 2008. The measures taken since, such as quantitative easing and the bailouts to banks has put a band-aid on a gunshot wound. While they have given the impression that things are ok now they aren't. Inequality is getting to a unmanageable level, and the amount of debt in the world is unsustainable. It's only a matter of time before the current ponzi scheme that is fiat currency comes crashing down. This has been coming since the gold standard was abandoned, as currency now has no physical asset backing it up. The governments of the western world owe more money than they can possible pay back.
Tamereth wrote: The economy collapsed in 2008. The measures taken since, such as quantitative easing and the bailouts to banks has put a band-aid on a gunshot wound. While they have given the impression that things are ok now they aren't. Inequality is getting to a unmanageable level, and the amount of debt in the world is unsustainable. It's only a matter of time before the current ponzi scheme that is fiat currency comes crashing down. This has been coming since the gold standard was abandoned, as currency now has no physical asset backing it up. The governments of the western world owe more money than they can possible pay back.
Ehem the Gold standart also has faults, mainly Gold has no intrinsic value?
Also western world? Do we not count in there or is the imagined lower then 20% debt of the swiss state imagined and in truth we allready got anschlussed?
Whatever happens, China is going to face a massive impact. And I mean massive.
Even with there large reserves, they have a fairly small internal vs trade market and a good chunk will never earn wages to purchase half what they mana facture at a higher economic level.
China has kept things in line and people, well not happy all the time but sustainable woth jobs, growth and money. If that runs out then there in trouble. Money keeps things calm, people have jobs, people can live normal lives, even off there abit gakky at times.
Currently Im not sure how much there burning but the amount of security they run in some regions is high, especially the more monitored groups is expensive. Now they have them down you do not want to have to release it. A spring my jump, or nothing.
China has also issues with Zombie companies, basically like the banks DB or some italian banks but non monetary Zombie companies are probably a first in history to my knowledge.
Ehem the Gold standart also has faults, mainly Gold has no intrinsic value?
Er?
Aside from the self evident argument that the economic construct is an entirely arbitrary system devised by man and as such nothing carries an intrinsic value, for the purposes of this discussion that is objectively untrue.
Gold currently has limited supply and is crucial in many important manufacturing processes, it's absolutely intrinsically valuable.
Unlike, say, toy soldiers made out of tuppence hapenny of HIPs beads.
Ehem the Gold standart also has faults, mainly Gold has no intrinsic value?
Er?
Aside from the self evident argument that the economic construct is an entirely arbitrary system devised by man and as such nothing carries an intrinsic value, for the purposes of this discussion that is objectively untrue.
Gold currently has limited supply and is crucial in many important manufacturing processes, it's absolutely intrinsically valuable.
Unlike, say, toy soldiers made out of tuppence hapenny of HIPs beads.
Nope Gold is not intrinsically valuable, infact alot of these processes could be replaced by other Materials.
That's the key though a single inflexible one commoditiy bound currency system is too volatile.
Better would be a mixture of Materials including a vast Array in order to get a more stable groundwork and more flexibility torwards the national banks.
Azreal13 wrote: Gold currently has limited supply and is crucial in many important manufacturing processes, it's absolutely intrinsically valuable.
Yes, it does have certain industrial uses that give it intrinsic value. But the majority of its current value comes from its arbitrary selection as a currency, take away the currency value and gold would only be valuable on par with other useful metals and the "wealth" accumulated in gold would collapse overnight. So it's kind of pointless nitpicking to argue that its intrinsic value is merely very low but not literally zero.
Azreal13 wrote: Gold currently has limited supply and is crucial in many important manufacturing processes, it's absolutely intrinsically valuable.
Yes, it does have certain industrial uses that give it intrinsic value. But the majority of its current value comes from its arbitrary selection as a currency, take away the currency value and gold would only be valuable on par with other useful metals and the "wealth" accumulated in gold would collapse overnight. So it's kind of pointless nitpicking to argue that its intrinsic value is merely very low but not literally zero.
So, like I said in the first bit of my post that you didn't quote then?
Not Online!!! wrote: China has also issues with Zombie companies, basically like the banks DB or some italian banks but non monetary Zombie companies are probably a first in history to my knowledge.
Yeah, the Chinese economy, despite being vast is not so immune to shocks, just on a far larger scale, not thousands of jobs but millions.
Over production and so is definitely a real issue for them. If they had reduced demand and kept everyone empyed the run prices low.
Cut jobs, well everyone knows while you have work and OK living standards, you get a calm population, and China loves calm and unity.
Others rely on state, which helps keeps companies and so nice and loyal but if cuts. Its the state cutting Jobs, not popular with people. And China is robust in security but they have a careful balence, really not wanting it upset.
China is interesting how so much is tied to there economics, entire regions security and balence is basically reliant on how they can keep there economics stable.
Ok, so what do you think is intrinsically valuable?
Now that is a good question.
I would have bypassed it though via my recomendation that you should not use a single Material for the determination of a currency.
Also as a philosopher that could be a lot to answer but frankly i'd go for logic as beeing intrinsically valuable so long you regard your existence as valuable?
Not Online!!! wrote: China has also issues with Zombie companies, basically like the banks DB or some italian banks but non monetary Zombie companies are probably a first in history to my knowledge.
Yeah, the Chinese economy, despite being vast is not so immune to shocks, just on a far larger scale, not thousands of jobs but millions.
Over production and so is definitely a real issue for them. If they had reduced demand and kept everyone empyed the run prices low.
Cut jobs, well everyone knows while you have work and OK living standards, you get a calm population, and China loves calm and unity.
Others rely on state, which helps keeps companies and so nice and loyal but if cuts. Its the state cutting Jobs, not popular with people. And China is robust in security but they have a careful balence, really not wanting it upset.
China is interesting how so much is tied to there economics, entire regions security and balence is basically reliant on how they can keep there economics stable.
In a way i feel like China has more to lose from economic instability then other nations.
Mostly due to the fact that the loyalty torwards the regime was and is maintained by a growing economy and therefore improving living standards.
If this were to stop i belive people would start to question the status quo.
Ok, so what do you think is intrinsically valuable?
Now that is a good question.
I would have bypassed it though via my recomendation that you should not use a single Material for the determination of a currency.
Also as a philosopher that could be a lot to answer but frankly i'd go for logic as beeing intrinsically valuable so long you regard your existence as valuable?
Now answer the question as it pertains to the topic.
The whole economic model for the species is based on the idea that things are worth stuff. Whether it's donkeys, gold, used underwear, whatever.
In an economic discussion the assumption must be that we agree things are worth something, even though the whole idea that anything is worth anything is entirely constructed.
So either gold is valuable, or nothing material is worth anything and the whole discussion is pointless.
Oil is an exception. Much of the raw materials and raw materials processing are long gone overseas. At the same time, high end manufacturing (like Apple) is mostly overseas. Farms grow crops specifically for export, specifically stuff that doesn't have much of an internal market (soybeans and whatnot). Could everything be retooled and brought internal? Eventually, maybe, but it might well not be worth it.
Keep in mind that a lot of manufactured goods coming out of China aren't critical in the short term. If the supply of cell phones dries up, people use their old ones for longer, rather than replacing them every 2 years (or less). No cheap goods at Walmart? Standard of living drops, but it's not the end of the world - .
We're not talking about the end of the world, we're talking about the economy tanking and going into a recession. Cheap goods and junk like 2 year cell phones is what the economy largely runs on. If that sort of things 'dries up,' we're absolutely in economic recession territory.
And the bulk of what goes into that junk comes from overseas. And its mostly made overseas.
I work in an office that deals with fairly specialty construction- the materials that were readily available a couple decades ago isn't anymore. It has to come from outside the US- and that includes building materials, or simple things like treated split logs for fencing. Our IT infrastructure is HQed in Mexico. The local housing market is guttered (but better than some areas), infrastructure is a crumbling mess (that isn't getting funded), and a lot of the Midwest is still a flooded semi-wasteland (with roads and bridges still wiped out), where people are losing farms to several massive climatic storms and being unable to export goods thanks to the 'trade war.' And food is one of the few things that we do produce a surplus of easily, and its currently a major problem. Its bad times all around.
Azreal13 wrote: Now answer the question as it pertains to the topic.
The whole economic model for the species is based on the idea that things are worth stuff. Whether it's donkeys, gold, used underwear, whatever.
In an economic discussion the assumption must be that we agree things are worth something, even though the whole idea that anything is worth anything is entirely constructed.
So either gold is valuable, or nothing is worth anything and the whole discussion is pointless.
I belive you misunderstood me.
I am not against a standart per see or a binding.
I am pointing out however that value is often more imagined then actually there. Gold being a main offender in this regard.
My suggestion therefore is that instead of just simply reeimplementing a system which was shown to be volatile and unstable you'd modify it.
Basically instead of just having Gold as determinant of worth of the currency you could add in Platinium, copper, rare earths, diamonds, oil, etc. In a somewhat predetermined way.
Basically the issue is: a one commoditiy bound currency is inherently volatile, therefore not particulary healthy for an economy.
A mixture of commodities would be stable and therefore due to it's differentiated nature alot less in danger of sudden losses or gains in regards to it's worth.
No, I understand your point. My issue with it is that if you start arguing that nothing is really worth anything then the whole economic system just falls over.
Arguing gold isn't intrinsically valuable is moot, because nothing is, or one sticks with thousands of years of culture and agree that different things have different degrees of value.
Arguing for a compound standard instead of a gold standard is not the same argument as "gold has no intrinsic value." Whatever commodities chosen to support a currency need to have a value in just the same way, and won't carry any more intrinsic value than gold.
Azreal13 wrote: No, I understand your point. My issue with it is that if you start arguing that nothing is really worth anything then the whole economic system just falls over.
Arguing gold isn't intrinsically valuable is moot, because nothing is, or one sticks with thousands of years of culture and agree that different things have different degrees of value.
Arguing for a compound standard instead of a gold standard is not the same argument as "gold has no intrinsic value." Whatever commodities chosen to support a currency need to have a value in just the same way, and won't carry any more intrinsic value than gold.
No Gold has no intrinsic value!
Value is determined by the market and other Factors but generally agreed upon by individual participants of a system, be they companies, countries or just Bob and John.
The value therefore is amalgam of subjective worths so to speak.
If the people, companies etc deem Gold to be worthless because they can't use it f.e. Gold loses all value.
Ok, so what do you think is intrinsically valuable?
Now that is a good question.
I would have bypassed it though via my recomendation that you should not use a single Material for the determination of a currency.
Also as a philosopher that could be a lot to answer but frankly i'd go for logic as beeing intrinsically valuable so long you regard your existence as valuable?
Not Online!!! wrote: China has also issues with Zombie companies, basically like the banks DB or some italian banks but non monetary Zombie companies are probably a first in history to my knowledge.
Yeah, the Chinese economy, despite being vast is not so immune to shocks, just on a far larger scale, not thousands of jobs but millions.
Over production and so is definitely a real issue for them. If they had reduced demand and kept everyone empyed the run prices low.
Cut jobs, well everyone knows while you have work and OK living standards, you get a calm population, and China loves calm and unity.
Others rely on state, which helps keeps companies and so nice and loyal but if cuts. Its the state cutting Jobs, not popular with people. And China is robust in security but they have a careful balence, really not wanting it upset.
China is interesting how so much is tied to there economics, entire regions security and balence is basically reliant on how they can keep there economics stable.
In a way i feel like China has more to lose from economic instability then other nations.
Mostly due to the fact that the loyalty torwards the regime was and is maintained by a growing economy and therefore improving living standards.
If this were to stop i belive people would start to question the status quo.
Agreed. If not growing. Least stable economy, and lives.
Life in China is not great but they Don t make it terrible and unliveable.
True. There state, and economy for better and worse are tied together extremely tightly, far more than west because they have larger state run groups.
Azreal13 wrote: No, I understand your point. My issue with it is that if you start arguing that nothing is really worth anything then the whole economic system just falls over.
Arguing gold isn't intrinsically valuable is moot, because nothing is, or one sticks with thousands of years of culture and agree that different things have different degrees of value.
Arguing for a compound standard instead of a gold standard is not the same argument as "gold has no intrinsic value." Whatever commodities chosen to support a currency need to have a value in just the same way, and won't carry any more intrinsic value than gold.
No Gold has no intrinsic value!
Value is determined by the market and other Factors but generally agreed upon by individual participants of a system, be they companies, countries or just Bob and John.
The value therefore is amalgam of subjective worths so to speak.
If the people, companies etc deem Gold to be worthless because they can't use it f.e. Gold loses all value.
If you state that an agreement of an Amalgam of participants on a value is intrinsically then i can't help but point to the fact that the value in this case is exactly not intrinsically but externally apointed.
Automatically Appended Next Post: Also culture does not generate value, same with tradition, both get appointed value. There is nothing intrinsic about it
We're not talking about the end of the world, we're talking about the economy tanking and going into a recession. Cheap goods and junk like 2 year cell phones is what the economy largely runs on. If that sort of things 'dries up,' we're absolutely in economic recession territory.
Of course! But your earlier assertion that the US would suffer more than China from a global recession is demonstrably false. The US has undergone multiple recessions in the past few decades and has weathered them all and recovered fairly quickly. China goes into a recession? Hoo boy.
Not Online!!! wrote: If you state that an agreement of an Amalgam of participants on a value is intrinsically then i can't help but point to the fact that the value in this case is exactly not intrinsically but externally apointed.
Automatically Appended Next Post: Also culture does not generate value, same with tradition, both get appointed value. There is nothing intrinsic about it
Go back and read what I've written very carefully.
From the get go I've highlighted that value is a construct, but it's irrelevant arguing otherwise as that's not reality, our economic system is based on ascribing value to commodities, so arguing that gold doesn't have an intrinsic value is futile because nothing has an intrinsic value and it contributes nothing to the discussion.
I think the only thing we've learned in the last 10 years of economic development is that no one really understands how it all works and that maybe the current scheme is the worst model for building sustainable societies.
About the only thing we do know is that the gold/silver standards were utter disasters for every economy that employed them in the last 200 years, and the idea that our problems will somehow magically not be there anymore if we go back to a currency model that boomed and busted every three years as opposed to one that does so every 10-15 is kind of silly.
Azreal13 wrote: So, like I said in the first bit of my post that you didn't quote then?
No, because "nothing has intrinsic value" is not true either. Gold has limited intrinsic value because its practical applications are fairly narrow and it's not all that rare. Rarer things would have more intrinsic value. For example, highly enriched uranium suitable for nuclear weapons production is extremely valuable simply because of its scarcity and manufacturing expense. The objection to the gold standard being anything other than fiat currency is not one about intrinsic value in general, it's about gold specifically being very low in value outside of its arbitrary selection as currency.
The U.K. is circling a recession. You can guess why.
And I genuinely fear this will hit far harder than 2007/2008.
Why?
The PPI ‘scandal’. Trust me when I say when it comes to PPI, I’ve (genuinely) forgotten than you’ll ever know about the ins and outs of that specific insurance product.
See, since it all kicked off around, ooooh, 2010? All forms of PPI were seen to be toxic. And many were pretty worthless. Either stupidly restrictive terms, or not worth the cost.
But Mortgage PPI (MPPI)? Why wouldn’t you want a policy to cover your mortgage payments for (in most cases) up to 12 months? Which would pay out alongside any other similar policies? And, given what you stood to gain, a pretty nominal cost?
You’re right, it does make sense. Because the only certain thing in life is that things are uncertain.
Yet, because PPI as an umbrella product group has a not undeserved bad reputation? There are tens of thousands of mortgage holders that cancelled their MPPI policies. And that means when redundancies start hitting? All of them are at heightened risk of repossession. And from there, negative equity.
So. Yeah. Regardless of the root cause of the next recession in the U.K.? It gonna be far, far worse.
Yeah, I think you're right there.
Cars, too. Virtually no-one buys a car outright any more, it's all done on finance. I think that's set to all come crashing down in a recession once people start losing their jobs, can't make their car payments or afford the settlement figure to end the agreement early.
The U.K. is circling a recession. You can guess why.
And I genuinely fear this will hit far harder than 2007/2008.
Why?
The PPI ‘scandal’. Trust me when I say when it comes to PPI, I’ve (genuinely) forgotten than you’ll ever know about the ins and outs of that specific insurance product.
See, since it all kicked off around, ooooh, 2010? All forms of PPI were seen to be toxic. And many were pretty worthless. Either stupidly restrictive terms, or not worth the cost.
But Mortgage PPI (MPPI)? Why wouldn’t you want a policy to cover your mortgage payments for (in most cases) up to 12 months? Which would pay out alongside any other similar policies? And, given what you stood to gain, a pretty nominal cost?
You’re right, it does make sense. Because the only certain thing in life is that things are uncertain.
Yet, because PPI as an umbrella product group has a not undeserved bad reputation? There are tens of thousands of mortgage holders that cancelled their MPPI policies. And that means when redundancies start hitting? All of them are at heightened risk of repossession. And from there, negative equity.
So. Yeah. Regardless of the root cause of the next recession in the U.K.? It gonna be far, far worse.
Yeah, I think you're right there.
Cars, too. Virtually no-one buys a car outright any more, it's all done on finance. I think that's set to all come crashing down in a recession once people start losing their jobs, can't make their car payments or afford the settlement figure to end the agreement early.
Cars are worse.
Houses least unless trashed mantain the majority of there value. Not many lose majority of value without somthing big.
Not Online!!! wrote: If you state that an agreement of an Amalgam of participants on a value is intrinsically then i can't help but point to the fact that the value in this case is exactly not intrinsically but externally apointed.
Automatically Appended Next Post: Also culture does not generate value, same with tradition, both get appointed value. There is nothing intrinsic about it
Go back and read what I've written very carefully.
From the get go I've highlighted that value is a construct, but it's irrelevant arguing otherwise as that's not reality, our economic system is based on ascribing value to commodities, so arguing that gold doesn't have an intrinsic value is futile because nothing has an intrinsic value and it contributes nothing to the discussion.
No, you need to realise that you can't argue that if nothing has intrinsic value that you should just disregard that fact and implement a standart on a commoditiy currency Basis because we can't fathom a World were such commoditiy would turn worthless.
Take whale oil for exemple.
This is why i said Gold is intrinsically valueless, in order to point out the volatility to explain to you that your standart is virtually useless as a suggestion to base the currency value on.
Just because you don't like the argument doesn't make it wrong, that is not how an argument works.
Cars, too. Virtually no-one buys a car outright any more, it's all done on finance. I think that's set to all come crashing down in a recession once people start losing their jobs, can't make their car payments or afford the settlement figure to end the agreement early.
Cars are worse.
Houses least unless trashed mantain the majority of there value. Not many lose majority of value without somthing big.
A new car loses x value just leaving the lot.
X amount after 3 years or so etc.
I'm afraid I have to disagree.
I think your point is valid in the context of a decent housing market. But that's not what we've got. The marker is grossly over inflated in terms of price.
So, if I'm right, and the next recession sees a remarkable uptick in repossession? Yeah. That's banks losing out even more. And when banks lose out, they become Risk Adverse. That means fewer mortgages being granted. House prices will fall not only because nobody can afford to buy, but because the Banks cannot shift the repossessed properties to anyone except speculators. Who do what they do by paying as little as possible.
That can tank the entire market. That traps an awful lot of people, who bought their home in the past decade to 15 years trapped in negative equity.
That's not really a problem in Car Finance, because the second you roll off the forecourt, you're down 20% due to VAT alone. Car's are meant to depreciate in value. Housing isn't meant to.
Automatically Appended Next Post: The PPI aspect also hits lending of any kind.
Credit Card? No PPI.
Loan? No PPI.
Car Finance of any stripe? No PPI.
Oh, it's still available. And a decent product overall. But nobody is buying it. So when things hit the skids, and money becomes tight? That's another noogie to the economy.
Heck, I've seen people so hellbent that any form of financial insurance is PPI, and therefore BAD actually cancel income protection policies, life policies, critical illness policies.
The PPI Scandal? All claims must be made on or before 29 August 2019. But that will not be an end to the financial repercussions. There are many, many more waiting in the wings to come and rough us up in a recession.
And once again, it's those in the lower income brackets that are most exposed. Even if they're lucky enough to see reduced hours, rather than outright redundancy? They're gonna be in shtook.
To give you an idea? Between April 2011 and November 2015, more than 12,000,000 successful PPI complaints were made. That's 12,000,000 policies rescinded (that will of course include policies on long since repaid debt) - and lord knows how many other policies cancelled on the off chance of a refund.
This is the dog's egg in the long grass - and the lawnmower is coming.
Not Online!!! wrote: If you state that an agreement of an Amalgam of participants on a value is intrinsically then i can't help but point to the fact that the value in this case is exactly not intrinsically but externally apointed.
Automatically Appended Next Post: Also culture does not generate value, same with tradition, both get appointed value. There is nothing intrinsic about it
Go back and read what I've written very carefully.
From the get go I've highlighted that value is a construct, but it's irrelevant arguing otherwise as that's not reality, our economic system is based on ascribing value to commodities, so arguing that gold doesn't have an intrinsic value is futile because nothing has an intrinsic value and it contributes nothing to the discussion.
No, you need to realise that you can't argue that if nothing has intrinsic value that you should just disregard that fact and implement a standart on a commoditiy currency Basis because we can't fathom a World were such commoditiy would turn worthless.
Take whale oil for exemple.
This is why i said Gold is intrinsically valueless, in order to point out the volatility to explain to you that your standart is virtually useless as a suggestion to base the currency value on.
Just because you don't like the argument doesn't make it wrong, that is not how an argument works.
My opinion on the argument isn't what makes it wrong. It is your futile assertion that's causing the issue.
Azreal13 wrote: So, like I said in the first bit of my post that you didn't quote then?
No, because "nothing has intrinsic value" is not true either. Gold has limited intrinsic value because its practical applications are fairly narrow and it's not all that rare. Rarer things would have more intrinsic value. For example, highly enriched uranium suitable for nuclear weapons production is extremely valuable simply because of its scarcity and manufacturing expense. The objection to the gold standard being anything other than fiat currency is not one about intrinsic value in general, it's about gold specifically being very low in value outside of its arbitrary selection as currency.
No, you're conflating "value" with "application."
Gold wasn't worth anything for millions of years. Then man found it and decided he liked it and/or needed it. People who liked/needed it but didn't have it offered people that had gold other things they did have in exchange. How much of those goods was needed to obtain that gold was an initially arbitrary decision based on nothing more scientific than whatever felt right to the trading parties.
And lo, commerce is born.
Nothing has an intrinsic value because "value" is a construct. However everything has a value because that's what we've collectively decided to do as a species, even if that value is basically nothing.
Which is why arguing "gold has no intrinsic value" is so futile, because for this discussion to work we need to agree that everything has a value or economics doesn't work.
Arguing "the gold standard didn't work because basing another thing's worth on something that fluctuates" is a fair argument. Arguing that it didn't work because gold has no intrinsic value is baseless because whatever thing or combination of things that you substitute for gold won't have any intrinsic value either, unless we have a consensus that it does.
Gold wasn't worth anything for millions of years. Then man found it and decided he liked it and/or needed it. People who liked/needed it but didn't have it offered people that had gold other things they did have in exchange. How much of those goods was needed to obtain that gold was an initially arbitrary decision based on nothing more scientific than whatever felt right to the trading parties.
And lo, commerce is born.
Nothing has an intrinsic value because "value" is a construct. However everything has a value because that's what we've collectively decided to do as a species, even if that value is basically nothing.
Which is why arguing "gold has no intrinsic value" is so futile, because for this discussion to work we need to agree that everything has a value or economics doesn't work.
Arguing "the gold standard didn't work because basing another thing's worth on something that fluctuates" is a fair argument. Arguing that it didn't work because gold has no intrinsic value is baseless because whatever thing or combination of things that you substitute for gold won't have any intrinsic value either, unless we have a consensus that it does.
Why does the goldprice then fluctuate or any good?
BECAUSE THE VALUE IS DETERMINED BY THE MARKET.
Ergo the Value as you say is a construct, ergo as you say it is not intrinsical, ergo you are a moron if you state then that the reason that something has no intrinsic value is a baseless assumption because the MARKET mechanism literally gives every commodity a value at a given time, ergo i CAN STATE that Gold has no intrinsic value, BUT that gold has the value accomondated and appointed by the market.
This is literally the reason why the gold standart never worked, because the market decides what is the goods price, ergo the Market gives the good value else it would not have any value at all, which is incidentally the reason why the gold standart not worked.
IS this so difficult to understand?
And now for the reason why i recomended a mixture of goods. Because if i apply a mixture i get surprise surprise a mixture of goods which overall will be less affected by sudden price shifts. Ergo a more stable and flexible baseline valuebasis for the currency.
This is not a political thread, but an economics thread.
They're one and the same because, despite their protestations, economists are not scientists and economics is not a scientific discipline, it is mathematics enslaved by philosophy.
It doesn't matter how something obtained value, it matters how reliable that value is. When someone says "X has intrinsic value" what that means in a practical sense is "X is reliably valuable."
Gold - and to a lesser extent Silver - are valuable and have a practical use for a reason that I'm surprised has not been brought up yet considering it's the primary reason why Gold and Silver became so independently popular as coinage across the globe; they're ideal metals to make coins out of.
Gold - and to a lesser extent silver - is;
- Relatively rare. You can't just dig it up in your back yard.
- It's easily cast or stamped into the shape of a coin with an official seal on it.
- It's quite light, so you can carry a decent amount of it around in a purse all day without it weighing you down.
- It's not particularly reactive, at least not with air, so it's not self debasing.
- It provides an attractive, quality finish to items such as jewellery.
It's not an accident that these two metals have formed the basis of currency the world over for hundreds of years.
Back on the actual topic, while everyone seems to love a good cataclysmic prediction the recession might hurt but it's unlikely to be on the scale of the global financial crisis. Yes there's a lot of exposed firms (the exposure to credit for vehicle purchases has already been covered I think) and there's some financial book cooking going on in many countries to make banks and other financial institutions look more stress resistant than they actually are, but the underlying economics and structure of most advanced economies is actually pretty good. Employment in the UK for example is very high (please don't bother with the zero hours etc nonsense, the number of people minimally employed is quite low relatively) and it has room for slack. Our fiscal deficit is quite low so we have room for expansionary spending if needed in an emergency. No recession is good, but it's unlikely to be anywhere near as bad as the last one.
NinthMusketeer wrote: It doesn't matter how something obtained value, it matters how reliable that value is. When someone says "X has intrinsic value" what that means in a practical sense is "X is reliably valuable."
Is that logic? Yeah see we don't like your kind round here
I am pretty sure he meant "the gold and silver standard is a notable element in discussion of economy overall but is off-topic within the context of this thread unless linked to the specific event being discussed, that being the next recession."
NinthMusketeer wrote: It doesn't matter how something obtained value, it matters how reliable that value is. When someone says "X has intrinsic value" what that means in a practical sense is "X is reliably valuable."
Is that logic? Yeah see we don't like your kind round here
Sorry, what I meant was "we need to adopt the pony standard, whereby everyone's wealth is represented by a pony of varying weight; more wealthy people can feed their pony and it will get fatter."
I am disappointed, Ninth. You're on dakkadakka, debating what to base economics around-
And your straw man is not TEEF!
The conditions definitely seem right for a recession. We have trade wars galore, a major destabilization brewing in the Middle East which will undoubtedly have an impact on oil prices, and citizens that are unable to handle economic hardships because they have no savings or assets. The only real question is what the catalyst will finally be- war, a financial scandal, or automation eliminating a large sector of jobs.
Here's my take on it. I am going out on a limb here and by no means claim to be right but this is just how I see it..
1. China doesn't really operate a free market. Here's why. As soon as the Chinese stock market entered free fall- July 3 - China Financial Futures Exchange (CFFEX) suspends 19 accounts from short-selling for one month. In laymen terms that prevented extraction of critical amount of resources from society. (Which is what a stock-market crash is rich entities getting richer by calling in debts... defaults are covered by bailouts etc.). This and other measure kept the insane growth rate. Is it sustainable indefinitely? No. Is it softening the fall and damage controlling the slow fall of fiat currency. Yes.
New York Stock exchange can/will enter a free fall because its a strict free market US capitalist establishment. Its a payday to the very rich when it happens.
2. Why are people talking about gold? The US dollar and de-facto economical benchmark is based on a resource already - Oil/Shale Gas. The petro-dollar is heading for a very big speed bump while it will need to adjust to a shared market for oil as other players profit of the turmoil and US's weakening political position while electric/alternative energy sources are slowly becoming a larger part of society. US is the only country that's stepped out of the Paris accords. Why? To try and delay the inevitable. That's why there is so much interference going on in the middle east & Venezuela trying to keep a hold on the market $$..
Everyone else is still on track because they can see it coming we are all heading for electrics. Global warming true or false is irrelevant to thios shift in energy because its still happening irrespective if climate change is or is not man made because that's what the market now wants. The developed nations will lead and the third world will follow 1.5 steps behind.
The next recession? Yes.Trump gets re-elected and when his term finishes there'd be a good time for a grand cashing in of the chips. The dominoes will get knocked again.. This will be exhabarated by higher unemployment due to accelerating automation rates and ageing population so it will be far worse than 2008.
Am I right? Hopefully not and things will just be on the up and up and I'm just completely bonkers.. Could I be right? Hopefully not and people will not need to suffer through hardships.
Extra Credits did a good Extra History episode on the history of paper money which went into the Gold Standard and why it no longer worked and the currencies were floated.
Clearly we all need to go back to the Cowrie shell standard.
A Town Called Malus wrote: Extra Credits did a good Extra History episode on the history of paper money which went into the Gold Standard and why it no longer worked and the currencies were floated.
Clearly we all need to go back to the Cowrie shell standard.
Here's the issue, EC half the time is just plain wrong.
In the UK, household borrowing on unsecured credit (so excluding mortgages etc, but including student debt) is also increasing - and currently stands as a higher average than before the last crash.
Seriously. Regardless of the root cause of the next one, it's gonna be proper, proper rough. Even if the UK ends up remaining in the EU, leaves with a deal or crashes out. This is gonna hurt.
Which is why I'll be taking advantage of having a flatmate, and that extra income (which offsets my rent) to settle all my existing debts. They ain't big by any means (far, far below the household average). But they have to go. When it hits, I don't want to be owing anyone anything.
If you're in a similar financial position, I can recommend doing the same. Even if it's just a programme to reduce your borrowing. Better to do it now, whilst you know you've got disposable income.
Honestly matey, I wouldn't rely solely on the equity. What's there today, could be gone tomorrow. Especially if there's a very sudden collapse in house prices.
And as I'm sure you're aware being a mortgage holder, if you can afford to pay extra in a given month, it saves you quite a bit of money in the long run - as overpayments typically reduce the capital, rather than the interest. This is an especially potent tactic in the early years of a mortgage, which are generally spent paying off interest, rather than capital.
And a final nuggett? Overpaying Your Mortgage Does Not Build Up A Reserve For Tighter Times. At all. It's a fairly common misconception I see at work from time to time.
Example? Let's use a round number, realistic or not. Your mortgage payment is £500. You pay this without issue for 12 months. And you also make overpayments across the same period, totalling £1,000. That £1,000 overpayment does not mean you've got two contractual repayments 'in the bank'. Ever. It just means the capital owing is reduced.
Please note this information is correct for the UK. Other countries may have different rules and takes.
We're very lucky. We have a 200k mortgage on a roughly 700k house in a very desirable area. Obviously a major recession could wipe out a lot of that value but shouldn't be to the point where we need to worry about things like negative equity.
I think what's being overlooked is that growth rates have been slowing in many countries at a graceful rate and so it's likely that both governments and private institutions can see the writing on the wall and are prepared. The 2008 recession involved the sudden falling over of a number of dominos, especially concentrated in the financial sector, which came as a massive shock and caused real problems with the recovery. The next recession is more likely to be an extended and more manageable dip followed by a much faster climb out.
Mad Doc Grotsnik wrote: Sweet If you've spare rooms, consider a lodger. Every penny they pay can be used to overpay the mortgage (less tax, of course).
At the moment, I'm in the spare room. Not everything in the garden is rosy... :(
The U.S. added 224,000 jobs in June. While there are certainly signs of some headwinds (and while anything can happen), this doesn't seem like an economy obviously on the edge of catastrophe. No matter how much some people almost seem to be rooting for it...?
This is not a political thread, but an economics thread.
They're one and the same because, despite their protestations, economists are not scientists and economics is not a scientific discipline, it is mathematics enslaved by philosophy.
The nasty truth.......
.... however, politics is banned in the OT, NOT economics.
gorgon wrote: The U.S. added 224,000 jobs in June. While there are certainly signs of some headwinds (and while anything can happen), this doesn't seem like an economy obviously on the edge of catastrophe. No matter how much some people almost seem to be rooting for it...?
UK has been adding jobs. Or, at least.....lowering the unemployment figures.
I've absolutely no idea if the US is similarly massaging the figures - and this should not be construed as any kind of accusation or allegation against the US.
But in the UK, zero hour contracts (where one has a job, but not necessarily pay), gig economy (deliveroo etc, again, see Zero Hour issue), Carers all now count as 'employed'. It makes the figures look good, but is tarting it all up somewhat.
Yodhrin wrote: economists are not scientists and economics is not a scientific discipline, it is mathematics enslaved by philosophy.
I always felt like, from outside observance, Economics is what you get when you create the bastard child of sociology, mathematics, a tiny bit of history, and whatever field "wildly guessing about trends that change by the second that no one really understands but we're going to try and understand because no one pays us to say we don't fething know" falls under.
Yodhrin wrote: economists are not scientists and economics is not a scientific discipline, it is mathematics enslaved by philosophy.
I always felt like, from outside observance, Economics is what you get when you create the bastard child of sociology, mathematics, a tiny bit of history, and whatever field "wildly guessing about trends that change by the second that no one really understands but we're going to try and understand because no one pays us to say we don't fething know" falls under.
Economics is philosophy fumbling with maths.
No seriously Atleast non operative level economics.
gorgon wrote: The U.S. added 224,000 jobs in June. While there are certainly signs of some headwinds (and while anything can happen), this doesn't seem like an economy obviously on the edge of catastrophe. No matter how much some people almost seem to be rooting for it...?
Low employments levels have always preceded a recession which is why many people point to it as a warning. I believe, simplisitically, the thinking goes that it is economic productivity which is important overall not low unemployment levels. The concern is that increasing lowered unemloyment levels is an indicator that:-
People are getting more desperate and having to take (more) jobs to keep going (and you increasing tap into that desperate low paid group of people).
Worried businesses don't invest, instead they employ more people when there is low certainty. If you spend a £1m on new machinery you can't recoup that in a recession potentially driving the company bust. Instead you employ £1.25m worth of staff over a five year period because if you go into recession you can purge yourself of the staff fairly quickly and the overall cost is much less.
In effect you are already in recession but are using spare, 'desperate', people to keep things going and that extra money keeps the economy stable because. However, once you hit the point where there are no employees left in the system there is no room for growth and the economy falls back. As that happens businesses quickly fire these employees to maintain profit escalating the situation. Hence most recessions show a very low employment level suddenly jumping to much higher levels.
Yodhrin wrote: economists are not scientists and economics is not a scientific discipline, it is mathematics enslaved by philosophy.
I always felt like, from outside observance, Economics is what you get when you create the bastard child of sociology, mathematics, a tiny bit of history, and whatever field "wildly guessing about trends that change by the second that no one really understands but we're going to try and understand because no one pays us to say we don't fething know" falls under.
Economics is the study of choices. How and why people do what they do, and how outcomes arise from there.
Unfortunately because people are, well, people, this requires pulling from basically every other discipline when attempting to study how and why they do what they do, because people do things for an incomprehensiblely wide array of reasons.
A lot of people hear the word "economics" and immediately start thinking GDP numbers and wall street and dollar signs, but the field at its most fundamental is "what motivated you to do X?". This inevitabily then drags other disciplines in by necessity.
gorgon wrote:The U.S. added 224,000 jobs in June. While there are certainly signs of some headwinds (and while anything can happen), this doesn't seem like an economy obviously on the edge of catastrophe. No matter how much some people almost seem to be rooting for it...?
Europe is more at risk, for example German manufacturing is not doing great and the auto market in general in Europe is not performing well. It's more likely at this stage that we'll see a shallow-ish recession in parts of Europe that gently dips and then recovers.
Mad Doc Grotsnik wrote:But in the UK, zero hour contracts (where one has a job, but not necessarily pay), gig economy (deliveroo etc, again, see Zero Hour issue), Carers all now count as 'employed'. It makes the figures look good, but is tarting it all up somewhat.
As someone who has both worked zero hours and employed people on zero hours, that's a bit of a misleading representation. "Zero hours" in the UK context just means "zero fixed hours". It means I can't guarantee you say 20 hours of work every week. But in practice I can offer you a certain amount of work and some weeks you might get a bit more, some you might get a little bit less. Companies do not typically retain large numbers of people to just sit at home on the off chance they might have a sudden splurge of work, it's normally more measured than that. As for the people taking the work, despite the odd scare story that pops up in a newspaper or gets brought up by some MP, the majority of people doing such work are doing it because it fits their lifestyle, e.g. they have a job already and are looking for bit work on the side, students who have flexible periods in their week, people who will hoover up any and all extra hours you can throw their way.
I guess the economic question is, why are these types of labor:
the majority of people doing such work are doing it because it fits their lifestyle, e.g. they have a job already and are looking for bit work on the side, students who have flexible periods in their week, people who will hoover up any and all extra hours you can throw their way.
in the market more in the last decade than previous decades? Didn't these types of labor always exist? Therefore, what is different about it now and why are we tracking it differently now?
gorgon wrote: The U.S. added 224,000 jobs in June. While there are certainly signs of some headwinds (and while anything can happen), this doesn't seem like an economy obviously on the edge of catastrophe. No matter how much some people almost seem to be rooting for it...?
A recession isn't a catastrophe, but some of the circumstances in place could make a recession into one. The last recession didn't hit China very hard. The next one may well. Between zombie corporations and real estate scams (ghost towns and buildings that fall apart in 5 years), there's a huge potential for job loss and economic ruin if China makes a single mis-step, or gets into a serious trade war because of politics (Trump, Hong Kong).
Easy E wrote: Didn't these types of labor always exist? Therefore, what is different about it now and why are we tracking it differently now?
Because politicians and their supporters need a constant supply of new sticks with which to try and beat each other up. "Oh, employment levels are at record highs now? Yeah, well, err, it's the wrong type of employment!!" etc, etc. The reality of what is happening in an economy and mere matters such as peoples jobs and their right to do whatever the hell employment they like are a secondary concern to making sure an MP looks good at Prime Ministers Questions and gets on the 6/10 clock news.
More people are working, but from my view it seems like the work is harder and pays less than it has in quite a long time, relative to previous times where the economy was good.
bouncingboredom wrote: - It's quite light, so you can carry a decent amount of it around in a purse all day without it weighing you down.
I'm going to quibble with this one, because gold is actually quite HEAVY. It's close to four times the weight of iron per unit volume.
Employment in the UK for example is very high ... and it has room for slack.
That's true NOW. The problem is, once you start talking about actually being IN a recession that changes in a hurry. Businesses hear the word 'recession,' before it can possibly have had any effect on their bottom line (much less put them in the red at all) and they cut expenses like a mad barber... and the production employees always seem to take the brunt of it. Now you've got a bunch of unemployed people so there's a LOT less spending... and BAM! A minor blip that could easily be weathered becomes a major problem.
Not least of which for the companies who just effectively fired their customers.
Vulcan wrote: Not least of which for the companies who just effectively fired their customers.
I think the caveat is that, to a single company, this math makes complete sense and protects the business.
The problem is when every company does it. They're effectively cutting the legs out from under one another. But of course, they don't care because all the people running those companies and making those decisions today will get their millions either way. The marking position of the cut employees tanks. Increasing wages becomes massively disincentivized. The next few years are spent regaining lost income and making up missed opportunity. The guys at the top never missed out anything except maybe a higher payout to stockholders, who still get their due.
bouncingboredom wrote: As someone who has both worked zero hours and employed people on zero hours, that's a bit of a misleading representation. "Zero hours" in the UK context just means "zero fixed hours". It means I can't guarantee you say 20 hours of work every week. But in practice I can offer you a certain amount of work and some weeks you might get a bit more, some you might get a little bit less. Companies do not typically retain large numbers of people to just sit at home on the off chance they might have a sudden splurge of work, it's normally more measured than that. As for the people taking the work, despite the odd scare story that pops up in a newspaper or gets brought up by some MP, the majority of people doing such work are doing it because it fits their lifestyle, e.g. they have a job already and are looking for bit work on the side, students who have flexible periods in their week, people who will hoover up any and all extra hours you can throw their way.
Unfortunately it might have worked for you in these cases but for a lot of people it's barely past desperation exploitation. I have friends / family that have been consistently exploited by zero hours contracts. All in the catering industry. In one example for example where the person was a chef the company used the zero hours contracts to pay for only the hours needed. So hence they might pay for 8am to 9.30am, 12pm - 2pm then 5-8pm. The problem with this is that there is simply not time to fill that spare time with something constructive (e.g. another job). It's effectively a 13 hour shift. but paid for only half of it. They also tended to take the approach that you could be called in or dropped at very short notice. Not needed for the 12-2pm shift, they could do this even to point you've walked in the business's door to be told you are not needed. Now you've got to wait even longer. They also took the approach that if you turned down a shift because it wasn't convenient they tended to get 'punished' by being given far less work over the next couple of weeks to make a point. It's not really very far from exploitation but some people do this because they have no choice. Now for certain groups (e.g. students) it works and historically that's what it was used for. But then an evil git worked out they could start pushing it on a larger portion of population than it was ever intended to be used for (in the UK at least).
