9 ms·

Predicting Next Recession

80 points by simonpure 7y ago

viburnum 7y ago
Most recessions are easy to predict because they’re intentionally triggered by central banks with the aim of controlling inflation by putting a lot of people out of work.
- H8crilA 7y ago
  Those are actually somewhat rare. US in the late 70s with Paul Volker and the famous British Pound short by Soros which interrupted the government chocking off the economy with high interest rates, broke the pound and saved the UK from a recession. Do you have more prominent examples? It's usually policy error in the other direction - keeping easy money for too long. I.e. you don't handle a catastrophe by fixing the down leg (that's emergency measures with bad side effects), you prevent the up leg. Alan Greenspan will be forever remembered and hated by some after his efforts to create the dotcom and the housing bubble.
  - rapsey 7y ago
    The Japanese central bank single handedly caused the lost decade.
    - mcguire 7y ago
      Single handedly?
    - hogFeast 7y ago
      They didn't. That is a misconception borne out of reading our methods of economic policy onto a different context. The MoF, not the BoJ, controlled not only monetary policy but pretty much all aspects of the economy (they even directed lending by banks at the level of individual loans). This changed in the late 90s but through to the early 90s, it was all the MoF.
  - surfmike 7y ago
    The policy error in 2008 was not enough easy money early enough. https://www.cato.org/sites/cato.org/files/serials/files/cato-journal/2019/5/cj-v39n2-12.pdf https://www.cato.org/sites/cato.org/files/serials/files/cato...
  - hogFeast 7y ago
    It happened in 1958 (it may have been '56, my memory is poor), and 1920-1. In the case of the Fed, the last central banker to take this approach was Martin in the 1960s ("leaning against the wind")...and his legacy ended up being inflation. You are basically correct but these factors are essentially structural. For example: is the central bank independent from the govt? How much oversight is there over policy decisions? Etc. In the West, it has been politically impossible to actually do this. Your understanding of early 1990s Britain is not correct. The UK was forced to raise rates because of the ERM and rising inflation. The govt ran the BoE so it should be quite obvious that they had no desire to slow the economy down but were forced to do so.
    - H8crilA 7y ago
      They wanted high rates because ERM was the main policy goal of the prime minister. Super high rates were also choking the economy. It was a choice between ERM and easier recession, and the breakage of the pound forced them to no ERM and easier recession. The bundesbank was the one to put the final nail in the UK Euro coffin. Also, this is not about the FED being dependent or independent from the government. This is about the widespread idiocy of thinking that expensive assets = well-being of the country. Dotcom and 2008 (and today, but let's wait for it to burst first) are all FED's pedal-to-the-metal work.
      - hogFeast 7y ago
        > They wanted high rates because ERM was the main policy goal of the prime minister. Again: no they didn't. They didn't "want" high rates. You understand how dependent the Conservatives were on home owners and the structure of UK mortgages? The reason ERM was the main policy goal of Major was inflation. The Bundesbank was the immediate cause but the reason they got into that position was inflation (if you read the research, even the die-hard Lawson fans believe that the ERM set the stage for the 1990s). Yes, the nature of the relationship between the central bank and the govt determines the response to those events. Do you realize that there have been substantial changes in this relationship since the Fed was created? The Fed is politically unable to respond. I don't understand the relevance of your point about expensive assets...that determines nothing, the market will go up and down regardless of anything.
- madengr 7y ago
  Then why not short sell stocks and become rich?
  - abcpassword 7y ago
    Because it can’t actually be predicted or they would do just that.
  - take_a_breath 7y ago
    Stocks aren’t necessarily an indicator of economic strength. The S&P 500 is in an earnings recession right now, but continues trading at all-time highs. The market can stay irrational longer than you can stay liquid.
