jump to navigation

Recession (depression?) worse than ’08 coming? January 18, 2016

Posted by Tantumblogo in Basics, disaster, error, foolishness, General Catholic, horror, It's all about the $$$, Revolution, sadness, secularism, self-serving, Society.
trackback

The other day, I expressed some hopeful views that the low price of oil would lead to an overall invigorated economy (even while some areas like Texas dependent on oil production would suffer).  Historically, low oil prices have almost invariably led to economic boom times.

But, we do not live in normal times.  Never has government, business, or personal debt been so high.  Never has government so artificially sustained what paltry economic “growth” there has been with such enormous measures.  That is to say, there is very little government can do to rectify an economic downturn (and probably much less gov’t should do).

That’s the thinking in the article below from a bearish economist at CNBC.  Given China’s economic crisis and the beating the markets have taken over the past few weeks, you certainly won’t find me arguing against his prognostication:

The S&P 500 has begun 2016 with its worst performance ever. This has prompted Wall Street apologists to come out in full force and try to explain why the chaos in global currencies and equities will not be a repeat of 2008. Nor do they want investors to believe this environment is commensurate with the dot-com bubble bursting. They claim the current turmoil in China is not even comparable to the 1997 Asian debt crisis.

Indeed, the unscrupulous individuals that dominate financial institutions and governments seldom predict a down-tick on Wall Street, so don’t expect them to warn of the impending global recession and market mayhem……

……..this inevitable, and by all accounts brutal upcoming recession, will coincide with two unprecedented and extremely dangerous conditions that should make the next downturn worse than 2008. [Did we ever even leave a recession?  I know what the Obama administration says, but I don’t trust them or their statistics at all. I think much of the country has remained in relatively flat growth ever since 2007.

First, the Fed will not be able to lower interest rates and provide any debt-service relief for the economy. In the wake of the Great Recession, former Fed Chair Ben Bernanke took the overnight interbank lending rate down to zero percent from 5.25 percent and printed $3.7 trillion. The Fed bought longer-term debt in order to push mortgages and nearly every other form of debt to record lows. [And left the US economy fundamentally destablized as a result.  That Bernanke may have been hoodwinked by shyster hedge fund managers to allow them to keep their 8-9 figure bonuses I’ll just gloss over for now]

The best the Fed can do now is to take away its 0.25 percent rate hike made in December.

Second, the federal government increased the amount of publicly-traded debt by $8.5 trillion (an increase of 170 percent), and ran $1.5 trillion deficits to try to boost consumption through transfer payments. Another such ramp up in deficits and debt, which are a normal function of recessions after revenue collapses, would cause an interest-rate spike that would turn this next recession into a devastating depression.

It is my belief that, in order to avoid the surging cost of debt-service payments on both the public and private-sector level, the Fed will feel compelled to launch a massive and unlimited round of bond purchases. However, not only are interest rates already at historic lows, but faith in the ability of central banks to provide sustainable GDP growth will have already been destroyed, given their failed eight-year experiment in QE.

Therefore, the ability of government to save the markets and the economy this time around will be extremely difficult, if not impossible. Look for chaos in currency, bond and equity markets on an international scale throughout 2016. Indeed, it already has begun.

It’s past time to find safe havens.  I did late last  year.  Not that the options are all that great.

There is an argument to be made that the incredible growth in prosperity the world has seen since the late 1700s is ultimately unsustainable and quite possibly unnatural.  For most of human history growth in wealth and productivity has been very slow.  There have been a few exceptions – the ancient Mediterranean world from about 200 BC to AD 200, China over roughly a similar period – where wealth accumulated very quickly (along with technological development and gains in productivity), and then followed by a period of reversal and long stagnation.  Birth rate (and infant survival) was a key factor in both the growth and the decline.

I wonder about this (in very brief form) because I have had the sense for a while that we may be looking at a very long period of technological, economic, and cultural stagnation if not outright reversal.  This is all grounded in the worldwide collapse in birthrate and the moral enervation of the West (the world’s leading culture), to the degree that many leaders seem to long for the barbarians to come and finish them off.

This is all very speculative and I certainly don’t have a lot of facts in support of my claim, it’s just a vague but growing sense I’ve had for some time. But I doubt I’m alone, given the explosion of “prepping” and similar trends.

Gold and (productive) land are probably some things very much worth having on hand.

Comments

1. Mike - January 18, 2016

Two questions.

First: What types of investments did you place your assets in.

Second. I drive 200 miles to work in rural NY and Pa. I take the back roads. In my travels, I have encountered over 50 cemeteries on my route.

You have stated you can obtain a plenary indulgence each time you visit a cemetery and pray for the souls in purgatory. I hope to visit each one on my arrival and return trips.

Question: When does “All Souls” week begin? November 1 thru 7, or the Sunday thru Saturday, All Souls occurs? All souls occurs on a Tuesday, this year so I want to be as accurate as possible.

Thank you for your effort. I am giving a talk on sexuality in my parish this spring and I am using much information from your blog. My gratitude.

Tantumblogo - January 18, 2016

Nov 1-8. It’s an Octave, so, an 8 day week, if you will.

Thank you for your kind words. And thanks for using my material, that’s a terrific compliment, one I’m not certain I deserve.

Just to be clear, the plenary indulgence is earned for the souls in Purgatory. Prayers need not be elaborate, an Our Father, Hail Mary, and Glory Be will suffice.

As to assets…..I actually haven’t moved much into gold. But I do own land in some rural locations in Kansas and Texas. Not as much as I like, about 500 acres. The Texas land is not arable, but it has very abundant game (but also a lot of people around).

I have some money in REITs. I dumped my preferred stock. I’m actually in a secure short term CD right now because I think 2016 is going to be very bad. I don’t make money but hopefully won’t lose any. Provided there isn’t a general banking collapse. That’s all retirement stuff, anyway.

D - January 19, 2016

fwiw, local Dallas investment advisor and radio show host Ken Moraif advised his clients to get out of the stock market back in August 2015.. He is one of the few advisors that doesn’t pump “buy and’ hold” especially for those nearing retirement. He is predicting DOW 11,500. Quite a retreat from its current level.

2. Baseballmom - January 18, 2016

Absolutely do not believe the guvmint numbers. We have had stagnation since ’08. Jobs created is pure bs…. I know too many small business owners who “created jobs” by turning one full time position into two part time slots to avoid Obamacare.

3. Baseballmom - January 18, 2016

Post did not go through…

4. Mike - January 19, 2016

Thanks.

As when to visit the cemeteries, does all souls week begin on November 1, or the Sunday of that week, regardless of the date? Sorry to be so scrupulous.

5. Ben - January 20, 2016

Tantum, you and your folks will be up a creek without a paddle if you do not learn the Austrian Theory of the Business Cycle and emigrate. Absolutely critical to well being this century. Try the blog Sovereignman.com, then don’t go to Chile like the author did.

Tantumblogo - January 20, 2016

Where is the Austrian Theory actually being used?

6. Ben - January 20, 2016

An article I read on seekingalpha.com recently argues that the stock market may decline because of China but that there will not be the kind of stress seen on the banking sector in 2008 because monetary policy is still wildly loose. I recommend seekingalpha.com and lewrockwell.com for some of the very best information in the world on the direction of the economy.


Sorry comments are closed for this entry

%d bloggers like this: