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We have been in a long growth period, and the nature of the economy is cyclical.

There are some folks who are starting to doom-say about the economy based on various indicators.

https://www.npr.org/2019/06/30/737476633/what-just-happened-also-occurred-before-the-last-7-u-s-recessions-reason-to-worr

https://www.cnbc.com/2018/11/21/trump-economy-expected-to-slow-down-in-2019-before-possible-recession-in-2020.html

https://www.washingtonpost.com/news/powerpost/paloma/the-finance-202/2019/06/04/the-finance-202-manufacturing-slips-as-signs-grow-of-softening-trump-economy/5cf591b6a7a0a46b92a3ff83/?noredirect=on

These are based on a Yield Curve inversion and slowing Manufacturing numbers. So the question is, in your opinion:

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?

Again, your opinions with some speculation backed by facts/citations would be great.

This is not a political thread, but an economics thread.

 Easy E wrote:

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.

We are out of a recession?
Could have fooled me and my entire generation

 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.

We are more likely in a liquidity trap.

@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.

Not Online!!! wrote:
We are more likely in a liquidity trap.

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.

 John Prins wrote:

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.

Well, avoiding Politics?

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.

Voss wrote:

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.

 Easy E wrote:

Not Online!!! wrote:
We are more likely in a liquidity trap.

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.

But China will not want to risk that.

China has alot to fear.

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.

Not Online!!! wrote:


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.

 Azreal13 wrote:

Not Online!!! wrote:


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.

Not Online!!! wrote:


Nope Gold is not intrinsically valuable, infact alot of these processes could be replaced by other Materials

Ok, so what do you think is intrinsically valuable?


Automatically Appended Next Post:

 Peregrine wrote:

 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?


Automatically Appended Next Post:

 jhe90 wrote:

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.

Not Online!!! wrote:

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.

 John Prins wrote:

Voss wrote:

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.

And this literally affects all Materials.

Not Online!!! wrote:

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?


Automatically Appended Next Post:

 jhe90 wrote:

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.

Not Online!!! wrote:

 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.

And this literally affects all Materials.

So now you're arguing my point back to me?

Good lord.

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