    - tryptophan 7y ago
      This is not true. Sp500 earning are near ATH. https://www.multpl.com/s-p-500-earnings https://www.multpl.com/s-p-500-earnings
      - take_a_breath 7y ago
        Your chart is earnings per share, it’s also from June. That has increased because of all the stock buybacks following the new tax law. Total earnings are down. MarketWatch - https://www.marketwatch.com/story/the-sp-500-is-in-its-first-earnings-recession-in-three-years-2019-09-18 https://www.marketwatch.com/story/the-sp-500-is-in-its-first... CNBC - https://www.google.com/amp/s/www.cnbc.com/amp/2019/06/24/analysts-now-expect-the-earnings-recession-to-last-through-the-third-quarter.html https://www.google.com/amp/s/www.cnbc.com/amp/2019/06/24/ana...
- ur-whale 7y ago
  That sounds like a conspiracy theory. Also, I fail to see how this theory applies to the recession of '08.
  - viburnum 7y ago
    I said most. Occasionally there are bank crises (like in 2008). This isn’t a big secret, it’s right there in FOMC meeting notes. Google Greenspan and punch bowl. Google Kalecki and politic aspects of full employment.
- GuB-42 7y ago
  Conspiracy aside, that doesn't make it easy to predict. It is like saying that wars are easy to predict because they are (obviously) the result of governments declaring war. Same thing for companies, even if a layoff is planned, no one knows exactly when it will happen, not even the people who planned it. It may be earlier than expected, or later, or not at all depending on the results, the whims of the market, the legal framework...
  - BenoitEssiambre 7y ago
    While it doesn't make things predictable unless you can predict central banker's whims, this is no conspiracy theory. It's a fairly accurate description of mainstream Keynesian macroeconomics. I might tone it down by saying bad recession happens when central banks accidentally overdo their inflation control but sometimes it doesn't seem so accidental, and more a question of incompetence. Like when central bankers refused to use negative interest rates even though the natural rate was clearly plunging into the negative. In 2009 their own Taylor rule models put the correct rate at negative 4% (https://www.brookings.edu/blog/ben-bernanke/2015/04/28/the-taylor-rule-a-benchmark-for-monetary-policy/ https://www.brookings.edu/blog/ben-bernanke/2015/04/28/the-t...). Central banks kept interest rates very high at zero.
- aguyfromnb 7y ago
  >intentionally triggered by central banks with the aim of controlling inflation by putting a lot of people out of work This is the top comment, while someone calling it a conspiracy theory is down-voted. That is sad. The Fed was founded in 1913. The US had recessions in 1785, 1789, 1796, 1802, 1807, 1812, 1815, 1822, 1825, 1828, 1833, 1836, 1839, 1845, 1847, 1853, 1857, 1860, 1865, 1869, 1873, 1882, 1887, 1890, 1893, 1902, 1907, 1910. Do you notice how frequent recessions were, pre-Fed? The average duration was also much longer. Blaming recessions on the Fed (who are trying to manipulate the business cycle) doesn't jibe with the data.
  - davidw 7y ago
    > This is the top comment, while someone calling it a conspiracy theory is down-voted. That is sad. Perhaps it's my perception, but I've noticed this more lately. I mean, there's always been a perception, for as long as I've been on this site that "things used to be better", so take that with a grain of salt, but objectively, if we don't have the "antibodies" in this community to reject obvious conspiracy theories like this... we're in a bad spot.
  - burlesona 7y ago
    Also note how few of those made any real impact on the people of the time or were noteworthy enough that the average person has heard of them. I think the current finance era may come to be viewed in the same light as the fire-fighting practices of the past century. Always working to prevent the little fires leaves the forest unhealthy and sets up an eventual inferno that no one can control.
    - aguyfromnb 7y ago
      >Also note how few of those made any real impact on the people of the time or were noteworthy enough that the average person has heard of them. Indeed. That's the norm with recessions. It just so happens that the last one, the one we all remember (2008) was...really bad. It will affect people's perceptions for the rest of their lives, much like the Great Depression.
  - hogFeast 7y ago
huffmsa 7y ago
What's in the author's portfolio will really tell you what they think about the next proximity of the next recession.
