Recession is coming

alphasigmookiealphasigmookie Senior MemberPosts: 8,798 Senior Member
https://www.mauldineconomics.com/frontlinethoughts/capitalism-gone-wild

I've posted stuff from him before. John is a conservative and not especially bearish as a rule. He does however see the dynamics of our economy fairly clearly. I think this article is worth a read for anyone with any significant assets in the market. He sees a recession as likely next year. 

A few notes that jump out:
13% of companies in developed nations don't make enough money (revenue not profit) to pay even the interest on their outstanding loans. This at a time when borrowing costs have been artificially depressed by central banks.

Monopolies and oligopolies abound. Rather than being forced to innovate by competition, large companies use easy access to credit to buy out all their competitors.

Low interest rates force investors to reach into risky ventures for yield leading to massive miss allocation of capital towards companies that may someday possibly make a profit if everything goes perfectly. 





"Finding out that you have run out of toilet paper is a good example of lack of preparation, buying 10 years worth is silly"
-DoctorWho

Replies

  • earlyagainearlyagain Posts: 3,806 Senior Member
    Ive heard this before. It makes sence except it seems like the Fed can be used to indefinitely inflate the bubble?????
  • alphasigmookiealphasigmookie Senior Member Posts: 8,798 Senior Member
    Ive heard this before. It makes sence except it seems like the Fed can be used to indefinitely inflate the bubble?????
    Maybe. That is indeed the wildcard. Continuing to inflate the bubble only means it is bigger when it pops. The bubble always pops. The only question is when. Given the potential political ramifications, you can bet the administration will try to do everything it's power to ensure it stays inflated through the election at least. We'll see. 
    "Finding out that you have run out of toilet paper is a good example of lack of preparation, buying 10 years worth is silly"
    -DoctorWho
  • AccipiterAccipiter New Member Posts: 231 Member
    Not familiar with the author, but as for the title of the thread.........yep.  Feels exactly like it did in 05/06 for me and my business.  I see many of the same behaviors, and massively overvalued real estate.  The market is massively overvalued as well.  But business is good for me at the moment and I am making hay while the sun is shining.  I have taken multiple steps in the last few years in an effort to protect myself from the next recession.  I went through the last one unprepared, and this time it will be different.  I hope.  

    The saddest thing I see is no one seems to have learned from the last one.  People still spend like their income will always be the same or better than it is this moment.  Oh well, people as a corporate whole are stupid.
  • CaliFFLCaliFFL Senior Member Posts: 4,845 Senior Member
    Yep be prepared. Recessions ALWAYS come and go. 

    IN 2007, I sold my CA house for almost 5X what I paid for it in 1994. By 2008, the same house was worth less than half the price paid by the new owners. 

    I rented and waited for the bottom to fall out before I bought an Idaho house and acreage. 

    Admittedly, I had a little luck with the timing, but I took advantage of the opportunity when it was presented.  
    The question isn't who is going to let me; it's who is going to stop me.

    Ayn Rand
  • alphasigmookiealphasigmookie Senior Member Posts: 8,798 Senior Member
    For those who are prudent and plan ahead recessions don't always have to be especially painful and can be viewed as an opportunity for those positioned well. 
    "Finding out that you have run out of toilet paper is a good example of lack of preparation, buying 10 years worth is silly"
    -DoctorWho
  • 1hogfan831hogfan83 Member Posts: 285 Member
    Quiet a read but what does he mean by “Helicopter Countries?” 
    "Well he shoulda armed him self" William Munney-Unforgiven"
    "You believe there is one God, that is good, even the demons believe and shudder in fear" James 2:19
  • kansashunterkansashunter Senior Member Posts: 1,476 Senior Member
    I read it but I disagree with his conclusions. He might be right or not. 
  • alphasigmookiealphasigmookie Senior Member Posts: 8,798 Senior Member
    1hogfan83 said:
    Quiet a read but what does he mean by “Helicopter Countries?” 
    By helicopter governments he means governments and central 
    Banks that try to prevent anything bad from ever happening in their economies. Basically doing everything they can between fiscal and monetary policy to prop up the economy up to and including significant bailouts which prevents the natural economic processes from wiping out the weak companies and increasing the likelihood of bubbles and miss allocation of capital. 