Man the "Those jobs are for students" argument always hurts. Never mind most places are deliberately understaffed as apparently desperate flailing is efficiency, we've also got to talk down to anyone management has decided to pay as little as legally allowable.
And then people wonder why things take longer than expected and service often sucks. Not enough people to do things and not getting paid to close the gap is generally enough to ensure that.
Better part of my generation is still stuck in those jobs, we're in our 30s.
Zero Hours and Gig Work aren’t inherently exploitative. But, people on them are being counted as employed, regardless of how often they actually get hours.
Easy E wrote: I have heard that this thread was about the Next Recession....
Is it true, that Employment often peaks prior to a large recession?
Yes, but I think it's more of a side effect of things.
Someone earlier in thread gave a really good explanation for why companies hire lots of employees in times of uncertain growth, which probably plays into it and honestly is there a better definition of "uncertain growth" than the current economy? It's basically propped up on hopeful stilts while everyone has one finger on the abort button. Employees are a good sink in uncertain growth, cause if things go south you can just hand out pink slips and you never overinvested in anything. Employment rises. Economic watchers look at high employment and assume inflation will set in. So they turn to the Fed to regulate interest rates to keep the dollar stable. But then they complain, because when interest rates are "high" companies have to pay money to other people (heaven forbid anyone but the middle class American family ever be expected to pay their debts). So they get antsy, because the Fed is only suck their dicks 23/6 instead of 24/7. So they start eyeing that abort button harder, which is really tempting what with tariffs, and trade wars all around and no one really having a solid idea how it'll play out for the greedy corporate investor. Eventually the tension reaches it's boiling point. Either someone stops being able to pay their debts, or investors hit abort, or something and the economy stops growing while everyone runs around like headless chickens because the "uncertainty" has become so high than everyone enters "save myself" mode all at once and actually ends up burying each other. Except for the people at the top. They win no matter what.
Honestly it reaches this point where you realize the whole thing is kind of an impromptu scam.
The economy does well because people think it's doing well. It does badly when people think it's going to do badly. It's something of a self-fulfilling prophecy from one end to the other, the only difference is that the people at the top win no matter how it goes.
Easy E wrote: I have heard that this thread was about the Next Recession....
Is it true, that Employment often peaks prior to a large recession?
Yes, but I think it's more of a side effect of things.
Someone earlier in thread gave a really good explanation for why companies hire lots of employees in times of uncertain growth, which probably plays into it and honestly is there a better definition of "uncertain growth" than the current economy? It's basically propped up on hopeful stilts while everyone has one finger on the abort button. Employees are a good sink in uncertain growth, cause if things go south you can just hand out pink slips and you never overinvested in anything. Employment rises. Economic watchers look at high employment and assume inflation will set in. So they turn to the Fed to regulate interest rates to keep the dollar stable. But then they complain, because when interest rates are "high" companies have to pay money to other people (heaven forbid anyone but the middle class American family ever be expected to pay their debts). So they get antsy, because the Fed is only suck their dicks 23/6 instead of 24/7. So they start eyeing that abort button harder, which is really tempting what with tariffs, and trade wars all around and no one really having a solid idea how it'll play out for the greedy corporate investor. Eventually the tension reaches it's boiling point. Either someone stops being able to pay their debts, or investors hit abort, or something and the economy stops growing while everyone runs around like headless chickens because the "uncertainty" has become so high than everyone enters "save myself" mode all at once and actually ends up burying each other. Except for the people at the top. They win no matter what.
Honestly it reaches this point where you realize the whole thing is kind of an impromptu scam.
The economy does well because people think it's doing well. It does badly when people think it's going to do badly. It's something of a self-fulfilling prophecy from one end to the other, the only difference is that the people at the top win no matter how it goes.
In a way the employment line is behind the line of the economy so to speak.
Companies first know what was ordered, then they asses their capability and then start hiring, which takes line and makes the curve lag behind as capacities are generated later then needed and often get hired into the start of a recession, were many companies see overapacities and start panic firing.
The worst part is that if the big employers WOULD NOT PANIC FIRE, the investors would quickly see it's just an unjustified panic and everything stabilizes quickly.
But no, everyone panics and does stupid things as panicked people tend to do and NO ONE learns from history so we're all doomed to repeat it over and over again...
Vulcan wrote: The worst part is that if the big employers WOULD NOT PANIC FIRE, the investors would quickly see it's just an unjustified panic and everything stabilizes quickly.
But no, everyone panics and does stupid things as panicked people tend to do and NO ONE learns from history so we're all doomed to repeat it over and over again...
This is honestly in my eyes the nature of the beast.
Base your value assessment system on confidence, and you suffer the consequence of value tanking when confidence tanks, which is just the snake eating its own tail because deep down in some way or another, everyone knows that the system is built on smoke and mirrors so everyone knows that it'll "tank" eventually.
Vulcan wrote: The worst part is that if the big employers WOULD NOT PANIC FIRE, the investors would quickly see it's just an unjustified panic and everything stabilizes quickly.
But no, everyone panics and does stupid things as panicked people tend to do and NO ONE learns from history so we're all doomed to repeat it over and over again...
This is honestly in my eyes the nature of the beast.
Base your value assessment system on confidence, and you suffer the consequence of value tanking when confidence tanks, which is just the snake eating its own tail because deep down in some way or another, everyone knows that the system is built on smoke and mirrors so everyone knows that it'll "tank" eventually.
I agree with your guys’ points except that I don’t think it’s panic induced behavior I think it’s just calculated math and a convenient excuse. When recessions hit or market demand weakens for any other reason it has become nigh impossible for CEOs and boards to tell shareholders that they’ll weather the storm, work through the lower earnings and reposition themselves to be stronger when conditions improve. Corporate leadership doesn’t want to tell investors/shareholders any bad news or miss their earnings projections. The tail wags the dog and the incentive structure is unbalanced to favor short term thinking. When forces beyond their control hurt earnings they focus on costs they can control and try to reduce them enough to offset losses. Labor is the cost most easily controlled so any downturn is met with layoffs, automation, selling off property/closing locations, etc because the company is dependent on its stock price staying high so that major shareholders like hedge funds and pension funds don’t wreck the company by dumping the stock. The system is a snake eating its tail because the short term pursuit of profitability helps the company at the moment but the layoffs exacerbate the weak demand and fees the panic and naysayers in the media and the public perception. It’s not a healthy pursuit of efficiency and best practices for the industry it’s just an excuse for massive cuts that only make growth in other areas harder to achieve.
Vulcan wrote: The worst part is that if the big employers WOULD NOT PANIC FIRE, the investors would quickly see it's just an unjustified panic and everything stabilizes quickly.
But no, everyone panics and does stupid things as panicked people tend to do and NO ONE learns from history so we're all doomed to repeat it over and over again...
This is honestly in my eyes the nature of the beast.
Base your value assessment system on confidence, and you suffer the consequence of value tanking when confidence tanks, which is just the snake eating its own tail because deep down in some way or another, everyone knows that the system is built on smoke and mirrors so everyone knows that it'll "tank" eventually.
I agree with your guys’ points except that I don’t think it’s panic induced behavior I think it’s just calculated math and a convenient excuse. When recessions hit or market demand weakens for any other reason it has become nigh impossible for CEOs and boards to tell shareholders that they’ll weather the storm, work through the lower earnings and reposition themselves to be stronger when conditions improve. Corporate leadership doesn’t want to tell investors/shareholders any bad news or miss their earnings projections. The tail wags the dog and the incentive structure is unbalanced to favor short term thinking. When forces beyond their control hurt earnings they focus on costs they can control and try to reduce them enough to offset losses. Labor is the cost most easily controlled so any downturn is met with layoffs, automation, selling off property/closing locations, etc because the company is dependent on its stock price staying high so that major shareholders like hedge funds and pension funds don’t wreck the company by dumping the stock. The system is a snake eating its tail because the short term pursuit of profitability helps the company at the moment but the layoffs exacerbate the weak demand and fees the panic and naysayers in the media and the public perception. It’s not a healthy pursuit of efficiency and best practices for the industry it’s just an excuse for massive cuts that only make growth in other areas harder to achieve.
Then perhaps that's part of the system that needs changing. By legislation, if nothing else. Perhaps really painfully big fines for companies that cut payroll but not dividends (and executive bonuses).
I'm going to quibble with this one, because gold is actually quite HEAVY. It's close to four times the weight of iron per unit volume.
Should have clarified that we're talking in terms of how much you would have to carry around to achieve a reasonable value. For example, because Iron is so common, to carry any worthwhile amount of it around to pay your day to day bills you would need pretty sizable quantities of the stuff. That was my fault, poor explanation/wording.
Spoiler:
Businesses hear the word 'recession,' before it can possibly have had any effect on their bottom line (much less put them in the red at all) and they cut expenses like a mad barber...
Because once the writing is on the wall, it's normally a question of when the recession will affect you, not if it will affect you. It's better to take early action and be ready, thus buttressing the company against potential problems down the line and preserving jobs in the long run than it is to try and be clever and wait too long, potentially resulting in the collapse of the company and the loss of all its jobs. See Ford/Deutsche Bank* restructuring right now. Yes, lots of people are losing their jobs, but the alternative is to just keep on trying to make a sqaure peg fit into a round hole, bringing down the company and taking all of its employees (and a lot of their suppliers/sub-contractors with them).
*Anyone worried about another recession should pay close attention to the fortunes of Deutsche Bank. How they've got this far and still in business is nothing short of a minor miracle.
Whirlwind wrote:
Spoiler:
Unfortunately it might have worked for you in these cases but for a lot of people it's barely past desperation exploitation.
Thankfully the number of people for which this is actually true is vanishingly small.
YeOldSaltPotato wrote:
Spoiler:
Man the "Those jobs are for students" argument always hurts. Never mind most places are deliberately understaffed as apparently desperate flailing is efficiency,
It's not so much that those jobs are only for students, just more convenient for them generally, like evening shifts in retail and leisure. Horses for courses. As for staffing, most companies have a decent grasp of what is the minimum number of staff they need to perform certain jobs, given their customer base (expensive hotels for example are normally higher staffed than cheaper hotels, because their clientele can afford to cover the cost and then some). It's normally better to be a little bit understaffed than to be a bit over staffed.
Mad Doc Grotsnik wrote:
Spoiler:
Yup.Zero Hours and Gig Work aren’t inherently exploitative. But, people on them are being counted as employed, regardless of how often they actually get hours.
MarkNorfolk wrote:
Spoiler:
Theoretically, someone on Zero Hours Contract could be given no hours over a month but still be 'employed' for the purposes of Government Statistics.
I mean if we're being pedantic then they have to work at least one hour a week to qualify (might be per month? But almost certain it's a week). However one of the reasons that the whole Zero Hours argument gets my blood pressure up is because of this idea that there are millions of people out there doing one hour a week etc, which is bs. It's difficult to even think of a job where it would even be worth employing someone for just one hour per week. Most of the people doing zero hours work actually get a decent number of hours regularly, and normally in a way that fits their circumstances reasonably well (almost no job will perfectly accomodate someone).
Vulcan wrote:
Spoiler:
Then perhaps that's part of the system that needs changing. By legislation, if nothing else. Perhaps really painfully big fines for companies that cut payroll but not dividends (and executive bonuses).
Presuming someone was mad enough to introduce such a bizarre and counter productive piece of legislation, one of two things will happen. Either you'll see the mass failure of large firms, putting huge numbers of people out of work during every recession, or you'll see pension funds going bankrupt and pensioners being left to fend for themselves. As much as people might bitch and moan about it, the reality is that having a flexible labour force and market is critical to a properly functioning economy. If you want to make a recession worse by causing companies to go bust unneccessarily, putting large numbers of people completely out of work, then by all means pursue a course like this.
Presuming someone was mad enough to introduce such a bizarre and counter productive piece of legislation, one of two things will happen. Either you'll see the mass failure of large firms, putting huge numbers of people out of work during every recession, or you'll see pension funds going bankrupt and pensioners being left to fend for themselves. As much as people might bitch and moan about it, the reality is that having a flexible labour force and market is critical to a properly functioning economy. If you want to make a recession worse by causing companies to go bust unneccessarily, putting large numbers of people completely out of work, then by all means pursue a course like this.
OR, you'll see recessions become very minor because people will retain more consumer confidence and can continue to participate in the economy normally instead of having 10% of the population totally removed from the economy and another 70% or so too terrified to RISK participating in the economy.
Strong economies are money IN USE, not money stockpiled in banks or Wall Street. Thus, boosting PAYROLL does more to stimulate the economy than any amount of dividends. In the end, the American economy is 100% based on consumers consuming, not on rich people's largesse to the poor. When the consumers stop consuming, that's when things get BAD.
One of the problem by making layouts difficult is that company reacts by hiring fewer people or being much more picky and not necessarily in a good way. Empoyment discimination becomes a higher risk in such a system. The French system suffers from this up to a certain point. Its workforce isn't mobile enough and its very difficult for young people to find a job because companies will wait and sift through a lot of candidates before they hire someone because they fully expect to have to keep that person in their spot. When you are young, you are viewed as a risk because you don't have much work experience. Having a good social network becomes essential to get a job. Having studied in a prestigious school becomes very important. Immigrants and women struggle to find employment twice more. There are a lot of complexities to an economic system. A good social net is essential and so is a hearty level of progressive taxation. Governmental control over some key sectors of economical activities can also be very useful, but a good economy needs a certain flexibility and risks to be performant.
Me? I'm likely to spend that money. Possibly on models, maybe on nights out etc. Either way, that money re-renters the economy (usually the local economy, spesh on food and beer, as I am spoiled in my area!).
Someone might get their hair done, or have a Spa Day. Again, that money re-enters the economy and begins to circulate. This helps generate new taxes.
Sure, some might squirrel it away for a rainy day. And when that rainy day comes? It re-enters the economy.
To someone with lots of money already? Well, if they just whack it in their savings, that's the end of it. It's not gonna get spent. It's not gonna generate new tax income. It's ded munneh.
It's why the outcry when a 'poor' family has a nice TV or similar irks me.
See, when you've not got a lot, and you get a windfall? You don't spend it on a holiday. You don't save in an ISA or what have you. You spend it on things which make life that little bit more pleasant.
A nice new TV, bigger than the old one, and more energy efficient. A console and couple of games for the kids. Maybe a new sofa, so you're more comfortable overall.
And if they did scrimp and save for it, or bought it on credit? So what? What's it to you? They've the same right to state benefits as everyone else - and those are not intended for purely subsistence living.
Yes, it was annoying in my last job. See, I worked 40 hours a week on a full time basis. By the time I'd paid for my monthly essentials, I had maybe £200 left for me. Peeps on benefits could get more. But that is not a flaw with the benefits system. That's a flaw of employers paying as little as they possibly can.
Don't you see? Poor people buying replacments for their broken old household items with newer energy efficient models is damaging for the economy! Think about all the pounds they'll save on energy bills? That is money being stolen straight from the claws of hard working shareholders!!
Jokes aside, don't investors use dividends to invest further? Those investments fund the growth of new business, return a fraction of the investment back to the investor, as well as growing the value of their new investment. The growth of a new business means more productivity and more wages.
Sury invested money still takes part in the economy and doesn't just disappear?
Dividends can also make your shareholders less likely to sell, thus helping to keep your shareprice relatively stable.
Depends where it's being invested. The very rich scoff at taxes, because it's all squirreled away offshore, or sunk into dodgy schemes to keep the taxman away - and indeed, lower their tax bill elsewhere.
Me? Give me that £100, and Mr Taxman is automatically getting £20 back in tax. And even if I tip it down my neck in the form of lovely, lovely beer? That £20 is joined by the Beer Duty, and any tax the Pub owes on wages and profits etc.
nareik wrote: Sury invested money still takes part in the economy and doesn't just disappear?
Yes. Even money in savings accounts gives banks cash that they can lend out to companies to help them grow.
I'm hardly an economist, but it isn't hard to recognize that there are some real misunderstandings here about how this stuff works.
Except rich people don't have their money just sitting in a savings account (unless said account is in Bermuda or Switzerland). When they "save" money, it means they are doing something like buying a property to sit empty and gain value or squirrel away offshore.
And the people they're buying those properties off of? They're doing the same thing. They're all avoiding taxes.
Ultra high net worth people still invest in equities markets. I worked at an investment manager and would see names of professional athletes and such with accounts. They might not be using the same investment vehicles as you and I, but they have plenty of money participating in the economy. It isn't all tied up in secret tropical island bases and such like some of you seem to believe.
Trickle down is inherently ridiculous; if the wealthy were going to share the money they gained they would be sharing the money they already have. Trickle down is a just means to give a handout to the wealthy in exchange for their support, but that's veering into politics.
NinthMusketeer wrote: Trickle down is inherently ridiculous; if the wealthy were going to share the money they gained they would be sharing the money they already have. Trickle down is a just means to give a handout to the wealthy in exchange for their support, but that's veering into politics.
I don't know if you're responding to me, but my post has nothing to do with 'trickle down' as I understand it. I'm just stating the fact that the wealthy absolutely have sizable sums participating in world economies.
One of the problem by making layouts difficult is that company reacts by hiring fewer people or being much more picky and not necessarily in a good way. Empoyment discimination becomes a higher risk in such a system. The French system suffers from this up to a certain point. Its workforce isn't mobile enough and its very difficult for young people to find a job because companies will wait and sift through a lot of candidates before they hire someone because they fully expect to have to keep that person in their spot. When you are young, you are viewed as a risk because you don't have much work experience. Having a good social network becomes essential to get a job. Having studied in a prestigious school becomes very important. Immigrants and women struggle to find employment twice more. There are a lot of complexities to an economic system. A good social net is essential and so is a hearty level of progressive taxation. Governmental control over some key sectors of economical activities can also be very useful, but a good economy needs a certain flexibility and risks to be performant.
If you think having a good social network isn't essential to getting a good job in America you're fooling yourself. How do you think so many idiots get into upper management? They're relatives of friends of the executive board. That's how fools who couldn't run the overnight shift at a Wendy's wind up direction operations for hundreds of them.
I can honestly say I don't fathom how anyone gets a job without social connections anymore.
Almost everyone I knew growing up got a job through social connections, doesn't has one, or works minimum wage. There's like two exceptions to this. I tried for years to get a job on merit alone, and the only lesson I learned is that merit doesn't matter in America nearly as much as Americans fool themselves into thinking.
LordofHats wrote: I can honestly say I don't fathom how anyone gets a job without social connections anymore.
Almost everyone I knew growing up got a job through social connections, doesn't has one, or works minimum wage. There's like two exceptions to this. I tried for years to get a job on merit alone, and the only lesson I learned is that merit doesn't matter in America nearly as much as Americans fool themselves into thinking.
Networking is certainly very important. However, my last three positions (all permanent, full time) were either posted jobs that I applied for, or were jobs that a recruiter approached me about. There were other interviews during that time that also fit those categories.
"Merit" may be less important in some fields, but it's very important in others. I'm a creative professional, and the quality of my portfolio has a lot to do with whether I'm hired or not. If they don't like my work, they aren't going to hire me no matter who I know. For an IT position or something, I can see how there may be fewer differentiators between candidates and more importance on having an 'in'.
Strong economies are money IN USE, not money stockpiled in banks or Wall Street. Thus, boosting PAYROLL does more to stimulate the economy than any amount of dividends. In the end, the American economy is 100% based on consumers consuming, not on rich people's largesse to the poor. When the consumers stop consuming, that's when things get BAD.
This is where tax policy in government comes in to play. . . One of many factors in the 1950s and into the 60s (when many western countries were well caught up to the US in production) was a tax rate/system that corporations had to pay. . . In those days, the company paid less taxes in two ways: first, they built new facilities and expanded production/operations, second they made their workers pay more taxes in the form of higher wages. Over time, trickle-downers realized that if they wanted their idiotic policies in play, they could make a tax deductible "donation" (bribe) to a politician's campaign, and start implementing lower and lower tax rates. History shows us again and again that when you lower tax rates, you exacerbate the problems of the rich getting richer while the poor get poorer. . . Yes, you *could* counter argue that the standard of living continues to rise. More and more houses have what used to be considered high end appliances (microwaves, freezer/refrigerator combos, TV, etc), however I think its important to view many of those products prices relative to inflation as the prices of those goods have, relatively, gone down to a much higher degree. This is even more apparent when you look at wage stagnation accounting for inflation/buying-power.
NinthMusketeer wrote: Trickle down is inherently ridiculous; if the wealthy were going to share the money they gained they would be sharing the money they already have. Trickle down is a just means to give a handout to the wealthy in exchange for their support, but that's veering into politics.