- strandedfoe 7y ago
  It’s amazing the amount of effort people are willing to convince themselves and others that the US Economy is failing when it’s the strongest in the world. When it affects themselves and their fellow Americans. Just because they hate the sitting president. So much that they are willing to delude themselves about the economy, fake impeachment, Evilness of china, Democrats with their 3 year prosecution that amounts to nothing, etc
  - Craighead 7y ago
    It's amazing the amount of people who forget the past, and are unable to read things like the Mueller report, or understand what quid pro quo means.
- AznHisoka 7y ago
  “Don’t tell me what you think. tell me what’s in your portfolio”
Gusen 7y ago
"Impeachment" Is A Diversion And Delay: President Donald J. Trump raped and killed 15 boys in Buffalo, New York on 10Jan2019. Complete and uncut audio of it all, along with Obama, Pelosi, & Schumer's direct involvement. 298+ boys die here during Jan 2019 from wealthy and high profile child rapists \\Full audio from 10th January 2019. Download the .mp3 file, put on headphones, and turn the volume all the way up.. 10JanCh3_1255 -1557.mp3 https://drive.google.com/file/d/18lTt_YKFEtsV6YDNzXFVQYLkStY-kSg2/view?usp=sharing https://drive.google.com/file/d/18lTt_YKFEtsV6YDNzXFVQYLkStY... \\Previously reported: This is audio of the President, Donald J. Trump, demanding a four billion dollar bribe from child rapists to “take a blind eye” on January 3rd, 2019. Trump becomes one on January 14th, 2019. Also, this is the big reason the major networks do not report any of it. (Media moguls are in on it also) //Download the video, turn the volume all the way up and put head phones on. Note: there is not much to see in the video, the audio is picked up from another [illegal surveillance] system. Trump is on a call from with Henry Porter and Gigi Hadid. See page 63. Bribe demand at 10:18am: 3JanCh3_900 -1100.avi https://drive.google.com/file/d/1Grdr8xF2psKNsuYlEnl9dIRV-77YG0Vr/view?usp=sharing https://drive.google.com/file/d/1Grdr8xF2psKNsuYlEnl9dIRV-77... //President of the United States, Donald Trump, rapes and kills his first boy at 6:32am. Video link below: 14JanCh3_600avi https://drive.google.com/file/d/154QvA5hwyHGYIVXtod1ZbsOHFUJNbqZW/view?usp=sharing https://drive.google.com/file/d/154QvA5hwyHGYIVXtod1ZbsOHFUJ... 14JanCh2_600 -700.avi https://drive.google.com/file/d/19UkqmnMwZiWy7xxWngltqwoKLTJL-IZ_/view?usp=sharing https://drive.google.com/file/d/19UkqmnMwZiWy7xxWngltqwoKLTJ... //On January 18th, 2019 at 8:31am (see page 8) Trump acknowledges the FOUR billion dollar bribe and says: "Let's get it done and get to fucking some kids." Video link below: 18JanCh3_725-.avi https://drive.google.com/file/d/1bVTcGq5Z9oOSAiOQcKYrmuK4TwoNmY1h/view?usp=sharing https://drive.google.com/file/d/1bVTcGq5Z9oOSAiOQcKYrmuK4Two... //The major reason this has not been reported by the major news networks is right here. Lester Holt of NBC Nightly News, apparently a member of the Illuminati since the 80's, along with ABC Nightly News lead anchor David Muir, stop over to the Porter studio in Buffalo, NY on January 14th, 2019 at 5:00 am. They both rape and kill about two dozen boys by 6:00 am. David Muir starts around 5:12 am, then Holt about 5:36 am. Multi-billionaire Rupert Murdoch, owner of News Corp & Fox Corporation, takes his turn after Holt. Video links below: 14JanCh3_500- 601.avi https://drive.google.com/file/d/1i7NKepeyG_FfdQRrM7KsnFOZOOX3o7UL/view?usp=sharing https://drive.google.com/file/d/1i7NKepeyG_FfdQRrM7KsnFOZOOX... 