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 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.

Some men just want to watch the world burn

 LordofHats wrote:
Some men just want to watch the world burn

True.


Automatically Appended Next Post:

 Ouze wrote:

 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.

Ah, gotcha.

 NinthMusketeer wrote:

 LordofHats wrote:
Some men just want to watch the world burn

True.

Oh god!

It starts out bad enough, and then the camera just keeps panning back and it just gets worse XD

So without straying into politics, what are the odds that a no-deal Brexit triggers a global recession?

 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.

Yeah, definitely. But the stats aren't in our favour. For last year, 46% of all UK exports went to the EU, and 54% of all UK imports came from the EU.

https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7851

On the other hand, about 6% of the EU's exports go to the UK...

https://www.bbc.co.uk/news/business-46612362

https://www.dailyherald.com/business/20190807/us-stocks-seesaw-as-global-trade-fears-spark-overseas-rate-cuts-dow-plunges-400-points

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.

Anyone want to chime in on what this all means?

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.

Easy E wrote:Anyone want to chime in on what this all means?

This about sums it up: https://twitter.com/randygdub/status/1158485458558410752

 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.

 NinthMusketeer wrote:

 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.

Permission to fix that for me

 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.

 Grey Templar wrote:

 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

More like human nature. You can't cure it, you can only try and plan around it.

 Grey Templar wrote:

 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.

And we still live with the repercussions today.

Not really new information for those of use following this thread but..... we are starting to see some ramifications from the article in the OP.

https://www.washingtonpost.com/business/2019/08/14/stocks-tank-another-recession-warning-surfaces/?noredirect=on

he global economy has begun to shudder.

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.

Fun!

Looks like the final number was 808 points, so closer to 3.5% I think.

Clearly the rational response is to freak out and actually cause the recession, that way we'll catch it by surprise and be better prepared!

Things look a bit grim.....

https://slate.com/business/2019/08/recession-economy-bond-market-yield-curve-trade-china-germany.html

As Bloomberg summed things up:

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.

Trouble in paradise!

Hold on tight, here we go!

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...

 Easy E wrote:

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.

Trouble in paradise!

 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.

It's a little scary.

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...

Well, at the risk of entering the political sphere, I share your sentiment there

I'll be fine. Working in financial complaints is a good career when things hit the skids!