    An analogy is forest fires. A natural healthy forest requires occasional fire to clear out the underbrush and weak trees. If we interfere and put out the fires too quickly all the time, the fuel builds up until finally it explodes in a blaze that can't be controlled and is far more destructive. 
    "Finding out that you have run out of toilet paper is a good example of lack of preparation, buying 10 years worth is silly"
    -DoctorWho
  • alphasigmookiealphasigmookie Senior Member Posts: 8,798 Senior Member
    I read it but I disagree with his conclusions. He might be right or not. 
    Sure, forecasting is a difficult game. Care to share any thoughts on why you disagree? 
    "Finding out that you have run out of toilet paper is a good example of lack of preparation, buying 10 years worth is silly"
    -DoctorWho
  • bisleybisley Senior Member Posts: 10,733 Senior Member
    No economist ever accurately predicts when a recession will occur - only that they always will. They can't even tell when we are already in one, until months later. Sure, we will have one and people will get hurt - hardly startling news.

    The timing is the thing, and the recovery time is crucial in determining how bad it will hurt and who will get hurt the most. The problem is that our political parties and the media try to create perceptions that will stimulate voters to put them into power. What used to be simply monitoring the economy, with all of its back and forth swings, has now turned into attempts to manipulate it for political purposes, and then misrepresenting it in order to damage the opposition.

    Our economy is so huge that government manipulations have a lag time that may take years to actually have the intended effect, and the next government may get credit for what his bitter political enemy actually helped to cause. Furthermore, consumer confidence is a wild card, because ill-informed investors may actually keep a bad economy afloat, out of pure ignorance.
  • earlyagainearlyagain Posts: 3,806 Senior Member
    In my mind I see US Presidents with strings extending upward. Behind the above curtain marked Federal Reserve, I see big banks pulling those strings.

    Sometimes good results, other times not.
  • VarmintmistVarmintmist Senior Member Posts: 6,552 Senior Member
    Here is my take.
    I wont play.
    Just like all the recessions before, I wont play the woe is me game. So far ignoring the doom and gloom has stood me pretty well. So have your recession if you want to.
    It's boring, and your lack of creativity knows no bounds.
  • Troy800Troy800 New Member Posts: 25 New Member
    There is always a ressesion coming, picking that is easy.  It's knowing when.  Listen to the news they have correctly picked 50 of the last 6 ressesions.
  • earlyagainearlyagain Posts: 3,806 Senior Member
    https://www.cnbc.com/amp/2019/04/12/alan-greenspan-says-economy-will-start-to-fade-out-because-of-growing-us-entitlement-burden.html

    I still can't figure out how a pay roll deduction gets spun into an entitlement, but there it is.
  • coolgunguycoolgunguy Senior Member Posts: 6,503 Senior Member
    https://www.cnbc.com/amp/2019/04/12/alan-greenspan-says-economy-will-start-to-fade-out-because-of-growing-us-entitlement-burden.html

    I still can't figure out how a pay roll deduction gets spun into an entitlement, but there it is.
    Other than social security (something folks are actually entitled to) I'd say it's because - over the years more and more folks feel like they're entitled to something and somebody else has to provide it. 
    "Bipartisan" usually means that a bigger than normal deception is happening.
    George Carlin
  • earlyagainearlyagain Posts: 3,806 Senior Member
    Pcoolgunguy said:
    https://www.cnbc.com/amp/2019/04/12/alan-greenspan-says-economy-will-start-to-fade-out-because-of-growing-us-entitlement-burden.html

    I still can't figure out how a pay roll deduction gets spun into an entitlement, but there it is.
    Other than social security (something folks are actually entitled to) I'd say it's because - over the years more and more folks feel like they're entitled to something and somebody else has to provide it. 
    I think politicians coined the phrase in order to conjure the unspoken word of undeserved in preface to entitlement. Those deductions come out of every pay check for a lifetime. I notice Alan Greenspan don't mention corporate entitlement. 
  • sgtrock21sgtrock21 Senior Member Posts: 1,648 Senior Member
    Pcoolgunguy said:
    https://www.cnbc.com/amp/2019/04/12/alan-greenspan-says-economy-will-start-to-fade-out-because-of-growing-us-entitlement-burden.html

    I still can't figure out how a pay roll deduction gets spun into an entitlement, but there it is.
    Other than social security (something folks are actually entitled to) I'd say it's because - over the years more and more folks feel like they're entitled to something and somebody else has to provide it. 
    I think politicians coined the phrase in order to conjure the unspoken word of undeserved in preface to entitlement. Those deductions come out of every pay check for a lifetime. I notice Alan Greenspan don't mention corporate entitlement. 