14JanCh2_530 -600.avi https://drive.google.com/file/d/1NZzgN5ilI7ToroU5cfqMaL4o2u1RwidV/view?usp=sharing https://drive.google.com/file/d/1NZzgN5ilI7ToroU5cfqMaL4o2u1... \\Adding to the (media protection) reason this is not picked up by the media, CBS and Viacom owner Sumner Redstone and Leslie Moonves rape and kill several boys following the President. 14JanCh3_700.avi https://drive.google.com/file/d/10XDw6x3ldnnQiq7oIjpdYVENyXaB4aI0/view?usp=sharing https://drive.google.com/file/d/10XDw6x3ldnnQiq7oIjpdYVENyXa... 14JanCh2_700- 800.avi https://drive.google.com/file/d/1NS_e6AzEZ05wnfljkGMETGU5CWYKfRDp/view?usp=sharing https://drive.google.com/file/d/1NS_e6AzEZ05wnfljkGMETGU5CWY... //Full 97 page PDF [updated 22nd Nov'19]: FBI_FinalDraft_26Jul2019_BSchlenker.pdf https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJc9cGk/view?usp=sharing https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJ... \\This post will be censored when this account logs off, the posts are "shadow banned". They try to make it look like the post is live, but it is not. Here is an example. https://drive.google.com/file/d/1zxS8JESoIg7uxRkUgdptMsF6SuJedYKz/view?usp=sharing https://drive.google.com/file/d/1zxS8JESoIg7uxRkUgdptMsF6SuJ... \\@ Listen to Speaker of the House, Senator Nancy Pelosi, accept a THREE billion dollar bribe from wealthy high profile child rapists for safe passage to get Asian boys through the border at "Monterrey" on January 17, 2019. New York senator Chuck schumer rapes and kills a boy later that afternoon to secure his $2 billion dollar bribe. //Download the video, turn the volume all the way up and put head phones on. Note: there is not much to see in the video, the audio is picked up from another [illegal surveillance] system. Nancy Pelosi call starts at 10:31am. 17JanCh3_949 -1100.avi https://drive.google.com/file/d/1eodHu4o5Cm3xEWhDqipSuTj-M1CZUvmE/view?usp=sharing https://drive.google.com/file/d/1eodHu4o5Cm3xEWhDqipSuTj-M1C... 17JanCh4_1017 -1100.avi https://drive.google.com/file/d/1y-nWEQbempkVZSz230j9wTyduZNjDmnk/view?usp=sharing https://drive.google.com/file/d/1y-nWEQbempkVZSz230j9wTyduZN... Excerpts of the dialogue: \\Speaker of the House Nancy Pelosi returns to the Porter camera system at 1031 for a check-in. "Nancy Pelosi is here and she wants $3 billion to keep the border open at Monterrey. $3 billion dollars to keep that shit open do you believe that?" Matthew Porter commentates. Pelosi states 1034: "I think he [Brian Schlenker] needs to be removed. I think we need to get this guy out of here". Speaker Pelosi then agrees to call back at 7pm PST. Gigi Hadid at 1034: "Thanks for calling us. I've got you down for three minutes". Pelosi don't worry about that I've got 3 billion. 1031 Matthew Porter: Nancy Pelosi is on and she wants $3 billion dollars to keep the border open at Monterrey. Three billion dollars to keep that shit open do you believe that? 1033 Nancy Pelosi: I don't think that will be necessary unless you insist. 1033 Donald Reeves: We insist. 1033 Nancy Pelosi: Ok then I guess we have a deal. 1033 Matthew Porter: Thank you Mrs. Pelosi. 1033 Nancy Pelosi: Please call me Speaker Pelosi. 1033 Nancy Pelosi: We want to make sure you have safe passage at Monterey. 1033 Matthew Porter: We appreciate that Speaker Pelosi. 1033 Gigi Hadid: I think we may have to scale back a little bit though. 1033 Nancy Pelosi: Gigi I think we'll be just fine. 1035 Nancy Pelosi: God damn it! I want Kamala to get a billion out of yours, not out of mine. 1035 Gigi Hadid: I think we can accommodate you but we need to find out if Monterrey will be open on the 30th of January. 1036 Nancy Pelosi: Of course it will Gigi. 1036 Nancy Pelosi: $3 billion goes a long way Peter. 