I don't know if you're responding to me, but my post has nothing to do with 'trickle down' as I understand it. I'm just stating the fact that the wealthy absolutely have sizable sums participating in world economies.
I wasn't, but should have made that more clear, whoops!
Automatically Appended Next Post:
LordofHats wrote: I can honestly say I don't fathom how anyone gets a job without social connections anymore.
Almost everyone I knew growing up got a job through social connections, doesn't has one, or works minimum wage. There's like two exceptions to this. I tried for years to get a job on merit alone, and the only lesson I learned is that merit doesn't matter in America nearly as much as Americans fool themselves into thinking.
Think of it this way; getting a job is an attack that needs a 6 to hit. Being well qualified nets you a +1 bonus to the roll. But if someone else hits with their attack first they get it and you don't get to try; people with social networking are +3 and ASF.
If they feel they aren’t paying enough taxes, they can send a check to the Treasury whenever they like to assuage their guilt. Leave the rest of us out of it.
If they feel they aren’t paying enough taxes, they can send a check to the Treasury whenever they like to assuage their guilt. Leave the rest of us out of it.
No. They cannot. . . Please stop with this idiotic and false line of reasoning.
If they feel they aren’t paying enough taxes, they can send a check to the Treasury whenever they like to assuage their guilt. Leave the rest of us out of it.
Proposals (if you'd read the article) are things like a 2% wealth tax on assets of $50m or more, and a further 1% on assets over 1bn. If this is going to affect you, please feel free to buy me a couple of armies with your spare change.
Proposals (if you'd read the article) are things like a 2% wealth tax on assets of $50m or more, and a further 1% on assets over 1bn. If this is going to affect you, please feel free to buy me a couple of armies with your spare change.
Neither of the things you list in this comment are as "extreme" as what the US had during the high-water point of its middle class. During the 1950s, the highest income earners were paying around 70% of income in the top bracket. IMO, the progressive tax bracket system needs to come back, but we also need to redefine "income" to alleviate the issues of situations where like Howard Schulz did at one point at Starbucks, had a "salary" of $1 per year, but if you looked more closely, he was making around 16-20 million a year because his real salary was being paid in investment options that weren't taxed because they aren't considered income.
Tax reform is desperately needed, but I also feel like a number of problems can be addressed without changing tax levels at all.
The use of real estate as tax shelters/deductions has had drastic ramifications across society, most of them not so great. The ability to pay less in taxes by giving to political campaigns is just sleazy. Lots of industries receive billions in government subsidies that frankly are not deserved. And... most of the other things I could rant about probably cross too clearly over the politics ban so *zip*
Point is, if no one wants us to raise taxes on a demographic that by majority actually wants us to raise their taxes, there are alternatives in simply adjusting how much can be written off and for what they could have a lot of benefits on the whole. Maybe. Hard to say someone go hire a committee to actually bother looking into it. We don't do that gak enough around here.
I also feel like there's gotta be a way to get a better grasp on wage disparities. I have no idea what, but there's gotta be something.
If you were to tax on asset the wealthy would just have their company pay them in 'loans' with very loose repayment plans, so (on paper) they would have negative wealth, despite having access to obscene sums of money.
nareik wrote: If you were to tax on asset the wealthy would just have their company pay them in 'loans' with very loose repayment plans, so (on paper) they would have negative wealth, despite having access to obscene sums of money.
Honestly, I'm not sure that's any different from right now in practice. Being wealthy and making liberal use of the company's assets seems to go hand in hand. You can tax "perks" as easily as you can tax anything else... our you know just toss the somewhat self-serving and unethical practice of using company property as personal property. Either the business is privately owned or it isn't. Pick one or the other and stop letting people have it both ways. Which is a whole other series of problems, because corporate stuff is complex and I doubt anyone here is going to be able to encapsulate everything that could/should/might be done to get a better social balance than we currently have.
To someone with lots of money already? Well, if they just whack it in their savings, that's the end of it. It's not gonna get spent. It's not gonna generate new tax income. It's ded munneh.
Not true. Money in savings accounts is what banks use to finance the loans they give out. It is very much still being used in the economy. Not to the extent of money that is directly spent, but it is definitely a vital part of the economy.
The only way to truly remove money from circulation is to withdraw it in cash and have it stuffed in a mattress or something.
If they feel they aren’t paying enough taxes, they can send a check to the Treasury whenever they like to assuage their guilt. Leave the rest of us out of it.
No. They cannot. . . Please stop with this idiotic and false line of reasoning.
Actually yes. You can simply send the government a donation to this address.
Gifts to the United States
U.S. Department of the Treasury
Funds Management Branch
P.O. Box 1328
Parkersburg, WV 26106-1328
The money is considered an unconditional gift to the federal government and is added to the general fund. Anybody who does feel that they aren't paying their fair share may send however much they want this way.
And sending a check to the treasury doesn't work. It's not something that can be budgeted for so it doesn't really solve any problems. It's a really bad answer and thus meaningless. It doesn't actually do anything.
Also, workforce participation hasn't budged that much, i.e. there's arguably 0 appreciable change in the actual number of people employed. The only change was in the number of people trying to find work.
The employment rate has always been a garbage statistic for the overall health of the economy (most stats taken in vacuum are). The employment rate just makes a really nice sound bite, so TV news tends to give it undue attention.
skyth wrote: And sending a check to the treasury doesn't work. It's not something that can be budgeted for so it doesn't really solve any problems. It's a really bad answer and thus meaningless. It doesn't actually do anything.
Actually, it is a good solution to liberal billionaire guilt. Stay away from more tax laws that always end up hurting the middle and lower classes, and give away your money freely to the government. So they can waste it as they please, and have always done. And the Soros' and Gates' of the world can sleep easy at night. And stop virtue signaling the rest of us.
LordofHats wrote: So billionaires can afford to just give the government money, but they can't afford to pay a tiny increase without "hurting the middle class."
I really hope the silliness of that doesn't need to be pointed out cause it's really self-apparent.
Education? Paid for. Numerous life threatening health conditions and accidents? Paid for. Plus Police, Fire Service, Ambulances etc. Then there’s my State Pension, which with no further upping of the pay date? I’ll be collecting in....erm.....28 years (totally freaked myself out with that revelation).
I get my money’s worth, or have had my money’s worth. Bit of both, really.
And now God Sprog is growing rapidly, and will soon be entering school. Plus she’s got full NHS services at her disposal, as needs might be.
Taxes help provide a stable, responsible society. One where there’s a solid safety net for those that need it.
Do some take the mick? Well. Yes. Of course they do. The second you create any kind of system, financial, social or otherwise, there’s someone looking to exploit it. Welcome to human nature.
But we need to pool resources as a society to have a society. And without said society, where are we?
Ye, claiming that taxing the super rich more hurts us all? No... trickledown economics has been shown time and again to be nonsense.
It used to be that the very rich had a direct connection to everyone else. They worked with the ordinary man day to day, and this lead to many of the great reformers. It lead to things like companies building for their employees (which was sometimes exploitative, but often not) offering education, healthcare and pensions. The industrialist would see the people they employed every day in the street. The wealthy land owner the people who lived on his land. Now, do you think the average wealthy investor has any idea about the companies other than their balance sheet? Do you think most mega rich CEOs have any idea where their factories are, beyond a country, possibly a region? Let alone the conditions their workers live and work in?
LordofHats wrote: So billionaires can afford to just give the government money, but they can't afford to pay a tiny increase without "hurting the middle class."
I really hope the silliness of that doesn't need to be pointed out cause it's really self-apparent.
When the government writes tax laws, the 'rich' have resources and lawyers and accountants to avoid them. Death taxes, estate taxes, sales taxes, and 'fees' for licenses, permits, breathing all hurt the middle class and poor. Those are the people hurt by this. Beware when the government promises you that they're going to 'soak the rich' - you pay for it with regressive sales taxes and fees. There will never be enough funds to confiscate to build your socialist utopia. In the meantime, feel free to give your government more money so they can waste it, and bankrupt any future there may be. Grow the economy, grow the tax paying base. Shrink the economy, shrink the tax base. Simple enough for even a moonbat to understand.
totalfailure wrote: When the government writes tax laws, the 'rich' have resources and lawyers and accountants to avoid them.
Indeed.
Death taxes, estate taxes, sales taxes, and 'fees' for licenses, permits, breathing all hurt the middle class and poor.
And here you completely lose me. The threshold to actually be hit by "death taxes" is so high no one who is really middle class gets touched. That myth is mostly based on the habit of the lower end of the wealthy spectrum considering themselves middle class. It has little basis in reality. The middle class is the "idealized" America. Everyone wants to be middle class, even people who definitively are not when you use the tax code to define it. To be fair, middle class is kind of empty terminology. It's an idea more than anything, and political rhetoric loves it because it makes blurring the lines of what is being discussed easier.
No one who talks about raising taxes on the rich is talking about people who aren't in the millionaires' and up range of yearly income. Millionaires and up are definitively not middle class.
Those are the people hurt by this. Beware when the government promises you that they're going to 'soak the rich' - you pay for it with regressive sales taxes and fees.
That doesn't make any sense either. When people generally talk about taxing the rich, they're talking about raising their income taxes or adjusting how we value assets, deductibles, and such. There are merits of debate on all of those, but no one on Earth talks about "soak the rich" by raising sales taxes and fees. Those taxes are mostly state level and mostly paid by the not-rich. If anything we probably want to lower those and switch states more towards income taxes for their revenue, but people have very bizarre reactions to the idea of "taxes" on income that are not the same as our reaction towards sales taxes and fees.
There will never be enough funds to confiscate to build your socialist utopia.
I don't want a utopia. I'll settle for much, much less.
In the meantime, feel free to give your government more money so they can waste it
They do waste it, but that's a whole other barrel of fish, and one we probably can't even begin touching without clearly crossing the politics line. Honestly, we've probably already crossed it, but we've all been civil enough I guess no one has felt any need to shut the thread down.
Grow the economy, grow the tax paying base. Shrink the economy, shrink the tax base.
Good platitudes, but mostly devoid of real meaning.
As I see it, the biggest area to go for is capital gains. They are almost universally taxed lower than income. The assumption, to the point of being almost a philosophical belief, is that capital gains are more worthy than income and that wealth is created from the inspiration and risk of those who control assets rather than the sweat of workers. In the modern age this is totally thrown out by the fact that most assets are owned by distant owners controlling stock, who hedge their risk and have little input. A stock holder in a market is not the same as someone mortgaging their house to start a business, but we treat them the same. We need to tax large capital gains more like income.
I also think we need to be measuring wealth better. We should stop looking at total GDP and average and start looking for a measure that takes in to account distribution. If I have £100million and the rest of my street have £100 I see that as worse for everyone than all of us having £10k.
LordofHats wrote: So billionaires can afford to just give the government money, but they can't afford to pay a tiny increase without "hurting the middle class."
I really hope the silliness of that doesn't need to be pointed out cause it's really self-apparent.
When the government writes tax laws, the 'rich' have resources and lawyers and accountants to avoid them. Death taxes, estate taxes, sales taxes, and 'fees' for licenses, permits, breathing all hurt the middle class and poor. Those are the people hurt by this. Beware when the government promises you that they're going to 'soak the rich' - you pay for it with regressive sales taxes and fees. There will never be enough funds to confiscate to build your socialist utopia. In the meantime, feel free to give your government more money so they can waste it, and bankrupt any future there may be. Grow the economy, grow the tax paying base. Shrink the economy, shrink the tax base. Simple enough for even a moonbat to understand.
The trick being that spending grows the economy, and the super-rich do not spend as much of their money as the middle class does.
If the CEO earns 500 times what his employees does, to equal their relative spending he has to buy 500 TVs, 500 cars, 500 houses, 500 times as much utilities, 500 times as much clothing, 500 times as much food, go out to eat 500 times as often, etc...
But they obviously don't. So the more wealth goes to the rich, the LESS the economy grows.
Each of the seven Walton grandkids individually controls more wealth than the lower 70% of the population of America. That's more money than 250,000,000 people have combined. I promise you not one of them spends 250,000,000 times as much on ANYTHING.
They're also remarkably stingy. They bragged a couple years ago about giving 2 billion to their own charity, which is run by members of the Walton family, so really they gave 2 billion to themselves and considering the combined wealth of the Waltons, 2 billion is not actually that much. They're blown out of the water by most other billionaires in terms of charity, but then most other billionaires weren't raking in billions in tax dollars by underpaying their own employees and getting them to spend their government benefits at Walmart.
Steve steveson wrote: As I see it, the biggest area to go for is capital gains. They are almost universally taxed lower than income. The assumption, to the point of being almost a philosophical belief, is that capital gains are more worthy than income and that wealth is created from the inspiration and risk of those who control assets rather than the sweat of workers. In the modern age this is totally thrown out by the fact that most assets are owned by distant owners controlling stock, who hedge their risk and have little input. A stock holder in a market is not the same as someone mortgaging their house to start a business, but we treat them the same. We need to tax large capital gains more like income.
I also think we need to be measuring wealth better. We should stop looking at total GDP and average and start looking for a measure that takes in to account distribution. If I have £100million and the rest of my street have £100 I see that as worse for everyone than all of us having £10k.
Capital gains being taxed less never really connected logically for me; income that you get simply for owning something deserves to pay lower taxes than income from actually working? I have heard the argument that it encourages investing, which again seems silly because it isn't like people are going to see that they are making less money from investing and decide it is wise to instead make no money by not investing.
LordofHats wrote: So billionaires can afford to just give the government money, but they can't afford to pay a tiny increase without "hurting the middle class."
I really hope the silliness of that doesn't need to be pointed out cause it's really self-apparent.
When the government writes tax laws, the 'rich' have resources and lawyers and accountants to avoid them. Death taxes, estate taxes, sales taxes, and 'fees' for licenses, permits, breathing all hurt the middle class and poor. Those are the people hurt by this. Beware when the government promises you that they're going to 'soak the rich' - you pay for it with regressive sales taxes and fees. There will never be enough funds to confiscate to build your socialist utopia. In the meantime, feel free to give your government more money so they can waste it, and bankrupt any future there may be. Grow the economy, grow the tax paying base. Shrink the economy, shrink the tax base. Simple enough for even a moonbat to understand.
The trick being that spending grows the economy, and the super-rich do not spend as much of their money as the middle class does.
If the CEO earns 500 times what his employees does, to equal their relative spending he has to buy 500 TVs, 500 cars, 500 houses, 500 times as much utilities, 500 times as much clothing, 500 times as much food, go out to eat 500 times as often, etc...
But they obviously don't. So the more wealth goes to the rich, the LESS the economy grows.
Each of the seven Walton grandkids individually controls more wealth than the lower 70% of the population of America. That's more money than 250,000,000 people have combined. I promise you not one of them spends 250,000,000 times as much on ANYTHING.
By another measure, are they 250,000,000 times more useful to society?
skyth wrote: And sending a check to the treasury doesn't work. It's not something that can be budgeted for so it doesn't really solve any problems. It's a really bad answer and thus meaningless. It doesn't actually do anything.
Actually, it is a good solution to liberal billionaire guilt. Stay away from more tax laws that always end up hurting the middle and lower classes, and give away your money freely to the government. So they can waste it as they please, and have always done. And the Soros' and Gates' of the world can sleep easy at night. And stop virtue signaling the rest of us.
Exactly.
It just shows that a billionaire saying "please tax me more!" is just them saying a sound bite. If they actually did indeed want to send more money to the government, they already can do so. The fact that they haven't, despite their alleged desire to be taxed more, just shows they really don't want to be taxed more.
Yes, the government can't make a budget around donates like this, but they'll spend the money that does come in as a bonus.
skyth wrote: And sending a check to the treasury doesn't work. It's not something that can be budgeted for so it doesn't really solve any problems. It's a really bad answer and thus meaningless. It doesn't actually do anything.
Actually, it is a good solution to liberal billionaire guilt. Stay away from more tax laws that always end up hurting the middle and lower classes, and give away your money freely to the government. So they can waste it as they please, and have always done. And the Soros' and Gates' of the world can sleep easy at night. And stop virtue signaling the rest of us.
Exactly.
It just shows that a billionaire saying "please tax me more!" is just them saying a sound bite. If they actually did indeed want to send more money to the government, they already can do so. The fact that they haven't, despite their alleged desire to be taxed more, just shows they really don't want to be taxed more.
Yes, the government can't make a budget around donates like this, but they'll spend the money that does come in as a bonus.
Because relying on the good will of people is totally a realistic solution Heck, by that logic we can cut taxes down to nil and just let people donate what they feel is appropriate!
We are just saying if a person feels like they don’t pay enough taxes, they have a way to assuage that burning guilt.
Or maybe they feel that way because they see a systemic problem with how taxation is handled for their tax bracket, and framing it as an "emotional" issue is completely disingenuous?
Nah, it's not like it's common trope for one side of the political spectrum to try to paint the other as "emotional" or anything.
We are just saying if a person feels like they don’t pay enough taxes, they have a way to assuage that burning guilt.
Or maybe they feel that way because they see a systemic problem with how taxation is handled for their tax bracket, and framing it as an "emotional" issue is completely disingenuous?
Nah, it's not like it's common trope for one side of the political spectrum to try to paint the other as "emotional" or anything.
What I'm saying is, people like Mark Cuban should put their money where there mouth is.
If he, and others like him, want to be taxed more then they should send in whatever additional money they want to be taxed to the Treasury Department. they shouldn't just say "I want to be taxed more!". They should also show their sincerity by sending some extra money in too. Bernie Sanders, and other rich people who want to raise taxes, shouldn't be taking advantage of tax exemptions when they're filing, etc...
Saying "We need to raise taxes!" while simultaneously taking available tax breaks to minimize the taxes they are paying and not using a method which citizens can donate extra money to the government is hypocritical.
why would anyone voluntarily pay more taxes? thats just stupid. anyone who says they want to is just virtue signalling. If I knew how to pay less taxes I definitely would. I'd rather have it in my pocket than the government.
We are just saying if a person feels like they don’t pay enough taxes, they have a way to assuage that burning guilt.
Or maybe they feel that way because they see a systemic problem with how taxation is handled for their tax bracket, and framing it as an "emotional" issue is completely disingenuous?
Nah, it's not like it's common trope for one side of the political spectrum to try to paint the other as "emotional" or anything.
What I'm saying is, people like Mark Cuban should put their money where there mouth is.
If he, and others like him, want to be taxed more then they should send in whatever additional money they want to be taxed to the Treasury Department. they shouldn't just say "I want to be taxed more!". They should also show their sincerity by sending some extra money in too. Bernie Sanders, and other rich people who want to raise taxes, shouldn't be taking advantage of tax exemptions when they're filing, etc...
Saying "We need to raise taxes!" while simultaneously taking available tax breaks to minimize the taxes they are paying and not using a method which citizens can donate extra money to the government is hypocritical.
It would only be hypocritical if they were doing anything illegal. As long as they are paying the taxes they should and not using any illegal or questionable behaviours to calculate their tax return then there is nothing hypocritical about saying that the tax system is not equitable. It is about planning and equitability.
Steve steveson wrote: As I see it, the biggest area to go for is capital gains. They are almost universally taxed lower than income. The assumption, to the point of being almost a philosophical belief, is that capital gains are more worthy than income and that wealth is created from the inspiration and risk of those who control assets rather than the sweat of workers. In the modern age this is totally thrown out by the fact that most assets are owned by distant owners controlling stock, who hedge their risk and have little input. A stock holder in a market is not the same as someone mortgaging their house to start a business, but we treat them the same. We need to tax large capital gains more like income.
I also think we need to be measuring wealth better. We should stop looking at total GDP and average and start looking for a measure that takes in to account distribution. If I have £100million and the rest of my street have £100 I see that as worse for everyone than all of us having £10k.
Capital gains being taxed less never really connected logically for me; income that you get simply for owning something deserves to pay lower taxes than income from actually working? I have heard the argument that it encourages investing, which again seems silly because it isn't like people are going to see that they are making less money from investing and decide it is wise to instead make no money by not investing.
Capital gains tax makes total sense where there is a direct connection between investment and the business being invested in.
Lets say you have a baker who has a choice between taking money out of his business as income, or putting that income in to a new oven to bake more bread, employ an extra person and grow the business, and then getting the return from that as capital gains - Total sense.
The issue comes that for most investment this link is totally broken. It's about people putting money in to some investment vehicle, be that stocks, shares, property or some other way to make money make money. Even if they are directly involved the fundamental aim is not to grow the business but to grow the pile of money. This leads to pooling of money with little care for the vehicle used. This is where it is problematic for me. The other place it is problematic is where contractors who do work for another company have set up a company purely to reduce tax.
queen_annes_revenge wrote: why would anyone voluntarily pay more taxes? thats just stupid. anyone who says they want to is just virtue signalling. If I knew how to pay less taxes I definitely would. I'd rather have it in my pocket than the government.