    I agree 100%. Technically one of several definitions is 'funds managed and distributed by a government'.
  • VarmintmistVarmintmist Senior Member Posts: 6,552 Senior Member
    https://www.cnbc.com/amp/2019/04/12/alan-greenspan-says-economy-will-start-to-fade-out-because-of-growing-us-entitlement-burden.html

    I still can't figure out how a pay roll deduction gets spun into an entitlement, but there it is.
    Because its a tax. It has been a tax since 1937 SCOTUS ruled it was a tax. There is no trust fund, and there is no legal reason that the Fed has to give you a thing "back". They could stop SS payments tomorrow and continue the tax. The fact that they do, and do it in a unsustainable way, makes it a unsustainable entitlement. https://socialsecurityintelligence.com/is-social-security-an-entitlement/

    Good article on how and why it aint your money. https://fee.org/articles/the-myth-of-the-social-security-trust-fund/



    It's boring, and your lack of creativity knows no bounds.
  • alphasigmookiealphasigmookie Senior Member Posts: 8,798 Senior Member
    The issue with social security and especially Medicare is that yes everyone has paid for it, but what the government has promised is incompatible with the revenue they have collected. Demographic shifts and increases in lifespan which are great for individuals living longer, happier, healthier lives, but they're not so great when they government was only planning to have to pay you for 8-10 years and now they have to pay for you for 20 or 30. Same thing happening to pension funds. In many cases pensions are paying people for more years in retirement than the person worked in the first place. Math just doesn't/can't add up. 
    "Finding out that you have run out of toilet paper is a good example of lack of preparation, buying 10 years worth is silly"
    -DoctorWho
  • earlyagainearlyagain Posts: 3,806 Senior Member
    Sounds like our government are the ones with undeserved entitlement. The pay checks being deducted have our names on them. 
  • VarmintmistVarmintmist Senior Member Posts: 6,552 Senior Member
    Its deserved, the govt has the power to tax and it was sold to that generation as a good thing, which it WAS.

    For the last 40 years or so people have had access to much better ways to save for retirement than in the 30's. In the last 30 anyone who hasnt did it because they didnt want to, not because it was not understood. Ant and grasshopper thing.
    What it has morphed into from a SUPPLEMENT income that was backed by the govt as a entitlement, is a welfare system to buy votes. The politicos never slowed down the outflow, or increased the age requirement. What they did was upped the amount and give it to everyone who ever paid in for life.
    Understand, that if you paid in the max and your employer matched it as a cost of your employment, you will still go through EVERY dollar you were taxed in around 12-14 years (IIRC) SS was set up to pay when most people died after 3 or so years on benefits. I could, if things work out, go 25+ years getting SS. Now I have been taxed for the entitlment for
    It's boring, and your lack of creativity knows no bounds.
  • zorbazorba Senior Member Posts: 19,898 Senior Member
    ...or increased the age requirement.
    Uh, yea they did. Its no longer 65 for full benefits. I'd have to wait until I was 68, and I think it slides all the way  up to 70 a few years after me.
    -Zorba, "The Veiled Male"

    "If you get it and didn't work for it, someone else worked for it and didn't get it..."
  • VarmintmistVarmintmist Senior Member Posts: 6,552 Senior Member
    edited April 16 #24
    Yes they did, but not at a factor that is equatable to the age limit when SS was imposed. SS works when people get a couple years on SS not have a life expectancy of 85+. The money that was taxed from you and your employer paid for you as a condition of your employment, IF there was a trust fund or account, would be gone in something under 12 years. So, pretending there is a trust fund and this isnt an entitlement, even if you took it at 68, and lived to the avg of 85, you are tapping a min of 5 years that you had nothing to do with putting into.

    It's boring, and your lack of creativity knows no bounds.
Sign In or Register to comment.
Magazine Cover

GET THE MAGAZINE Subscribe & Save

Temporary Price Reduction

SUBSCRIBE NOW

Give a Gift   |   Subscriber Services

PREVIEW THIS MONTH'S ISSUE

GET THE NEWSLETTER Join the List and Never Miss a Thing.

Get the top Guns & Ammo stories delivered right to your inbox every week.