1036 Peter Thiel: Excellent answer. 1043 Gigi Hadid: I think we need to give Kamala a billion dollars to keep her [happy]. 1043 Matthew Porter: I think we can do that but we need to get her to do something first. 1043 Gigi Hadid: She did. We got her fucking Rahm Emmanuel Monday morning [14Jan] at 235. 1043 Matthew Porter: Perfect, then we're all set. Send her the billion. 1043? Nancy Pelosi: She'll accept the money, I guarantee it. 1043? Gigi Hadid: Nancy thank you for everything. <ch4> 1036 Donald Reeves: Don't listen to her. She will close down the border if it's not there. Make sure she gets the three billion. This is the tip of the iceberg. Full 97 page document [updated Nov 17th 2019]: FBI_FinalDraft_26Jul2019_BSchlenker.pdf https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJc9cGk/view?usp=sharing https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJ... //*This post will be censored when this account logs off. Posts are "shadow banned". They try to make it look like the post is live, but it is not. Here is an example. https://drive.google.com/file/d/1zxS8JESoIg7uxRkUgdptMsF6SuJedYKz/view?usp=sharing https://drive.google.com/file/d/1zxS8JESoIg7uxRkUgdptMsF6SuJ... \\$ \\New York Senator Charles Schumer rapes and kills one boy looking for his two billion dollar payment from 1700-1730. Schumer at 1701: "Let's get him out of there, and get to fucking some kids!” Download the video, turn the volume all the way up and put head phones on. Note: there is not much to see in the video, the audio is picked up from another [illegal surveillance] system. Just as a head’s up, there is a vacuum running intermittently in the beginning and some loud noises. \\Representative from New Orleans Steve Scalise rapes and kills three 17:25+. Video links below. Each channel has different system users of varying importance, and one may be easier to hear than another. This is explained in better detail in the PDF. 17JanCh3_1644.avi https://drive.google.com/file/d/1caUbmhIf8z264w1MWeOzm0VQIG_h3rtA/view?usp=sharing https://drive.google.com/file/d/1caUbmhIf8z264w1MWeOzm0VQIG_... 17JanCh4_1700-1800_redo.avi https://drive.google.com/file/d/1Md911Z2vXJzJEmNAiJcOkHDKIl15GUmz/view?usp=sharing https://drive.google.com/file/d/1Md911Z2vXJzJEmNAiJcOkHDKIl1... \\Back on January 13th, a deal to bring over the boys from North Korea & China, 300 boys for $375 million through “Monterrey”, is discussed with Barack Obama, Charles Schumer, Henry Porter, and Donald Reeves. Jack Dorsey is there and also discusses possibilities for 500 boys over 300. See pages 37 and 38. You will hear the deal go down later that afternoon between 1:30pm and 3:00pm. Here are the links for the first discussion, which begins around 8:40 with an anxious Barack Obama., the rest are in the PDF: 13JanCh2_700-900.avi https://drive.google.com/file/d/1iUr44-U3dpt0cBlhlOgM071HAtei-g6G/view?usp=sharing https://drive.google.com/file/d/1iUr44-U3dpt0cBlhlOgM071HAte... 13JanCh3_800-845.avi https://drive.google.com/file/d/1m3bBVPra2BEgzmM2QNJsR-JA7rw__oOW/view?usp=sharing https://drive.google.com/file/d/1m3bBVPra2BEgzmM2QNJsR-JA7rw... 13JanCh3_845-954.avi https://drive.google.com/file/d/1XFCDABfGb10oAwCLt7gc4XbsOMxgpKPT/view?usp=sharing https://drive.google.com/file/d/1XFCDABfGb10oAwCLt7gc4XbsOMx... \\Events were excerpts from this 101page PDF . It keeps getting censored, but with enough public awareness, they will eventually have to face justice. Please help get this around [updated 22Nov]: FBI_FinalDraft_26Jul2019_BSchlenker.pdf https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJc9cGk/view?usp=sharing https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJ...