I live in NY, I have great schools in my backyard and despite the weather destroying them good roads. Anyone I know who moved to save on taxes cannot say either. Hardly the only nice aspects either.
We've got issues, but as a citizen of one of the highest taxed counties in the US, it works out pretty nice when people actually pay taxes. If we could get the local multi-millionaires to stop complaining and enjoy the fact they have an educated work force to exploit it'd be down right wonderful.
Again, saying to just write a check to the Treasury shows a fundamental lack of knowledge of how government spending and programs and taxation work. It's a nice sound bite but it's to the point of being deceptive.
queen_annes_revenge wrote: why would anyone voluntarily pay more taxes? thats just stupid. anyone who says they want to is just virtue signalling. If I knew how to pay less taxes I definitely would. I'd rather have it in my pocket than the government.
But it's not in the Government's pocket, is it?
Instead, it's spent. Said spending benefits all. Armed Forces, Police, NHS, Ambulance Crews, Fire Service, Roads, Schools, Civic Amenities. There is barely an aspect in life in which tax money does not play at least some role.
Start skimping on it? Or worse, as consecutive Governments have done, keep adding more and more loopholes (with the advice of those paid by clients to help avoid Tax in the first place, because there's no conflict of interest there at all) and things start going south, pretty quickly.
It is in the interest of the wealthy to have as little poverty as possible. Poverty is the main cause of crime, after all. Poor education goes hand in hand with Poverty. So everytime a millionaire or billionaire dodges their tax? We as a society suffer, just so that person can sit on a slightly huger pile o'cash.
Me? I may be paying the 40% rate soon, if my career plans pan out. And I won't begrudge a single penny. Not because 'I'm alright, Jack', but because as explained earlier, I've done very well off the back of previous generations of Tax Payers.
queen_annes_revenge wrote: why would anyone voluntarily pay more taxes? thats just stupid. anyone who says they want to is just virtue signalling. If I knew how to pay less taxes I definitely would. I'd rather have it in my pocket than the government.
But it's not in the Government's pocket, is it?
Instead, it's spent. Said spending benefits all. Armed Forces, Police, NHS, Ambulance Crews, Fire Service, Roads, Schools, Civic Amenities. There is barely an aspect in life in which tax money does not play at least some role.
Start skimping on it? Or worse, as consecutive Governments have done, keep adding more and more loopholes (with the advice of those paid by clients to help avoid Tax in the first place, because there's no conflict of interest there at all) and things start going south, pretty quickly.
It is in the interest of the wealthy to have as little poverty as possible. Poverty is the main cause of crime, after all. Poor education goes hand in hand with Poverty. So everytime a millionaire or billionaire dodges their tax? We as a society suffer, just so that person can sit on a slightly huger pile o'cash.
Me? I may be paying the 40% rate soon, if my career plans pan out. And I won't begrudge a single penny. Not because 'I'm alright, Jack', but because as explained earlier, I've done very well off the back of previous generations of Tax Payers.
Cough up, pay your dues, or move somewhere else.
I agree with you, in principle.. But in reality, Where's the proof? All I hear on the news is how the nhs is dying. I serve in the armed forces, and the squadron I spent 6 years serving on just got disbanded, to save money. Schools are underfunded, as are nurseries, as are the police... So where is the money going?
Strictly speaking, State Pensions. Oh, and Tax Breaks for the wealthiest. Privatised stuff receiving Government Grants, despite all being independently profitable without the Grant/Subsidy (oh hai, great bloke from Eton! Here's scads of public cash, and a license to gouge the public even more!)
The issue is not that the UK is overspending. It's that we've collectively allowed Mass Tax Avoidance (remember, it's only Tax Evasion if you're poor)., so the national income is messed up.
BEIJING — China’s growth fell to its slowest pace in nearly three decades, officials disclosed on Monday, as a resurgence of trade tensions with the United States and lingering financial problems take an increasing toll on one of the world’s most vital economic engines.
BEIJING — China’s growth fell to its slowest pace in nearly three decades, officials disclosed on Monday, as a resurgence of trade tensions with the United States and lingering financial problems take an increasing toll on one of the world’s most vital economic engines.
Keep in mind that China's number are staggeringly unreliable (i.e. lies), so if they're forced to admit low growth you know it's a LOT worse!
BEIJING — China’s growth fell to its slowest pace in nearly three decades, officials disclosed on Monday, as a resurgence of trade tensions with the United States and lingering financial problems take an increasing toll on one of the world’s most vital economic engines.
Keep in mind that China's number are staggeringly unreliable (i.e. lies), so if they're forced to admit low growth you know it's a LOT worse!
Yes, that was my thought as well. I wonder if anyone has any outside analysis of the current Chinese economic situation?
Even those who are learned on the subject are probably still doing a lot of guesswork on the subject. Simply because of the already mentioned reasons that China keeps a tight grip on all their information. On top of economics already being a very... loose field of study.
Everybody plays the game of economics. And that game is Russian Roulette, except you're blindfolded and not sure if the gun is pointed at you or the guy sitting next to you when you pull the trigger.
NinthMusketeer wrote: By another measure, are they 250,000,000 times more useful to society?
Nope. They're not involved in the business at all. They just rake in money from their dividends. Pure parasites on society and on their grandfather's business.
NinthMusketeer wrote: By another measure, are they 250,000,000 times more useful to society?
Nope. They're not involved in the business at all. They just rake in money from their dividends. Pure parasites on society and on their grandfather's business.
Even in situations where a C-Suite exec is involved in the business, their involvement is on such a high ivory tower level that even still, they do not earn 250x the median wage earners of their company.
Speaking of certain terms, and interesting shift that I just today noticed: Back a few years ago, IIRC back when I was living in Germany and similar discussions would be had, we'd discuss CEO/executive pay in terms of X amount higher than the lowest wage earner in the company. . . I've seen a few mentions this last week or so in various media outlets of CEO pay and now they are discussing it in terms of X amount higher than the MEDIAN wage earner of a given company.
IMHO, that is a situation that should never have been allowed to happen, but due to the big P-word, has, and frankly, I think its an untenable situation.
Back when the USSR and "Communism" was a real threat (think 1918 until the late 1980's) the CEOs (and management class for lack of a better word) had some reason to not push too hard on their Shareholder/investor class only agenda.
Once that threat was removed, then the Management class (for lack of a better word) had no reason not to push their agenda as hard as possible. The competing system collapsed and "workers" had no alternative but to live in a new hyper-capitalist reality.
Unless some new dynamic arises, we can expect more hyper-capitalism because..... what is the alternative? I think we maybe starting to see some of that pushback now, but it is unclear which direction it will take and is diffuse enough to not be an effective counter yet.
On Topic:
I have a feeling that China will be hit hard in the next recession and their growth to Super-Power status and challenge to the US will be blunted by social unrest, minority turmoil, and some nationalism within ethnic communities.
I recall in the 80's when everyone thought Japan was going to become the new super-power. I also recall pre-WWI when a lot folks thought Russia's dominance was inevitable. Neither ended up being the Super-power they were projected to become for various reasons. I think China is in the same boat... a paper tiger if you will.
I suspect it has less to do with Communism and more shifts in the nature of the workforce, economy, and the collapse of faith in unions in the 80s and 90s. That last one might be sort of tangentially related to communism, but I'm not sure it's solid to tie western unions with communist states. That's just really shaky.
LordofHats wrote: I suspect it has less to do with Communism and more shifts in the nature of the workforce, economy, and the collapse of faith in unions in the 80s and 90s. That last one might be sort of tangentially related to communism, but I'm not sure it's solid to tie western unions with communist states. That's just really shaky.
Oh yeah, I am sure it is way more complicated! However, when you read speeches and talks from business leaders in the late 40's through Kennedy, there is a clear fear that Communism "could happen here" and therefore policies put in place at the corporate level to help avoid that outcome.
I think you are right that the decline of Trade Unions maybe a bigger issue. However, I know since the late 80's the corporate attacks on Unions has been pretty intense. At the last three new corporate jobs I took, we all had to watch a anti-union video day one. The ante-harassment and corporate ethics e-learnings could wait until.... a later date. LOL.
This is interesting, but a huge tangent from the actual thread.... so I think I should probably drop it now.
However, as we talk abut potential winners and losers from a potential next Recession, how does it impact the growth or decline of Unions in the US? Are Unions a potential winner or loser from another Recession? How did the Great Recession impact their membership? My sense is their membership declined further, but I do not have the data.
However, as we talk abut potential winners and losers from a potential next Recession, how does it impact the growth or decline of Unions in the US? Are Unions a potential winner or loser from another Recession? How did the Great Recession impact their membership? My sense is their membership declined further, but I do not have the data.
IMO, I think it will depend on a number of factors, and I think we may see a few things. . . First factor is regionality: a number of areas in the US have stronger "pro" union laws on the books, while others have opted for union killing "Right to work" laws, so that will have an affect on things.
As for a theoretical recession and post recession recovery period, I think what we'll see is that the unionized areas recover first and quicker, leaving the right-to-work areas further behind than they generally already are today. . . Maybe we'll see workers in those areas wake up, and demand change, maybe we won't. I'd think that should the workers in right-to-work areas demand change, unionize and all that, we may see a realization of how good unions can be, and thus their numbers will increase.
Honestly, I think blaming "right to work" laws is passing the buck.It's worth pointing out Unions were already dying when the first right to work laws hit the books. If anything, right to work laws probably saved some people some time, since by the time we started seeing such legislation prop up most unions were already anemic organizations.
Unions became bloated, arrogant political machines, and while I won't say <politics ban> didn't play a roll in their downfall, I feel like the foremost group responsible for the collapse of western unionism is western unionism. If unions were worth it people would stick with them in spite of right to work laws because it benefited them, but unions got too tied up in politics throughout the 70s and 80s, didn't look forward when facing economic realities, and signed their own death warrants a long time ago.
LordofHats wrote: Honestly, I think blaming "right to work" laws is passing the buck.It's worth pointing out Unions were already dying when the first right to work laws hit the books. If anything, right to work laws probably saved some people some time, since by the time we started seeing such legislation prop up most unions were already anemic organizations.
Unions became bloated, arrogant political machines, and while I won't say <politics ban> didn't play a roll in their downfall, I feel like the foremost group responsible for the collapse of western unionism is western unionism. If unions were worth it people would stick with them in spite of right to work laws because it benefited them, but unions got too tied up in politics throughout the 70s and 80s, didn't look forward when facing economic realities, and signed their own death warrants a long time ago.
I wasn't trying to blame unions. . . merely point out that "right to work" laws do have a sort of habitual way of preventing unions from re-establishing in an area.
From my business school trip to Germany in March, I think that while not perfect, the way they (by and large) handle unions and wage efforts is much better. I will grant obviously that my exposure to unions there was VERY limited by the duration of my stay and the companies we visited, but taken on the whole it is a system that does seem to work much more effectively.
LordofHats wrote: Honestly, I think blaming "right to work" laws is passing the buck.It's worth pointing out Unions were already dying when the first right to work laws hit the books. If anything, right to work laws probably saved some people some time, since by the time we started seeing such legislation prop up most unions were already anemic organizations.
Unions became bloated, arrogant political machines, and while I won't say <politics ban> didn't play a roll in their downfall, I feel like the foremost group responsible for the collapse of western unionism is western unionism. If unions were worth it people would stick with them in spite of right to work laws because it benefited them, but unions got too tied up in politics throughout the 70s and 80s, didn't look forward when facing economic realities, and signed their own death warrants a long time ago.
Aye. Unions were a self-defeating thing.
Thats not necessarily a bad thing though. They were successful in improving worker conditions and rights. Its only natural that they should go away when the problems they were meant to address are gone. Unions sticking around and going way beyond what they needed to do and becoming tyrannical organizations was a bad thing. A union becoming a permanent organization means that it will begin to become the very thing it was supposed to fight against.
Well, to be fair arguably worker rights have slid since the fall of the heyday of Unions. Relying on greedy corporate fatcats to benevolently protect their employees interests has hardly been reliable.
Unfortunately, economic conditions render Unions pretty crappy at this stage and expecting them to come back and fix the problem is probably wishful thinking. Honestly the best and most straightforward option is an overhaul/update of labor regulations. I like the idea of encouraging the formation of industry forums where workers and employers can sit down together and hammer things out to set industry standards, but I highly doubt such a system could work with the disparity in spending power that exists.
Unfortunately, economic conditions render Unions pretty crappy at this stage and expecting them to come back and fix the problem is probably wishful thinking. Honestly the best and most straightforward option is an overhaul/update of labor regulations. I like the idea of encouraging the formation of industry forums where workers and employers can sit down together and hammer things out to set industry standards, but I highly doubt such a system could work with the disparity in spending power that exists.
It would require a near German styling of the union system (as explained to me in Germany by some of the business folks we visited there): wherein even if you do not join the union for your profession, you still gain all the "benefits" of membership. . . On the business side of things, between the union and industry, wages are set at the state level, with a sort of step/slide scale for cost of living adjustments in areas where the cost of living is higher (ie, differences between living in Darmstadt vs. Wiesbaden or Frankfurt. . . all of which are in Hesse)
But as you say. . . I simply cannot see a situation wherein VW, who has plants in Tennessee would cooperate with Nissan who has plants in Tennessee, on things like wages for workers. . . On the flip side of the utterly foreign idea of "cooperation" in US business practice (despite mountains of academic evidence being published by business schools, including HBC, that shows that cooperation makes you MORE competitive), a system wherein wages were set regionally would make the finances and accounting decisions just that much easier (coincidentally, a reason why many businesses also prefer universal healthcare programs, as it stabilizes the costs of health insurance that they pay and makes accounting easier)
Ina different note, will anyone else feel a certain relief when the next recession does hit? I can't be alone in my belief that we have reached a point where the longer it gets postponed the longer the root problems have to fester.
NinthMusketeer wrote: Ina different note, will anyone else feel a certain relief when the next recession does hit? I can't be alone in my belief that we have reached a point where the longer it gets postponed the longer the root problems have to fester.
Depends. . . I recently graduated college and am still trying to get work. . . if I don't have work before recession hits, I definitely will not feel relief. . . Also, given the way I view politics and "current events" I don't know that I'll feel relief until I see what is done to solve the root problems.
NinthMusketeer wrote: Ina different note, will anyone else feel a certain relief when the next recession does hit? I can't be alone in my belief that we have reached a point where the longer it gets postponed the longer the root problems have to fester.
I can't help but feel the markets for Real Estate are way too hot again. This would help cool it down, but whether that is a good or bad thing is still debatable.
NinthMusketeer wrote: Ina different note, will anyone else feel a certain relief when the next recession does hit? I can't be alone in my belief that we have reached a point where the longer it gets postponed the longer the root problems have to fester.
Unless you’re a bond manager, I don’t understand why anyone would be rooting for recession.
LordofHats wrote: I think the only real difference between a market correction and a recession is severity. Both are caused by the same fundamental forces.
Yeah, those scumbags Weak Nuclear and Gravity *shakes fist angrily at the air*
LordofHats wrote: I think the only real difference between a market correction and a recession is severity. Both are caused by the same fundamental forces.
Well, you're wrong about that. There are all kinds of differences between a decline in a financial market and a period of negative GDP growth. If you don't understand the difference between a stock market and GDP...I recommend doing more reading on those subjects.
It's not about technicalities...financial markets and the economy as represented by GDP are completely different things.
And getting back to the specific point, market corrections are about rapid price changes in overpriced securities. They often don't last long, and can be seen as a healthy part of the process. Markets often return right back to growth. Kind of like pruning a tree, if you can pardon a very crude/dumb analogy. And they're mainly going to affect people participating in the given market. I would be surprised if there have been any market corrections taking place in an otherwise decent economy that sparked mass layoffs.
A shrinking *economy* is just that, and it theoretically affects everyone in more meaningful ways. A 'bubble' might be a trigger, but it doesn't have to be. Again, I'm hardly an economist here -- my knowledge extends to financial licenses and experience in financial services. But I would be surprised if there were many economists who would say that recessions are somehow corrective/necessary/helpful to anyone, or that having one sooner is better than later, which seemed to be where NinthMusketeer was going.
gorgon wrote: Again, I'm hardly an economist here -- my knowledge extends to financial licenses and experience in financial services. But I would be surprised if there were many economists who would say that recessions are somehow corrective/necessary/helpful to anyone, or that having one sooner is better than later, which seemed to be where NinthMusketeer was going.
Fair enough. I see your point.
That being said, we all know that this economy has boom-and-busts cycles. In fact, this is not new at all and has been going on in America (and probably elsewhere) for a long time.
Since we know there is some sort of "correction" every 10 years or so are these corrections any better at 8 years or 12 years? Ultimately, does it make any difference to the average main street worker?
NinthMusketeer wrote: Ina different note, will anyone else feel a certain relief when the next recession does hit? I can't be alone in my belief that we have reached a point where the longer it gets postponed the longer the root problems have to fester.
Unless you’re a bond manager, I don’t understand why anyone would be rooting for recession.
Beyond the financial incentives of investing heavily, there are political reasons, the discussion of which is beyond the scope of this forum - but there are definitely strategic reasons to root for recession.
NinthMusketeer wrote: Ina different note, will anyone else feel a certain relief when the next recession does hit? I can't be alone in my belief that we have reached a point where the longer it gets postponed the longer the root problems have to fester.
Unless you’re a bond manager, I don’t understand why anyone would be rooting for recession.
Beyond the financial incentives of investing heavily, there are political reasons, the discussion of which is beyond the scope of this forum - but there are definitely strategic reasons to root for recession.
It isn't that, nor am I rooting for it (is it even possible to root for the inevitable?). I feel like the next recession will be a pile of crap dumped on people, and the longer we wait the bigger the pile becomes. And the anticipation of imminent crap-piling will at least be relieved when the crap is finally dumped. For me at least, a looming future problem is more unnerving than when it actually happens.
LordofHats wrote: I think the only real difference between a market correction and a recession is severity. Both are caused by the same fundamental forces.
Well, you're wrong about that. There are all kinds of differences between a decline in a financial market and a period of negative GDP growth. If you don't understand the difference between a stock market and GDP...I recommend doing more reading on those subjects.
Honestly, I think that's just semantics. What measure we choose to observe to declare it, "market corrections" and "recessions" both stem from the reality that the market's value is mostly based on confidence and anxiety. A correction is a simple version where anxiety outweighs confidence and some people start drawing back/reorganizing to see what happens. Confidence holds and all goes back to normal. Recessions is when a whole lot of people anxiously try to withdraw/rearrange their assets to protect themselves and confidence collapses. I don't think there's that much difference after setting aside the technical discussions and cutting away the rhetoric to look at the raw mechanics.
NinthMusketeer wrote: Ina different note, will anyone else feel a certain relief when the next recession does hit? I can't be alone in my belief that we have reached a point where the longer it gets postponed the longer the root problems have to fester.
Unless you’re a bond manager, I don’t understand why anyone would be rooting for recession.
Beyond the financial incentives of investing heavily, there are political reasons, the discussion of which is beyond the scope of this forum - but there are definitely strategic reasons to root for recession.
It isn't that, nor am I rooting for it (is it even possible to root for the inevitable?). I feel like the next recession will be a pile of crap dumped on people, and the longer we wait the bigger the pile becomes. And the anticipation of imminent crap-piling will at least be relieved when the crap is finally dumped. For me at least, a looming future problem is more unnerving than when it actually happens.
I may be way wrong on this, but I agree with the people who are essentially saying "get on with it". . . . I mean, lets use a gak example off the top of my head for a moment. Lets say that there's a huge imbalance in the stock market on Hot Wheels cars and after several months of the "hot wheels bubble" waiting to burst things are ripe to be bad. . . Now, if the "hot wheels recession" hits much later than expected, it may drag, say beer or Warhammer Plastic Crack down the stock markets with it. I mean, we've seen it before, where a recession is caused by one thing, but due to timing and reactions it follows on and drags other, seemingly unrelated industries down with it (in my uber gak example: Beer is often canned, with metal. Hot Wheels still have metal body bits, and its much the same with the Warhammer Plastic Crack of this example) with the potential to develop into a full blown depression.
NinthMusketeer wrote: It isn't that, nor am I rooting for it (is it even possible to root for the inevitable?).
Sure, wasn't saying you did at all. I was more mentioning that because Gorgon said they couldn't imagine why anyone would root for a recession, and politically, they make useful cudgels, so that's at least one answer. The fact they also represent good investing opportunities was I believe also mentioned already.
I don't think I can think of more than those two reasons though.
NinthMusketeer wrote: It isn't that, nor am I rooting for it (is it even possible to root for the inevitable?).
Sure, wasn't saying you did at all. I was more mentioning that because Gorgon said they couldn't imagine why anyone would root for a recession, and politically, they make useful cudgels, so that's at least one answer. The fact they also represent good investing opportunities was I believe also mentioned already.