NPMaxwell 7y ago
The 1929 crash and the 2008 crash that started the great recession were both caused by uncovering the bezzle. The "bezzle" is what Galbraith called fake monetary supply: money that doesn't exist because it has already been embezzled (but still shows up on accounting statements). Trump signaled that there would be very lax regulation, meaning "your bezzle is safe from us." The next crash will appear when major corporations believe that it is in their interest to lay off CEO's and take their big baths. That will be sometime when they are convinced that the next Executive Branch administration will be checking accounting statements.
- NPMaxwell 7y ago
  https://moneyfyi.wordpress.com/2013/11/15/5358/ https://moneyfyi.wordpress.com/2013/11/15/5358/ https://en.wikipedia.org/wiki/Big_bath https://en.wikipedia.org/wiki/Big_bath
- take_a_breath 7y ago
  If your hypothesis is correct, we have the signal: “A total of 1,160 CEOs in the US have left their jobs in the first nine months of 2019, according to data from recruitment firm Challenger, Gray, & Christmas. That’s up 13% from the same period in 2018, and the highest turnover at this point in the year since the company first began tracking CEO departures, in 2002.” https://qz.com/work/1727662/why-ceo-turnover-in-2019-is-at-a-record-high/ https://qz.com/work/1727662/why-ceo-turnover-in-2019-is-at-a...
  - NPMaxwell 7y ago
    Cool! I bet it needs to be fine-tuned: % of Fortune-50 companies with CEO departures and losses taken on financial statements > 5%. Or something like that.
perspective1 7y ago
There's so much effort put into timing the next recession. It's not just that they can't even do that with meaningful certainty-- it's that they also can't tell you how significant the recession will be. I mean, with full employment right now, of course a recession is on the horizon (who knows when). But, going from full employment to 1% less doesn't mean the economy or its people is even worse off than they were 2 years ago. Same thing with virtually any thing else that plugs into GDP.
- buboard 7y ago
  > There's so much effort Because there is nothing else to do? Whatever happens to the market it keeps going up. There is little reason to search for an upturn (and you don't want to jinx it), so they are searching for a downturn.
lordnacho 7y ago
I'm not gonna put out my own model, but this one seems strangely, suspiciously well fitted to the historical data. How can you have a model that gives a 100% chance of something happening in the future? Yet that's what it says during the last recession. And it falls off a cliff when the actual recession ended in June 2009. I was alive and trading during that time, and I reckon the business cycle would be quite easy to predict -as in, the model would be in a textbook- if you could be that confident of recession one day and the opposite the next.
- hogFeast 7y ago
  I think the 100% is when the data shows the recession is occurring i.e. if a recession is occurring now, then the chances of one occurring in the next 3 months are clearly 1 (I get your point however...it is odd). There are other factors in the model aside from the ones with charts. The model isn't in a textbook because predicting the economy is nothing to do with economics as it is taught at universities. Economists use complex structural models because they are fun to teach and create barriers to entry. This is why DSGE models are so popular in universities, govt, and central banks but barely used anywhere else. If you want to forecast the business cycle, you just need linear regression. You can't ever be 100% (unless a recession is already occurring) because the economy is always changing but basic models are pretty accurate (the BIS has done quite a bit on this recently - https://www.bis.org/publ/work818.htm https://www.bis.org/publ/work818.htm - funnily enough, the term spread isn't the be all...but economists have a big problem with including things like credit.
michalu 7y ago
During the height of the bitcoin bubble I had my gym coach leave job and become "crypto investor" ... Katy Perry changed her nails to each look like one of the popular coins. And yes I did have an uber driver talk to me about crypto. The mainstream media were shilling Ripple at its highest price ever. Today, all the same people talk about coming recession. I was lucky to have my first job in finance during the credit crunch crisis. Until it was over media we're adamant it's just a correction. We did not believe it either ... we all thought it's a good time to buy cheap before the next bull run. Only about 3 people actually predicted it (even though AFTER the recession media came up with a dozen people who claimed so - none of them ever made any bets on it) It's hard to imagine recession come when everyone expects it.
- all2 7y ago
  When the street gets out, it's time to get in.
  - throwawayhhakdl 7y ago
    When the street gets out a recession has started. Probably still a good time to get in, nonetheless
- isimluk 7y ago
  I agree with what You said. However, You can still have downward spiral even in case "everyone is talking/preparing for coming crisis". Imagine this: - China going finally bust - honkong peg to dolar broken (financial companies there going bust) - australia mining slowdown and property market bust - australia banking woes Even though there are money on the sidelines, you can have crisis and even more money on the sidelines during few fearful quarters.
  - thatiscool 7y ago
    in your pipe dream.
    - 7y ago
puranjay 7y ago
Around the last recession, I had this distinct feeling: that this exuberance is a little too irrational. The press was constantly talking about how great the economy was, and people I knew around me were splurging on things they could in no way afford. I used to trade domain names at that time, mostly to fund my college. Everyone in my industry was talking about how the value of certain domains will 10x in the next 5 years and other irrational projections. Maybe its that experience, but I've since maintained a personal theory that a serious recession hits when people least expect it. When there is too much easy credit in the system and business optimism isn't grounded in any fundamentals, that's when you should fear a recession. Not when everyone is telling you that a recession is just around the corner. Because then you're already more careful in your decision making Not sure how much of this is founded on economics of course
- cellular 7y ago
  Yeah I think that too. Everyone else too! No way a recession is coming!!! ... ... Opps : recession. ;-) it's a paradox
- samsonradu 7y ago
  This likely happens when the upcoming recession is brutal, which was the case in 2008. But if the recession is moderate it could be anticipated for. I also believe that a moderate recession every decade is healthy, cleaning up the economical landscape of unproductive investments.
chiefalchemist 7y ago
The issue I have with historic based models is that today's "global economy" is not enough like the past. If the USA goes into a recession, chances are that's - more and more - the reflection of some other economy(s). And of course, vice versa. The biggest impact on the econony - via the spending minds of the masses - is how the mainstream media plays the strenght of the economy in the context of the USA's 2020 election. The middle to the left will be pulling out the stops to look for bad Trump-sourced economic news. That could become self-fulfilling.
zeeone 7y ago
Most modern recessions are caused by investor fear and panic. In March 2020, if Elizabeth Warren gets the democratic nomination, you can expect a medium to deep recession caused by her high tax plan and business-hostile policies. You can gauge this by the high number of put option contracts with March expiration being purchased, compared to all other months.
- ced 7y ago
  Link?
  - formercoder 7y ago
    https://www.wsj.com/articles/bridgewater-bets-big-on-market-drop-11574418601 https://www.wsj.com/articles/bridgewater-bets-big-on-market-...
- beatgammit 7y ago
  Would that result in a spike if Trump looks like he'll win the general election?
  - zeeone 7y ago
    Yes. As it already did in 2016.
rayshan 7y ago
There's not enough discussion about the eventual recovery in all these recession articles. I was looking at the last 2008 recession and found some interesting gems. For example, if you bought AIG, one of the main causes of the financial crisis, you would've made out like a bandit during the recovery period. Definitely too big to fail. Here's all the data on how stocks performed during and after the last recession: https://shan.io/writing/learnings-from-the-2008-great-recession/ https://shan.io/writing/learnings-from-the-2008-great-recess...