I don't think I can think of more than those two reasons though.
NinthMusketeer wrote: So without straying into politics, what are the odds that a no-deal Brexit triggers a global recession?
Ehh. . . while i'm no financial expert, but I didn't think the UK has/had the economic power to do that, the way say, the US, could. And anyhow, given that some of the advisors/experts that I've seen/heard in the US are looking at domestic issues as signs of a recession coming. . .
But who knows, maybe a Brexit no-deal will be a UK gin in the US's tonic
The UK may be the 5th biggest global economy, but they're tiny compared to USA and China.
A good analogy I saw (I think on another site) was that Panda Cola may well be the 5th biggest cola manufacturer (no idea if they actually are), but Coca Cola and Pepsi probably don't lose much sleep over them...
Though a no-deal scenario will not just disrupt the UK. It will also disrupt the EU to an extent and the EU as a whole is the second largest economy in the world, even without the UK if I remember correctly.
U.S. stocks plunged deep into negative territory Wednesday, signaling another day of volatility on Wall Street as investors absorbed a spate of overseas interest rate cuts amid ongoing uncertainty over the U.S.-China trade war.
Central banks in India, Thailand and New Zealand announced greater-than-expected rate cuts Wednesday, following signals from the European Central Bank and the Federal Reserve toward monetary easing as policymakers around the globe try to mitigate the fallout from the trade war, which has bogged down two of the world's most powerful economic engines and is threatening to stall global growth.
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The Dow Jones industrial average nose-dived nearly 550 points before tapering back to 300 to the downside after the Asian Pacific central banks announced their rate cuts. The Standard & Poor's 500 hit a two-month low before clawing back to about a 1 percent drop an hour into trading. The tech-heavy Nasdaq was down 0.5 percent in the morning.
Utilities and real estate were the only two of the 11 stock market sectors that had inched into the positive column. Financial services, energy and technology were hit the worst. Oil prices have been taking a beating in recent days because of a global oversupply amid a slowing world economy.
The stock losses collided with worries about the downturn in the closely watched 10-year Treasury yield, which has fallen to its lowest level since October 2016 as investors flee to safe harbors like bonds and gold to dodge volatility from the trade war.
TLDR: Investors are stupider than they think there are, and for a group that you'd think would thrive on pattern recognition, are really bad at pattern recognition.
LR:
Might mean nothing. This happened last year around this same time and nothing really came of it despite no end in sight for current trade disputes and tariffs eating into profit margins. That very well might happen again, because the market forces are about as comprehensible as American foreign policy circa 2017 (i.e. not remotely comprehensible at all).
My personal favorite is how the market clamors for 2 years asking "rate cut when?" while growing just fine, then they finally get a rate cut and lose their minds for a day or two because they're not getting another one. They were doing just fine for three years prior, why is it a disaster now that you finally got what you wanted?
Still no China deal? Gee, I wonder who didn't see that coming (idiots, that's who). Without delving into the underlying politics, the current administration imo has been figured out by most foreign states. China knows that the administration will bow out first once the strain starts impacting voters (EDIT: I mean, it's already impacting voters obviously, but unless it results in changes at the polls it won't affect the course of policy), while the totalitarian state can just suck it up. I think people have misinterpreted China cutting the value of the Yuan and then raising it again as a capitulation. It's not a capitulation, it was a statement of fact that China can just tank it's own currency and neuter the cost of tariffs on their own economy and wait the US out. They can do that as a single-party state with absolute control whose leaders regular siphon money out of their own country into foreign currencies. The United States cannot even remotely win that race, especially not with divisive leadership at the helm. This same pattern is basically repeating everywhere in current foreign policy; everyone is in a hold position waiting to see if the current administration will even be present 18 months.
My chime in is that the market doesn't make any sense and still seems to be driven solely by investors investing aggressively with no corresponding rhyme or reason in state policies or market hiccups. It will, of course, crash when a sufficient amount of the market decides it will, initiating once more the self-fulfilling prophecy of the rich transferring more wealth into their own pockets and bleeding the not rich out. Maybe that'll be this week. Maybe next year. Maybe 2 years from now. Who knows.
LordofHats wrote: TLDR: Investors are stupider than they think there are, and for a group that you'd think would thrive on pattern recognition, are really bad at pattern recognition.
Replace "investors" with "humans" and you just summarized our history in a sentence.
LordofHats wrote: TLDR: Humans are stupider than they think there are, and for a group that you'd think would thrive on pattern recognition, are really bad at pattern recognition.
Replace "investors" with "humans" and you just summarized our history in a sentence.
LordofHats wrote: TLDR: Investors are stupider than they think there are, and for a group that you'd think would thrive on pattern recognition, are really bad at pattern recognition.
Well, its not that they can't recognize the pattern. Its that everyone is always second guessing every decision and the decisions of everybody else. We're all playing a game of Prisoners Dilemma.
I can choose to leave my money in the economy, or I can pull it out. If everybody leaves their money in the economy, the economy does fine and we all win. But if the economy goes bad, anybody who left their money in loses it. So at the first hint of danger, everybody pulls their money because they don't want to lose it. Which causes the economy to go bad. Its a self-fulfilling prophecy.
We're good at pattern recognition, but we're also pessimistic and fear motivated. Which can result in a situation where we end up hurting ourselves just to avoid a perceived problem.
LordofHats wrote: TLDR: Investors are stupider than they think there are, and for a group that you'd think would thrive on pattern recognition, are really bad at pattern recognition.
Well, its not that they can't recognize the pattern. Its that everyone is always second guessing every decision and the decisions of everybody else. We're all playing a game of Prisoners Dilemma.
I can choose to leave my money in the economy, or I can pull it out. If everybody leaves their money in the economy, the economy does fine and we all win. But if the economy goes bad, anybody who left their money in loses it. So at the first hint of danger, everybody pulls their money because they don't want to lose it. Which causes the economy to go bad. Its a self-fulfilling prophecy.
We're good at pattern recognition, but we're also pessimistic and fear motivated. Which can result in a situation where we end up hurting ourselves just to avoid a perceived problem.
Honestly that just sounds like a indictment of the entire economic system that I can completely get behind
LordofHats wrote: TLDR: Investors are stupider than they think there are, and for a group that you'd think would thrive on pattern recognition, are really bad at pattern recognition.
Well, its not that they can't recognize the pattern. Its that everyone is always second guessing every decision and the decisions of everybody else. We're all playing a game of Prisoners Dilemma.
I can choose to leave my money in the economy, or I can pull it out. If everybody leaves their money in the economy, the economy does fine and we all win. But if the economy goes bad, anybody who left their money in loses it. So at the first hint of danger, everybody pulls their money because they don't want to lose it. Which causes the economy to go bad. Its a self-fulfilling prophecy.
We're good at pattern recognition, but we're also pessimistic and fear motivated. Which can result in a situation where we end up hurting ourselves just to avoid a perceived problem.
Yeah, it's the person who jumps first to 'get ahead of the trend' that creates the damn trend.
Writ large by the collapse of Northern Rock, which preceded the last recession in the UK.
See, they were having liquidity problems. They were, technically, solvent. But it was largely crystalised, and they couldn't access it very easily. A tricky, but not impossible situation.
Bank of England floated them some cash until they could move things around suitably to sort it out.
Gutter Press freak out in their usual irresponsible way - and there's a run on the bank as those with accounts rush to withdraw all their money.
Had that not happened? Well, it's not a case of 'the recession would never have happened', as the true problem lay in the US, with sub-prime lending and NINJA loans on a significant scale.
But, it might've made things less severe. Because it caused the market to get nervous. And from there things really kicked into gear. Banks became lending adverse, so businesses struggled to access lending/refinance.
On Wednesday, the U.S. stock market tumbled after a reliable predictor of looming recessions flashed for the first time since the 2008 financial crisis. The Dow Jones industrial average fell more than 700 points, or nearly 3 percent, in the afternoon and has lost close to 7 percent in the past three weeks.
Two of the world’s largest economies, Germany and the United Kingdom, appear to be contracting. Argentina’s stock market fell nearly 50 percent in recent days, and growth in China has slowed.
Whether the events presage an economic calamity or just an alarming spasm are unclear. But unlike during the Great Recession, global leaders are not working in unison to confront mounting problems and arrest the slowdown. Instead, they are increasingly at each other’s throats.
Wednesday’s sharp selloff was caused by an unusual development in the bond market, called an “inverted yield curve,” that often foreshadows a recession.
For the first time since the run-up to the Great Recession, the yields – or returns – on short-term U.S. bonds eclipsed those of long-term bonds. Normally, the government needs to pay out higher rates to attract investors for its long-term bonds. But with so many losing confidence in the near-term prospects of the economy and rushing to buy longer-term bonds, the U.S. government now is paying more to attract buyers to its 2-year bond than its 10-year note.
This phenomenon, which suggests investor faith in the economy is faltering, has preceded every recession in the past 50 years.
“The stars are aligned across the curve that the economy is headed for a big fall,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “The yield curves are all crying timber that a recession is almost a reality, and investors are tripping over themselves to get out of the way.”
and some info on the large world economy....
Darkening skies overseas gave investors more to worry about. New data indicated Germany was slipping into recession with the country’s economy shrinking 0.1 percent between April and June. If it experienced another contraction during this quarter, Germany officially would meet the definition of a recession. Officials blamed the drop-off on the U.S.-China trade war and the looming threat of a hard Brexit. The European Stoxx 600 benchmark was down nearly 6 percent in midday trading.
Meanwhile China reported more signs of a weakening economy Wednesday, with factory output falling to a 17-year low and high unemployment. The report fed fears about a broader global slowdown as the trade conflict appears to be stalling some of the world’s most powerful economies.
China reported the weakest growth in industrial output since 2002. Germany’s economy shrank as exports slumped, and euro-area production plunged the most in more than three years as the overall expansion cooled.
and
In response to Wednesday’s buffet of bad news, the alarm got a bit louder. Yields on 10-year Treasuries fell below those on two-year Treasuries, which basically means that the yield curve is now, officially, extra super-duper uber-inverted.
Asking business executives to be rational at this point is a lot like asking water on the edge of a waterfall to hang on a moment so you can paddle to shore...
In response to Wednesday’s buffet of bad news, the alarm got a bit louder. Yields on 10-year Treasuries fell below those on two-year Treasuries, which basically means that the yield curve is now, officially, extra super-duper uber-inverted.
LordofHats wrote: My chime in is that the market doesn't make any sense and still seems to be driven solely by investors investing aggressively with no corresponding rhyme or reason in state policies or market hiccups. It will, of course, crash when a sufficient amount of the market decides it will, initiating once more the self-fulfilling prophecy of the rich transferring more wealth into their own pockets and bleeding the not rich out. Maybe that'll be this week. Maybe next year. Maybe 2 years from now. Who knows.
I mean, it makes all the sense in the world when you realize the only reason the market exists in the first place is to make money off the fact people are making money and the chance they may make money in the future. If it might not make you money, bail. Leave it to the gungho idiots or those with no choice to take the brunt of the fall, re-join when the market is clearly coming back up.
You know, for people who can afford to bail out. Still seems parasitic to me.
On a basic level collective ownership is an important aspect to a developed economy. We humans do love to take things and run way too far with them though.
As I said earlier in the thread, with things seemingly starting to wobble, now is the time to start getting your finances in order.
If you've got a mortgage, but no mortgage insurance, now is the time to shop around - just in case.
If you've got credit cards, now is the time to tackle the balance - just in case.
Basically take what steps you can to insulate yourself from a potential financial shock - regardless of what eventually triggers it.
Because what caused the last one to hit so hard was a general consumer reliance on credit. When jobs were lost, situations became far worse.
In the UK, that of course filtered through into the PPI scandal (which comes to a technical close next Thursday, 29 August 2019, fact fans!). People had a chance to recover sometimes very large sums of money from the banks, and went for it.
Of course, not everyone really thought it through, so people also cancelled their mortgage PPI - y'know, the policy that would keep up your mortgage payments should be made redundant or suffer long term illness. So when the next comes around, expect higher levels of repossession in the UK, as people have willingly, and foolishly, thrown away their safety net.
Then there's the oft mooted fall in property values due to Brexit.
Britain is sitting on a financial timebomb right now. It's gonna go off, of course it is. But what's hard to tell is how much semtex has been packed in this time around.
We're not too badly off, so should weather it OK. We don't have any credit card debt. We did re-mortgage earlier in the year and borrowed more, with a view to home improvement / renovation, but haven't actually got round to doing anything with the money yet so have about £50k sat in the bank if gak goes down...
I am worried that a lot of people will get hit pretty hard by Brexit, but at the same time it does appear to be largely the same demographic that voted for Brexit... So there's an element of karma there...
We'll probably be fine too. I work for an Indian company providing IT support to an American company, and our products are aimed at the wealthier consumers so should hopefully not be hit too hard by Brexit. My wife is in education (part time teaching, part time classroom assistant) and they're pretty much at crisis point anyway, I'm not convinced it can get any worse for them...
Mad Doc Grotsnik wrote: As I said earlier in the thread, with things seemingly starting to wobble, now is the time to start getting your finances in order.
If you've got a mortgage, but no mortgage insurance, now is the time to shop around - just in case.
If you've got credit cards, now is the time to tackle the balance - just in case.
Basically take what steps you can to insulate yourself from a potential financial shock - regardless of what eventually triggers it.
Because what caused the last one to hit so hard was a general consumer reliance on credit. When jobs were lost, situations became far worse.
In the UK, that of course filtered through into the PPI scandal (which comes to a technical close next Thursday, 29 August 2019, fact fans!). People had a chance to recover sometimes very large sums of money from the banks, and went for it.
Of course, not everyone really thought it through, so people also cancelled their mortgage PPI - y'know, the policy that would keep up your mortgage payments should be made redundant or suffer long term illness. So when the next comes around, expect higher levels of repossession in the UK, as people have willingly, and foolishly, thrown away their safety net.
Then there's the oft mooted fall in property values due to Brexit.
Britain is sitting on a financial timebomb right now. It's gonna go off, of course it is. But what's hard to tell is how much semtex has been packed in this time around.
I recently was considering a buy to let mortgage *ducks rotten fruit and waits for the hisses and boos to settle down*... The mortgage guy was surprised I asked about payment holidays or ppi for when the property was empty. He said most small time landlords are very suspicious of ppi, let alone enquire for it!
China's position in the trade war is more precarious than it might seem at first blush. Sure, the CCP has absolute control on monetary policy and can manipulate its currency to its own advantage, but these things have very real costs. Lowering the value of the RNB vs the USD means that all the loans Chinese companies have borrowed from the US (and there's a lot of that!) cost more to service. Not just that, but it means that US consumers don't feel the bite of the trade war as much and makes it easier for Trump to carry on with tariffs. Maybe China can ride out the 18 months to see if Trump gets re-elected, maybe not. Wealthy Chinese are putting a lot of money into gold right now because of the currency uncertainty
China is getting a lot of push back over its aggressive trade policies and the One Belt/One Road. Then there's the Hong Kong Protests, which are literally a no win situation for the CCP leadership - either accept a huge loss of face or huge economic blowback, both are VERY bad for Xi Jinping's regime, which is very much in a power struggle for leadership of the CCP. Add in the fact that China's economy is almost certainly in a stall or near stall (their 6% growth figure is widely disbelieved), and Xi Jinping's popularity as a leader is surely tanking.
China avoided the 2008 recession through monetary policy changes but they probably can't do that again - they're already over extended on loans and if we get a global recession any time soon China will see its first real recession and it's going to hit very, very hard. Best case scenario is that Xi Jinping is forced to step down (taking all the blame for the Hong Kong fiasco and tanking economy) and the new CCP leadership decides to play a bit more by the rules with regards to trade.
Mad Doc Grotsnik wrote: As I said earlier in the thread, with things seemingly starting to wobble, now is the time to start getting your finances in order.
If you've got a mortgage, but no mortgage insurance, now is the time to shop around - just in case.
If you've got credit cards, now is the time to tackle the balance - just in case.
Basically take what steps you can to insulate yourself from a potential financial shock - regardless of what eventually triggers it.
Because what caused the last one to hit so hard was a general consumer reliance on credit. When jobs were lost, situations became far worse.
In the UK, that of course filtered through into the PPI scandal (which comes to a technical close next Thursday, 29 August 2019, fact fans!). People had a chance to recover sometimes very large sums of money from the banks, and went for it.
Of course, not everyone really thought it through, so people also cancelled their mortgage PPI - y'know, the policy that would keep up your mortgage payments should be made redundant or suffer long term illness. So when the next comes around, expect higher levels of repossession in the UK, as people have willingly, and foolishly, thrown away their safety net.
Then there's the oft mooted fall in property values due to Brexit.
Britain is sitting on a financial timebomb right now. It's gonna go off, of course it is. But what's hard to tell is how much semtex has been packed in this time around.
I recently was considering a buy to let mortgage *ducks rotten fruit and waits for the hisses and boos to settle down*... The mortgage guy was surprised I asked about payment holidays or ppi for when the property was empty. He said most small time landlords are very suspicious of ppi, let alone enquire for it!
Genuinely on the Buy To Let issue?
If the worst predictions prove true - and they’ve had a habit of doing just that lately - it may be worth holding off in case property prices do self-adjust.
Negative equity is one thing. Provided you’re not looking to move, it’s not a massive issue. But if it means rents go down as well, you could end up as landlord for a Lemon, where the rent doesn’t cover the mortgage, and you can’t sell without a significant hit.
Now I’m not a financial adviser. But you may want to consult one on that specific issue.
Or, bide your time, see what happens, and maybe be able to invest in a better property whilst dodging negative equity?
Now I’m not a financial adviser. But you may want to consult one on that specific issue.
This.
If I was a UK citizen and had available cash, I'd hold off on buying property. Maybe even convert GBP into a currency not likely to be hit by the Brexit backlash, though I'm not exactly sure what that currency would be if Brexit triggers a global recession.
Now I’m not a financial adviser. But you may want to consult one on that specific issue.
This.
If I was a UK citizen and had available cash, I'd hold off on buying property. Maybe even convert GBP into a currency not likely to be hit by the Brexit backlash, though I'm not exactly sure what that currency would be if Brexit triggers a global recession.
chf, everybody runs to the swiss national Bank if things go tits up. Might even make some money that way
Be advised that Greek prices seem already extravagant for working Greeks. Rents are 50% more in certain areas because of Airbnb. And because we're cheap the Chinese are also buying up properties here with a view to a EU passport.
It is not entirely clear that manufacturing is actually in a “recession” at this point, as some have argued. Journalists began bandying around the R-word this summer, after the Federal Reserve reported that industrial production had contracted for two straight quarters. Since then, the central bank’s stats have been more mixed. And while the ISM index shows the sector retreating, a rival barometer that some analysts prefer shows manufacturing is still growing, though just barely.
Still, whether or not we want to call it a “recession,” it is clear that the country’s factories are in a bit of a slump, which could have wider political and economic consequences.
It is kind of a significant metric in a way, as prior to the actual retractions US manufacturing was predicted to continue rising into the mid-2020s. Problem is the people making those predictions likely didn't expect the effect current policy is having on manufacturing, where the growth parts of the industry have gotten hit while the parts that were shrinking have shockingly continued to shrink despite policy efforts intended to bolster them.
A case of we can neither have our cake nor eat it.
I'm not sure how meaningful that is on the whole though. The US economy no longer revolves around domestic manufacturing. It's still an important industry but we still had these same hiccups a bit last year and the year before that at this exact time. This quarter is always wonky.
There's plenty of manufacturing...it just pays minimum wage. I've worked in the field and have a background in manufacturing engineering.
I'm talking about fast food. Every fast food place is run like a little factory and manufactures finished goods for consumer consumption from raw materials using an assembly line.
skyth wrote: There's plenty of manufacturing...it just pays minimum wage. I've worked in the field and have a background in manufacturing engineering.
I'm talking about fast food. Every fast food place is run like a little factory and manufactures finished goods for consumer consumption from raw materials using an assembly line.
Yes, but if you put it in a can that's a factory job and you deserve a fair wage, so it's different.
skyth wrote: There's plenty of manufacturing...it just pays minimum wage. I've worked in the field and have a background in manufacturing engineering.
I'm talking about fast food. Every fast food place is run like a little factory and manufactures finished goods for consumer consumption from raw materials using an assembly line.
Yes, but if you put it in a can that's a factory job and you deserve a fair wage, so it's different.
And why would it be different? If anything, the factory job is easier because you don't have to interact directly with the customer or meet the customer's deadline for immediate service.
That argument seems unrealistically arbitrary. It's like saying 'fast food and retail jobs are only for schoolkids so they don't need to be paid a fair wage'... and then expecting said businesses to be open during school hours when the schoolkids are in school.
I think I saw a meme literally the other day that went:
"Why is that everytime I say Job X sucks someone immediately replies 'yeah well job Y sucks more?' Like, is there a contest I don't know about? Does the person with the shittiest job win a $1,000,000 and not have to work that gak job anymore?"
Vulcan wrote: That argument seems unrealistically arbitrary. It's like saying 'fast food and retail jobs are only for schoolkids so they don't need to be paid a fair wage'... and then expecting said businesses to be open during school hours when the schoolkids are in school.
Beyond the obvious moral and logical issues you already pointed out, ultimately I don't think you can argue with people who say that, because it shows a pretty aggressive indifference to reality.
70% of fast food workers are at least 20 and the average fast food worker is 29, and in 2019 when literally everyone has a smartphone in their pocket with nearly the facts in the world at their fingertips, they're making a choice to be willingly ignorant to support their worldview.
skyth wrote: There's plenty of manufacturing...it just pays minimum wage. I've worked in the field and have a background in manufacturing engineering.
I'm talking about fast food. Every fast food place is run like a little factory and manufactures finished goods for consumer consumption from raw materials using an assembly line.
Yes, but if you put it in a can that's a factory job and you deserve a fair wage, so it's different.
And why would it be different? If anything, the factory job is easier because you don't have to interact directly with the customer or meet the customer's deadline for immediate service.
That argument seems unrealistically arbitrary. It's like saying 'fast food and retail jobs are only for schoolkids so they don't need to be paid a fair wage'... and then expecting said businesses to be open during school hours when the schoolkids are in school.
I'm only in my mid thirties so have mostly lived my (fulltime) working life through the post 2008 era, so in my eyes at least I've been living in some kind of suppressed economic times. Before 2008 I would be between crappy retail part time jobs being underemployed. I converted to an IT and Information Security career in around 2010.
Im lucky to be in a decent financial situation now and probably in a job that will be in demand for the next decade at least. I also managed to get a home over my head much cheaper than the other houses in the area as it was in a relatively poor state. I'd consider myself financially stable, with little debt (apart form mortgate) but very little in the way of actual savings.
I ask though, if over the past 11 years or so we've been in economic stagnation in comparison to periods of growth in the past.... what would a period of growth, or recession or depression actually look like?
My dad talked of 15% interest rates (80s?), 3 day weeks (70s?), but he's also talked about being able to walk out of one job and into another the same day (60s?).
I find living costs to be astronomical currently. I've never known anything else really though! To me it seems that all the people made their money decades ago - houses, stocks and shares - and I can't even imagine what it'd be like to be in a "boom time". Any extra money I get goes on paying off my house, putting into savings where I can, topping up my non-existant pittance of a pension or paying unexpected bills. Would a recession just mean people lose their jobs and not be able to find others, or will other costs go up too?
Easy E wrote: I would wager most of us never saw the "Boom Times" as it has been a slow decline ever since for most workers.
Yup, the oldest millennials might have seen some but that got wiped out by 2008. After that it's all about phrases like "be happy you still have a job in this economy". And yet, somehow companies regularly manage to have record profits :/
skyth wrote: There's plenty of manufacturing...it just pays minimum wage. I've worked in the field and have a background in manufacturing engineering.
I'm talking about fast food. Every fast food place is run like a little factory and manufactures finished goods for consumer consumption from raw materials using an assembly line.
Yes, but if you put it in a can that's a factory job and you deserve a fair wage, so it's different.
And why would it be different? If anything, the factory job is easier because you don't have to interact directly with the customer or meet the customer's deadline for immediate service.
That argument seems unrealistically arbitrary. It's like saying 'fast food and retail jobs are only for schoolkids so they don't need to be paid a fair wage'... and then expecting said businesses to be open during school hours when the schoolkids are in school.
My fault, I should have labelled that as sarcasm.
I like to use [sarcasm] [/sarcasm] to avoid confusion.
I think it is a sad mark of the times though; not that your default assumption was that I was serious, not even that I don't blame you for making that assumption, but that I recognize it was something I should have labelled as sarcasm because it isn't nearly irrational enough to be outside the norm of what people believe.
NinthMusketeer wrote: I think it is a sad mark of the times though; not that your default assumption was that I was serious, not even that I don't blame you for making that assumption, but that I recognize it was something I should have labelled as sarcasm because it isn't nearly irrational enough to be outside the norm of what people believe.
Sad, nothing. Now that you point it out, that's downright terrifying...
I believe this is from CNBC form 10/16/19 or so....
Even if there isn't a global recession over the next 12 to 18 months, it's clear that the economy is going to be much weaker, says Mark Zandi of Moody's Analytics.
So, looking back it looks like Recession fears peaked in late September and very early October. I know there were some FED rate cuts since then, was this enough to stave off the "coming Recession"? It would appear so.
Also, no China/US Trade deal until after the 2020 election....
I've found that pre-recession has a timeline; fears crop up but are dismissed/debated away, then fears crop up and the data starts to give them good credibility and people start to get concerned. Then the recession doesn't happen immediately, human society with its infamously short memory forgets about it and fears diminish while actual data isn't given attention. THEN the recession hits.
The point being the recession tends to hit right after society has done mental gymnastics to convince themselves is in't coming for some time yet.
I'm thinking about how the Conservatives are talking about returning spending (borrowing?) to preConservative levels (the levels which they alleged caused the recession in the UK).
Imagine if they reinstate that spending and another recession hits? It will solidify the idea (even if falsely) that public investment causes recesssion. I suppose the same will be true whoever gets in; we're on the precipice of recession and every major party in the UK is promising increased spending.
Advocates of austerity must be rubbing their hands in glee.
My area of the country tends to be in a bit of an insulated bubble that fends off the recession. For businesses in the area finding employees is hard, even harder when you want ones that aren't half-brain dead or on drugs.
Local businesses have starting wages for unskilled, no-experience employees consistently jumping well above minimum and still we lack workers. This even goes for Mom and Pop businesses.
cuda1179 wrote: My area of the country tends to be in a bit of an insulated bubble that fends off the recession. For businesses in the area finding employees is hard, even harder when you want ones that aren't half-brain dead or on drugs.
Local businesses have starting wages for unskilled, no-experience employees consistently jumping well above minimum and still we lack workers. This even goes for Mom and Pop businesses.
I have experienced similar issues when operating in rural areas. They are insulated from larger economic shocks for the most part. The big exception being if the local big employer closes due to the larger recession.
cuda1179 wrote: My area of the country tends to be in a bit of an insulated bubble that fends off the recession. For businesses in the area finding employees is hard, even harder when you want ones that aren't half-brain dead or on drugs.
Local businesses have starting wages for unskilled, no-experience employees consistently jumping well above minimum and still we lack workers. This even goes for Mom and Pop businesses.
I have experienced similar issues when operating in rural areas. They are insulated from larger economic shocks for the most part. The big exception being if the local big employer closes due to the larger recession.
Same issue with employees too.
Sometimes I find it challenging to keep in "boss mode", especially after one of my new hires (17 years-old, lives with mom and dad) tells me he needs a raise because the $11.50/ hour isn't enough to live on.
Yeah, it is tough as the boss as you need to balance the needs of the business (Often bank-rolled by you) and the employee. Sometimes, you just have to say good bye to good people if it doesn't make sense for the business.
There was I time in my life where I was pretty much bankrolling 21 people and their families on my corporate salary. My employees were easily making more than me take home. However, that is what I wanted to do to keep them around while the business was going through some emergency water damage repairs. Otherwise, I would re-open and have no one to work for me as they all would have moved on. Tough year.
The short answer is that government officials noticed the looming danger and made a course correction, both in the U.S. and around the world. The Federal Reserve cut interest rates three times. Other countries’ central banks similarly eased up on monetary policy. The Trump administration, meanwhile, struck a “phase one” deal with China, which averted an additional steep and destabilizing round of tariffs.
These moves were important for a couple reasons. First, they took pressure off the economy: After two years of hikes, interest rates were almost certainly too high, and the threat of more tariffs has likely hurt investment. But just as crucially, the moves showed that policymakers were actually alert to the dangers of the moment and willing to take steps to prevent a downturn.
Mack Truck to lay-off a bunch of people as the big truck industry slows down....
The cuts were expected after Mack said last month that it would need to slow production to cope with reduced demand. Mack expects the North American truck market to be down nearly 30% this year.
Easy E wrote: Mack Truck to lay-off a bunch of people as the big truck industry slows down....
The cuts were expected after Mack said last month that it would need to slow production to cope with reduced demand. Mack expects the North American truck market to be down nearly 30% this year.
U.S. hiring slowed sharply in December as employers added 145,000 jobs, raising concerns that trade worries and a persistent downturn in manufacturing may be taking a bigger toll on the broader economy.
The unemployment rate was unchanged at a 50-year low of 3.5%, the Labor Department said Friday.
If the Unemployment Rate has continued at a 50 year low, why is wage growth also largely flat/going down?
Average hourly earnings increased 3 cents to $28.32, pushing down the annual gain to 2.9% from 3.1%.
After nearing 3.5% in late 2018, pay hikes have moderated but remained at or above 3%. That has helped keep inflation stubbornly low and allowed the Fed to lower interest rates three times last year to fend off a possible recession down the road.
U.S. hiring slowed sharply in December as employers added 145,000 jobs, raising concerns that trade worries and a persistent downturn in manufacturing may be taking a bigger toll on the broader economy.
The unemployment rate was unchanged at a 50-year low of 3.5%, the Labor Department said Friday.
If the Unemployment Rate has continued at a 50 year low, why is wage growth also largely flat/going down?
Average hourly earnings increased 3 cents to $28.32, pushing down the annual gain to 2.9% from 3.1%.
After nearing 3.5% in late 2018, pay hikes have moderated but remained at or above 3%. That has helped keep inflation stubbornly low and allowed the Fed to lower interest rates three times last year to fend off a possible recession down the road.
Because the jobs being created and filled are largely service jobs that pay... poorly. This is in opposition to the jobs that were lost in 2007, which were mostly living-wage jobs and quite a large number were considered well paying jobs.
* Two-thirds (64%) of low-wage workers are in their prime working years of 25 to 54.
* More than half (57%) work full-time year-round, the customary schedule for employment intended to provide financial security.
* About half (51%) are primary earners or contribute substantially to family living expenses.
* Thirty-seven percent have children. Of this group, 23% live below the federal poverty line.
* Less than half (45%) of low-wage workers ages 18 to 24 are in school or already have a college degree.
Fifty-two percent of CFOs believe the U.S. will be in recession by the end of 2020, and 76% predict a recession by mid-2021, according to a Duke University/CFO Global Business
Outlook survey released Wednesday.
“Business leaders continue to expect an economic slowdown in the U.S. before or concurrent with the presidential election,” said John Graham, finance professor at Duke University’s Fuqua School of Business and director of the survey. “I’d expect uncertainty about the election itself to cause firms to slow expansion in the summer and fall of 2020.”
Seventy-nine percent of CFOs in Asia believe their countries will be in recession by the fourth quarter of 2020, as do the majority of CFOs in Africa (77%), Canada (67%) and Latin America (55%). Forty-nine percent of CFOs in Europe expect a recession by the end of 2020.
CFOs' pessimism doesn't track the latest forecast by the Federal Reserve. The Fed's Open Market Committee, which left short-term interest rates unchanged on Wednesday, is forecasting 2% growth in 2020 and 1.9% growth in 2021.
"The labor market remains strong and ... economic activity has been rising at a moderate rate," the Fed said in a statement Wednesday.
CFOs are nevertheless ready for a downturn; according to the Duke survey, 56% of U.S. companies say they are taking steps to prepare.
Among these firms, 59% are strengthening their balance sheets, 58% are reducing costs, 49% are increasing liquidity, and 31% are scaling back or delaying investment.
“During the last recession, CFOs could genuinely say that their lack of planning was a result of a sharp downturn that was a surprise to most,” said Campbell Harvey, a founding director of the survey and Fuqua finance professor. “However, it would be foolhardy to claim that the recession in 2020 or 2021 was a surprise. Although recessions are not controlled by CFOs, the impact on their firm is, to a large degree, managed by the CFO. This time around, CFOs will be judged by their preparations.”
Companies will continue increasing their cash holdings due to economic uncertainty. “Hoarding cash and reducing debt are the most obvious tactics to dull the blow of a recession,” Harvey said.
Fifty-four percent of U.S. firms indicate they are unlikely to spend their cash holdings during 2020 to preserve liquidity and spending power, should a recession take hold and tighten lending markets.
So, that dreaded "Uncertainty" again..... I can't recall a time when there WAS certainty, so it is just starting to look like an excuse to sit on cash and hand it back to Wall Street via stock buybacks and dividends.
In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
Vulcan wrote: In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
That is absolutely ridiculous. You can't possibly be that naive.
Vulcan wrote: In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
That is absolutely ridiculous. You can't possibly be that naive.
are you saying there are people in power that are disaster capitalists who engineer circumstances to give themselves opportunity to extract wealth from the ‘misfortune’ of others?
Vulcan wrote: In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
That is absolutely ridiculous. You can't possibly be that naive.
And yet a close examination of history bears it out.
Vulcan wrote: In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
That is absolutely ridiculous. You can't possibly be that naive.
are you saying there are people in power that are disaster capitalists who engineer circumstances to give themselves opportunity to extract wealth from the ‘misfortune’ of others?
Generally, people who are panicking aren't engineering anything. They're panicking. They've lost confidence in the stability of the system.
They then lay off people and cut orders for repairs/new equipment/maintenance/etc. and put people out of work. Those people no longer have income and stop spending, and now everyone else loses confidence in THEIR future employment, thus reducing THEIR confidence in the stability of the system, and they reduce spending. Now less is being spent, revenue and profit are down. This causes more executives to panic, they lay off more people, wash, rinse, repeat.
Where if the executives just keep their cool, remain confident that the system is still stable despite this minor issue, accept this quarter's not going to set new record profits, cut just the bare minimum to remain profitable... you don't wind up with the whole panic-inspired tailspin.
Vulcan wrote: In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
That is absolutely ridiculous. You can't possibly be that naive.
are you saying there are people in power that are disaster capitalists who engineer circumstances to give themselves opportunity to extract wealth from the ‘misfortune’ of others?
Both.
Disaster Capitalists know how to bring about uncertainty. The rest sorts itself out.
Vulcan wrote: In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
That is absolutely ridiculous. You can't possibly be that naive.
are you saying there are people in power that are disaster capitalists who engineer circumstances to give themselves opportunity to extract wealth from the ‘misfortune’ of others?
I feel that you vastly overestimate the competence of humans!
Some people can, in fact, be competent or even very competent. Plus you don't have to be impressively competent to do something that a system is set up to do anyway, just... competent. It isn't necessarily a high bar to pass.
Vulcan wrote: In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
That is absolutely ridiculous. You can't possibly be that naive.
I am listening. Tell me more.
Economics was never my focus, so I am open to learning.
Vulcan wrote: In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
That is absolutely ridiculous. You can't possibly be that naive.
I am listening. Tell me more.
Economics was never my focus, so I am open to learning.
Economics make more sense when you pair it with group psychology and a good background of economic history. The basics are 'more people working = good, fewer people working = bad', and, as I said above, stability builds strong economies while instability makes them weak.
Instability can be caused by many things, but what they all have in common is people stop spending. Why? This is where psychology comes into play. They're worried they'll need the money to cover basics later. Thus, no new spending. This puts people out of work (fewer people working = bad), and causes a downward spiral. It doesn't matter WHAT caused that instability - stock market crash, war, inflation and interest rates, terrorist attacks, housing bubbles, or even just gross racism and racial inequality a la South Africa, this is what happens.
Likewise, in stable areas people are confident they will have a job tomorrow, so they spend freely (but hopefully not irresponsibly, as irresponsible spending causes credit crises, another source of instability...). Thus there is more opportunity to find work (more people working = good), so there is more available to purchase. Thus, really stable countries like Switzerland have strong economies even without vast natural resources or large populations.
That's one of the reasons why extensive government austerity during economic downturns is such a terrible idea. Greece illustrates just how bad this can be very well.
Government funding drive so many big economic areas, like infrastructure and construction, that suddenly tightening the belt when the private sector is also tightening the belt is massively devastating. Not to mention, at the core of it, since government controls the levers of economy, they can keep things moving until the private sector starts to recover.
The second thing is that austerity measures also largely target support programs, which makes the contraction of basic household spending even worse as people are now also trying to conserve money to account for a lack of a safety net. Why this is a bad idea is because necessities like food are the bottom of the economic pyramid - people will always need to eat, and with how broad and foundational food sale is, one of the ways you help reverse and recover from an economic downturn is making sure that money keeps flowing up into the economy from necessity sales. Kicking blocks out of the foundation just makes things above it even worse.
Looking at how bank runs used to happen (and amusingly, the original Mary Poppins film has a not too bad example of this) is a good illustration of that kind of economic panic psychology at work. Just a rumor of problems with a bank could have people start pulling all their money out, fearful that the bank would fail and they'd lose it all. Which would trigger more people to pull their savings out, until the bank ran out of money and then did fail because of the run on it.
Thankfully, with modern regulation and insurance, that's no longer something that happens, but the inertia of panic in the stock market can have the same cumulative effect.
Vulcan wrote: In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
That is absolutely ridiculous. You can't possibly be that naive.
I am listening. Tell me more.
Economics was never my focus, so I am open to learning.
Economics make more sense when you pair it with group psychology and a good background of economic history. The basics are 'more people working = good, fewer people working = bad', and, as I said above, stability builds strong economies while instability makes them weak.
Instability can be caused by many things, but what they all have in common is people stop spending. Why? This is where psychology comes into play. They're worried they'll need the money to cover basics later. Thus, no new spending. This puts people out of work (fewer people working = bad), and causes a downward spiral. It doesn't matter WHAT caused that instability - stock market crash, war, inflation and interest rates, terrorist attacks, housing bubbles, or even just gross racism and racial inequality a la South Africa, this is what happens.
Likewise, in stable areas people are confident they will have a job tomorrow, so they spend freely (but hopefully not irresponsibly, as irresponsible spending causes credit crises, another source of instability...). Thus there is more opportunity to find work (more people working = good), so there is more available to purchase. Thus, really stable countries like Switzerland have strong economies even without vast natural resources or large populations.
That's not what you were talking about in your original post. There, you stated that recessions are created by panicking executives. Apparently a good company steward facing business headwinds should just keep the spending pedal to the floor. Run that b**ch straight into the iceberg, I guess. Maybe consider that conservative management can ultimately SAVE jobs?
Should we blame Millennials for not buying big houses and other big-ticket items? I mean, consumer spending is twice as important to the economy as corporate spending. Maybe they should sack up and take on even more debt to keep things afloat for the rest of us. There are pool installers' jobs on the line here.
Easy E wrote: I would wager most of us never saw the "Boom Times" as it has been a slow decline ever since for most workers.
Yup, the oldest millennials might have seen some but that got wiped out by 2008. After that it's all about phrases like "be happy you still have a job in this economy". And yet, somehow companies regularly manage to have record profits :/
With regard to US peak income: in 1977, my father was managing a repair service for RCA. He managed 180 people in his division, their job was to repair televisions. That's all they did, ride around in trucks and repair TVs in people's homes. Their campus was next to a GE repair service, they had 4 times the number of people doing in-home repairs on the same model.
The service was company owned, he made a great salary, he had great benefits and a company car that was replaced every 2 years. His 30-year mortgage was something like $100k. With inflation, the bank paid for more than half of it. He had the GI Bill going for him, got a degree in Mechanical Engineering and turned down an offer with Martin Marietta because he liked what he was currently doing. Eventually opened his own business in an unrelated field and did well.
He was living in an economy that stressed full employment, it was a great time to be a worker.
The current economy is really odd to me. 30 years of globalization has taken its toll, but I keep seeing surprising reports about Millennials. This one from Pew claims young adults are making more than older generations. Quote: "The median adjusted income in a household headed by a Millennial was $69,000 in 2017." Inflation adjusted, that's not far off from what my Dad was making.
Wondering why there's a perception Millennials make so little. I realize there was a period from 2008 - 2014 where young people weren't able to save as much, and that the cost of education / healthcare is dramatically higher, but that could not be the whole story...
Easy E wrote: I would wager most of us never saw the "Boom Times" as it has been a slow decline ever since for most workers.
Yup, the oldest millennials might have seen some but that got wiped out by 2008. After that it's all about phrases like "be happy you still have a job in this economy". And yet, somehow companies regularly manage to have record profits :/
With regard to US peak income: in 1977, my father was managing a repair service for RCA. He managed 180 people in his division, their job was to repair televisions. That's all they did, ride around in trucks and repair TVs in people's homes. Their campus was next to a GE repair service, they had 4 times the number of people doing in-home repairs on the same model.
The service was company owned, he made a great salary, he had great benefits and a company car that was replaced every 2 years. His 30-year mortgage was something like $100k. With inflation, the bank paid for more than half of it. He had the GI Bill going for him, got a degree in Mechanical Engineering and turned down an offer with Martin Marietta because he liked what he was currently doing. Eventually opened his own business in an unrelated field and did well.
He was living in an economy that stressed full employment, it was a great time to be a worker.
The current economy is really odd to me. 30 years of globalization has taken its toll, but I keep seeing surprising reports about Millennials. This one from Pew claims young adults are making more than older generations. Quote: "The median adjusted income in a household headed by a Millennial was $69,000 in 2017." Inflation adjusted, that's not far off from what my Dad was making.
Wondering why there's a perception Millennials make so little. I realize there was a period from 2008 - 2014 where young people weren't able to save as much, and that the cost of education / healthcare is dramatically higher, but that could not be the whole story...
Interating story and article. The article explains the reason for the "increase" pretty early on.....
How have Millennial households generated their comparatively high earnings? At least two factors related to women in households headed by Millennials are buttressing their income.
The generations definedWomen in Millennial households worked more in 2017 than their counterparts in young adult households did in 2000. Among those who were employed, 78% of women in Millennial households in 2017 worked at least 50 weeks of the year. In 2000, by comparison, 72% of women workers in households headed by 22- to 37-year-olds worked as long.
Aside from working more, women in young adult households are being paid more. The median earnings of women working full time for a full year (in households headed by people ages 22 to 37) rose from $37,100 in 2000 to $39,000 in 2017.
Millennial households have obtained these higher incomes even though the households are somewhat less likely to have two contributing spouses or partners. Today, 55% of young adult heads of a household have a spouse or cohabiting partner, down from 57% in 2000. The share of young adult households with two earners fell from 49% in 2000 to 44% in 2017.
Looking at wages is only data for that; how much money people make. While useful in a statistical/analysis context that means nothing in a real-world context where wages vs expenses is what matters. If a business sees its sales double but its expenses triple, it is considerably worse off despite that growth of income.
Vulcan wrote: In the end, all the talk about profit margins and dividends and stock valuations and all the other trivialities are... well, trivial.
Recessions are caused by powerful people panicking and taking actions that turn small downturns into huge economic uncertainty among the masses. Stability builds strong economies; instability makes them weak. It really is that simple.
That is absolutely ridiculous. You can't possibly be that naive.
I am listening. Tell me more.
Economics was never my focus, so I am open to learning.
Economics make more sense when you pair it with group psychology and a good background of economic history. The basics are 'more people working = good, fewer people working = bad', and, as I said above, stability builds strong economies while instability makes them weak.
Instability can be caused by many things, but what they all have in common is people stop spending. Why? This is where psychology comes into play. They're worried they'll need the money to cover basics later. Thus, no new spending. This puts people out of work (fewer people working = bad), and causes a downward spiral. It doesn't matter WHAT caused that instability - stock market crash, war, inflation and interest rates, terrorist attacks, housing bubbles, or even just gross racism and racial inequality a la South Africa, this is what happens.
Likewise, in stable areas people are confident they will have a job tomorrow, so they spend freely (but hopefully not irresponsibly, as irresponsible spending causes credit crises, another source of instability...). Thus there is more opportunity to find work (more people working = good), so there is more available to purchase. Thus, really stable countries like Switzerland have strong economies even without vast natural resources or large populations.
That's not what you were talking about in your original post. There, you stated that recessions are created by panicking executives. Apparently a good company steward facing business headwinds should just keep the spending pedal to the floor. Run that b**ch straight into the iceberg, I guess. Maybe consider that conservative management can ultimately SAVE jobs?
Should we blame Millennials for not buying big houses and other big-ticket items? I mean, consumer spending is twice as important to the economy as corporate spending. Maybe they should sack up and take on even more debt to keep things afloat for the rest of us. There are pool installers' jobs on the line here.
Easy E wrote: I would wager most of us never saw the "Boom Times" as it has been a slow decline ever since for most workers.
Yup, the oldest millennials might have seen some but that got wiped out by 2008. After that it's all about phrases like "be happy you still have a job in this economy". And yet, somehow companies regularly manage to have record profits :/
With regard to US peak income: in 1977, my father was managing a repair service for RCA. He managed 180 people in his division, their job was to repair televisions. That's all they did, ride around in trucks and repair TVs in people's homes. Their campus was next to a GE repair service, they had 4 times the number of people doing in-home repairs on the same model.
The service was company owned, he made a great salary, he had great benefits and a company car that was replaced every 2 years. His 30-year mortgage was something like $100k. With inflation, the bank paid for more than half of it. He had the GI Bill going for him, got a degree in Mechanical Engineering and turned down an offer with Martin Marietta because he liked what he was currently doing. Eventually opened his own business in an unrelated field and did well.
He was living in an economy that stressed full employment, it was a great time to be a worker.
The current economy is really odd to me. 30 years of globalization has taken its toll, but I keep seeing surprising reports about Millennials. This one from Pew claims young adults are making more than older generations. Quote: "The median adjusted income in a household headed by a Millennial was $69,000 in 2017." Inflation adjusted, that's not far off from what my Dad was making.
Wondering why there's a perception Millennials make so little. I realize there was a period from 2008 - 2014 where young people weren't able to save as much, and that the cost of education / healthcare is dramatically higher, but that could not be the whole story...
I imagine HUGE college debts have something to do with it.
One of the justifications used back in the early 2000s for making it impossible to discharge student loans in bankruptcy was, 'I worked hard at a summer job to pay my college tuition. That's what these kids need to do to.'
Which of course was neatly ignorant of how much tuition had increased since his 'summer job' was enough to pay for college. And how much it's further increased since then. And how the system is setup now to push as many kids to attend college as possible. Alternative solutions like trade and technical schools are ignored or discouraged (shop and trade skill classes are not suited for standardized testing, so resources spent on those are resources not put towards the results schools are judged on).
And both schools and financial institutions are happy with the situations as is. The ease of getting educational loans means the schools get paid, so they're happy. Loan companies are happy because those interest payments keep accruing, so loan away. Whether the student was actually best served by going to college instead of some other path like military service, pursuing a trade, or something else is irrelevant to them.
Then there's also how many benefits of steady, long term employment have been taken away, with the cost put onto the employee, like healthcare and retirement funding.
The current economy is really odd to me. 30 years of globalization has taken its toll, but I keep seeing surprising reports about Millennials. This one from Pew claims young adults are making more than older generations. Quote: "The median adjusted income in a household headed by a Millennial was $69,000 in 2017." Inflation adjusted, that's not far off from what my Dad was making.
Wondering why there's a perception Millennials make so little. I realize there was a period from 2008 - 2014 where young people weren't able to save as much, and that the cost of education / healthcare is dramatically higher, but that could not be the whole story...
Part of it is, as you say, education and healthcare costs that have absolutely skyrocketed. Part of it is also that housing costs continue to rise, with nearly no new construction of "affordable" housing (in my zip code alone, there are probably a dozen housing construction projects ongoing at the moment. The apartments are all "luxury housing", and the single family unit housing is all well north of $300k for 1600+ sq. ft. all despite the "new" jobs in the area not exactly being the type to support that housing).
Part of it is also Millenial spending habits. . . The "traditional wisdom" to home buying, as created by the boomers, was get married, get job at mill, buy starter home. While at mill, get promoted to section/shift leader and lower management, buy mid-career home. Finally, a few years before retiring from the mill, buy your "forever" dream home with your middle management salary and pension money. Data shows Millennials, seeing the financial investment of buying a house are not "settling" for that starter home. That entire time that millennials were busy living at home with mom and/or dad, they were actually saving up money for that down payment (and the data reflects that as well)
I will admit I haven't done as much research as I should, but I have seen articles and studies that also showcase different spending habits from prior generations in the automotive sector. The short of it is, Millennials are apparently less likely to lease a "normal" vehicle, so they are more likely to buy, and further, they are holding on to those vehicles for longer than the average time of prior generations.
Easy E wrote: We have been in a long growth period, and the nature of the economy is cyclical.
I'm just gonna question this first assumption. Economies aren't cyclical. Recessions will always come, but you aren't more likely to have one just because you haven't had one in a while. Some countries will have a recession and then have another within a couple of years, while other countries can go decades without one, here in Australia we've gone 27 years without a recession.
Think of it this way - keep rolling two dice again and again and sooner or later you will roll a double 6, but just because you've rolled 50 times without a double 6 it doesn't mean you're any more likely to roll one on your next roll, and if you do roll double 6 it doesn't mean you're any less likely to roll another one straight after. Recessions aren't completely independent events like dice rolls, but they're not cyclical either.
As to the current indicators of recession - maybe? The inverting yield curve tracks really closely to past recessions, but economics and finance are full of a truly stupid mass of data, and a lot of it is very messy. At any given point there will be data pointing in a lot of different directions, and it is likely a mistake to pick out a single data point and claim that is the one key bit of evidence that a macro level event is coming. Other economic signs are okay, about as okay as they have been since the long recovery out of the GFC started. They're not great, but 'not great' may be the new normal given modern demographics.
As to what will happen if there is another recession? Who knows. Tolstoy started Anna Karenina with the wonderful line 'All happy families are alike; each unhappy family is unhappy in its own way.' This applies to a lot of things, including economies - prosperous economies are all pretty much the same, while recessions are all different in their own way. Japan's lost decade was nothing at all like Asian Financial Crisis, which nothing like the Volcker recession, and so on.
I was reading up on potential recessions today after they spoke about it on the radio. Advice seems to be, save some money, which I have, pay off any high interest debts, of which only my car finance really applies, and not to freak out and sell stocks of the market plummets.
It also said that interest rates will fall, which sounds like a good thing to me? I assume to encourage spending, but definitely good for buying property. And led me to wonder, why worry about higher interest debts if rates will fall? Can anyone clear that up for me? Are the rates generally fixed or something?
All in all I'm not too worried should one hit. It might even be beneficial if I end up in the situation where I'm buying a home in the next 2 years.
queen_annes_revenge wrote: I was reading up on potential recessions today after they spoke about it on the radio. Advice seems to be, save some money, which I have, pay off any high interest debts, of which only my car finance really applies, and not to freak out and sell stocks of the market plummets.
It also said that interest rates will fall, which sounds like a good thing to me? I assume to encourage spending, but definitely good for buying property. And led me to wonder, why worry about higher interest debts if rates will fall? Can anyone clear that up for me? Are the rates generally fixed or something?
All in all I'm not too worried should one hit. It might even be beneficial if I end up in the situation where I'm buying a home in the next 2 years.
The problem is, right now (in America, at least) the Prime Rate is rates are so low there's not much room FOR them to fall without going negative.
As for the impact on high-interest debts, the rates for those are completely divorced from the Prime Rate, so they'll stay astronomically high 'because they can'.
Yeah that makes sense. The interest rate is quite low here too. But then a negative interest rate would be even better for mortgage buyers right? They would effectively be paying you for the mortgage.. But then if you had any savings, you would be paying to use the accounts.
Yeah that makes sense. The interest rate is quite low here too. But then a negative interest rate would be even better for mortgage buyers right? They would effectively be paying you for the mortgage.. But then if you had any savings, you would be paying to use the accounts.
I would assume that mortgage lenders would just start ignoring the prime rate just as high-interest lenders already do. There's no profit in paying someone to borrow money, and if America is about ANYTHING it's about maximizing profit.
But charging savings accounts for negative interest rates? Oh, yeah, they'd be all over that like white on rice. Of course, then no one would leave money in 'interest bearing' accounts, stripping banks of money to loan... 1929 bank collapse part 2, coming right up!
surely banks would have to adhere to the rate though? I dont know..I'm uninformed on the subject really.
I dont feel like its ever been done in uk, at least recently, but it seems some countries are doing it, although I cant see the advantage, except for the buyer, which makes no sense to me at all?
Negative Rates are not supposed to be a thing..... but lo and behold they have happened.
More rate cuts probably helped keep us from a recession combined with Quantitative Easing and Fed lending picking back up. However, I am no expert so I will let others chime in.
The problem is just as you state, if you keep them low too long, their is no where to go if the floor falls out again.
queen_annes_revenge wrote: surely banks would have to adhere to the rate though? I dont know..I'm uninformed on the subject really.
I dont feel like its ever been done in uk, at least recently, but it seems some countries are doing it, although I cant see the advantage, except for the buyer, which makes no sense to me at all?
To be honest, I don't know either.
All I know is that credit cards keep trying to get me to accept their 40% APR cards regardless of what the Prime Rate is. So I conclude that the Prime Rate has nothing to do with what interest rates are actually charged to the consumer.
Thinking about it, isn't the Prime Rate just the rate at which the government loans money to major financial institutions? No reason those institutions HAD TO charge (or pay) interest with any relation to that rate, to be honest. At least, not in America, anyway.
I think we can all rest assured that large financial institutions WILL find a way to screw over the little guy for profit. I'm not sure if the details of how are actually important, because the reality is that they will do it, the government will let them do so if it isn't already busy enabling the process, and the people will let the government do such if they aren't already busy enabling the process.
Punchline: Popular perception is correct. In 1985, the typical male worker could cover a family of four's major expenditures (housing, health care, transportation, education) on 30 weeks of salary. By 2018 it took 53 weeks. Which is a problem, there being 52 weeks in a year.
A key assumption of our inflation-adjusted analyses is that old products are still available. Don't like / can't afford the $26K 2018 Grand Caravan, go buy the $18K 1996 one instead. Except you can't. Same problem is even more pernicious in areas like housing and health care.
Another huge problem with health care, especially, is that everyone has to pay for shared risk. If a million-dollar miracle cure needed by 1 in 1,000 households drives up everyone's insurance premium, that's not inflationary. You now have access to the million-dollar cure. Another huge problem with health care, especially, is that everyone has to pay for shared risk. If a million-dollar miracle cure needed by 1 in 1,000 households drives up everyone's insurance premium, that's not inflationary. You now have access to the million-dollar cure.
So, start putting these things together, and you find a situation where major costs facing families have skyrocketed unsustainably in ways our economics is incapable of acknowledging. Then we gloss over the underlying assumptions and say "inflation-adjusted wages look good."
NinthMusketeer wrote: I think we can all rest assured that large financial institutions WILL find a way to screw over the little guy for profit. I'm not sure if the details of how are actually important, because the reality is that they will do it, the government will let them do so if it isn't already busy enabling the process, and the people will let the government do such if they aren't already busy enabling the process.
Considering bank bail outs, we could argue governments actually PAY banks to screw over the small guy...
Given the state of the Chinese economy right now and the Corona virus beginning to spread worldwide, I think the 'next' recession will be arriving very shortly.
Vulcan wrote: Given the state of the Chinese economy right now and the Corona virus beginning to spread worldwide, I think the 'next' recession will be arriving very shortly.
Possibly. Technically a recession is 2 successive quarters of economic decline.
Much of the Asian supply chain was in the works to be moved outside of China in 2019, so the tariff's impact may already be baked-in.
However, with stories that some Asian manufacturers, particularly China, were shuttered due to the virus has got to impact the markets.
Or, the reaction to the virus is merely a pretext for stock market corrections. If that's the case, then expect some aggressive buying sometime next week.
IMO, disruption in Chinese manufacturing on top of... 'previously existing risk factors' is definitely going to de-motivate a wave of re-buying. We are definitely heading into the next recession.
NinthMusketeer wrote: IMO, disruption in Chinese manufacturing on top of... 'previously existing risk factors' is definitely going to de-motivate a wave of re-buying. We are definitely heading into the next recession.
We've been heading that way for about a year now.
It's possible the economy rebounds from this issue, maybe. I wouldn't be surprised if the real hit came in the fall when the markets are always volatile anyway.
Vulcan wrote: I would assume that mortgage lenders would just start ignoring the prime rate just as high-interest lenders already do. There's no profit in paying someone to borrow money, and if America is about ANYTHING it's about maximizing profit.
Banks don't charge negative rates and aren't expected to. That rate is the short term risk free rate. ie what you accept if you want to be absolutely guaranteed to get your money back in about 30 days. Longer term loans, and more importantly loans with a chance of default will have a premium over that base rate. The rate of that premium is determined by the market, ie each bank making its own assessment of market conditions, the risk of the investment and the financial reliability of the lender. So the bank might access money at negative 0.25%, then turn around and lend it to someone for a houseloan at 2.5%. Or for a business loan with little capital it might 8%. For a loan shark giving money to finance a cocaine deal it might 1,500%.
The importance of that base rate is it is the starting point that premium will be added to. So if it spiked to 4% because of a runaway, overheated economy, that mortgage might go to something around 7%
Years ago, maybe around 2011 or 2012, I had an argument with someone here on dakka about one of the points raised in that article. I was defending the process of adjusting inflation for product improvements. Anyhow I read that stuff when it popped up on twitter and I realised I was wrong. So fair point, person from 8 or 9 years ago, baseline inflation adjustment is misleading.
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Vulcan wrote: Given the state of the Chinese economy right now and the Corona virus beginning to spread worldwide, I think the 'next' recession will be arriving very shortly.
Possibly, but it would need to have some massive knock on effects. Chinese is a huge trading partner for the US, but I think people don't realise exactly that is. Chinese goods coming in to the US made up about ~2.0% of US GDP in 2019. That's big but if it was to cut by let's say 0.5% it's the kind of impact that could be countered with markets realigning to other trading partners and some government money splashing around.
Don't believe me? Well Trump's trade war cut chinese imports from 2.5% in 2018 to 2.0% in 2019. Some farmers were hammered by Chinese retaliation, but was anyone impacted by a decline in Chinese imports? Nah, US purchases just realigned to other countries offering the same stuff at similar prices and we all shuffled along.
Coronavirus, like anything, probably won't be a recession in itself. It might be a contributory factor, if it spreads to a lot of countries and starts impacting economic activity in all of them. And even then, recession is only likely if it puts pressure on economic sectors that are suddenly revealed to be very fragile.
So like everything in economics the answer is maybe, if a bunch of stuff we think might happen actually happens, but even then maybe not. But also maybe if a bunch of stuff we haven't thought happens, then it also might happen because of that.
The first, most obvious answer is that the disease could disrupt life and commerce as the world knows it. Global supply chains are already getting scrambled, as much of China, the world’s factory, has been put on lockdown. Chinese consumers have stopped shopping, hurting sales of everything from cars to iPhones. Tourists are staying home. And if coronavirus truly washes across the U.S.—as public health officials seem to expect—it could prevent Americans from going to the office, their favorite restaurants, or the movies. As people’s daily routines grind to a halt, so too could the economy.
A budding pandemic is likely to be different. For starters, it creates demand problems that can’t necessarily be solved by putting money in people’s pockets; families aren’t going to spend a tax cut on a trip to Disney World if they’re afraid to go out in public. At the same time, as The Economist’s Ryan Avent pointed out earlier this week, coronavirus is also threatening to create a “supply shock,” by simply cutting off access to goods and services.
Issue number three: People are worried that a recession brought about by coronavirus could trigger landmines that have seemingly been waiting to explode in the financial world.
Fourth, there’s just the sheer uncertainty of it all. Nobody has any real frame of reference for what’s coming the world’s way right now.
I find the third point the most "concerning" as these "unexploded landmines" are there with or without Coronavirus.
Easy E wrote: https://slate.com/business/2020/02/four-reasons-why-coronavirus-is-such-a-terrifying-economic-threat.html
The first, most obvious answer is that the disease could disrupt life and commerce as the world knows it. Global supply chains are already getting scrambled, as much of China, the world’s factory, has been put on lockdown. Chinese consumers have stopped shopping, hurting sales of everything from cars to iPhones. Tourists are staying home. And if coronavirus truly washes across the U.S.—as public health officials seem to expect—it could prevent Americans from going to the office, their favorite restaurants, or the movies. As people’s daily routines grind to a halt, so too could the economy.
A budding pandemic is likely to be different. For starters, it creates demand problems that can’t necessarily be solved by putting money in people’s pockets; families aren’t going to spend a tax cut on a trip to Disney World if they’re afraid to go out in public. At the same time, as The Economist’s Ryan Avent pointed out earlier this week, coronavirus is also threatening to create a “supply shock,” by simply cutting off access to goods and services.
Issue number three: People are worried that a recession brought about by coronavirus could trigger landmines that have seemingly been waiting to explode in the financial world.
Fourth, there’s just the sheer uncertainty of it all. Nobody has any real frame of reference for what’s coming the world’s way right now.
I find the third point the most "concerning" as these "unexploded landmines" are there with or without Coronavirus.
It's also worth noting that the #1 enemy of a strong economy is uncertainty. And here we have a budding pandemic creating massive uncertainty...
I think coronavirus will get real nasty in the US because of how strong our go-to-work-while-sick culture is, even/especially in service industries. To say nothing about the number of people who cannot afford to miss three weeks of work.
If you've spare rooms, consider a lodger. Every penny they pay can be used to overpay the mortgage (less tax, of course).