Mikeb85 7y ago
Given how poorly most people are able to predict these things, I'm going to go out on a limb and say the next recession will happen when everyone is overly bullish on the economy. The amount of scepticism today combined with the actual economic data lead me to believe things will be OK for a while yet.
scyclow 7y ago
These metrics are totally meaningless. If some metric claims that there is a 50% chance of recession in the next 12 months, I'd expect it to be right roughly half the time it makes that confident a claim. Similarly, I'd expect a recession one third of the time that the metric says 33%. The year leading into the Great Recession was mostly around 36%. One year before the 2001 recession it was 24%. And then we have spikes around > 40% in 1999, 2002, 2003, 2006, 2016, and 2018, none of which "paid off". So how are we supposed to interpret these numbers? That a 40% chance of a recession has a 15% chance of actually predicting a recession?
- throwawaymath 7y ago
  > If some metric claims that there is a 50% chance of recession in the next 12 months, I'd expect it to be right roughly half the time it makes that confident a claim. Similarly, I'd expect a recession one third of the time that the metric says 33%. What if the forecast is Bayesian rather than frequentist?
  - scyclow 7y ago
    It's fine if the underlying model is Bayensian, but if you're going to present a time series graph then those past numbers don't mean a whole lot. Why not adjust the past data to be frequentist at that point?
arminiusreturns 7y ago
I don't think it is as near or going to be as bad as some people think, but with caveats. Listening to the guy who the big short was based on now, my main takeaway is that the banks deleveraged significantly since 07/08, down to ~11 vs ~30 then. Of course, part of the problem is they were using financial tricks to cover up bad assets... so I think they might be more leveraged than they are letting on. Second, the legislation afterwards only really did one thing: make the "fix", aka fed bailout, automatic. This means there should be less time between drop and recovery. At the same time, it creates incentive for bankers to be more reckless. Politically, midterms are always about the economy at heart. If Trump is serving Wall Street well enough they will try to keep him propped up for 2020, and would probably try to delay the big dip till either right after or till 2023/24. https://econbrowser.com/archives/2019/06/recession-anxieties-june-2019 https://econbrowser.com/archives/2019/06/recession-anxieties... https://www.investmentwatchblog.com/rosenberg-on-lagged-effects-of-fed-tightening-corporate-deleveraging/ https://www.investmentwatchblog.com/rosenberg-on-lagged-effe...
sprash 7y ago
Every crisis since 1929 has been manufactured. Just look at what the central bank(s) are doing and you get reliable results. The current monetary system creates money in form of debt with interest which can only be paid by issuing even more debt. As soon as the central banks pull the plug on liquidity (either by raising rates or fixing the balance sheet) you will have a cascade effect of bankruptcies which "clears out" all debt that could never be repaid in the first place. Right now the central banks are increasing liquidity around the globe again hence the low probability of a recession.
bollol 7y ago
There are so many tries to guess the exact date that somebody will hit the right day :D
thatiscool 7y ago
It’s during these times when the monetary liquidity and economic growth tide go out that we find, again, who has been swimming naked. The bubble will burst soon...
masonic 7y ago
Bloomberg has successfully predicted 17 of the last 3 recessions.

80 points by simonpure 7y ago

Most recessions are easy to predict because they’re intentionally triggered by central banks with the aim of controlling inflation by putting a lot of people out of work.

H8crilA 7y ago
Those are actually somewhat rare. US in the late 70s with Paul Volker and the famous British Pound short by Soros which interrupted the government chocking off the economy with high interest rates, broke the pound and saved the UK from a recession. Do you have more prominent examples? It's usually policy error in the other direction - keeping easy money for too long. I.e. you don't handle a catastrophe by fixing the down leg (that's emergency measures with bad side effects), you prevent the up leg. Alan Greenspan will be forever remembered and hated by some after his efforts to create the dotcom and the housing bubble.
- rapsey 7y ago
  The Japanese central bank single handedly caused the lost decade.
  - mcguire 7y ago
    Single handedly?
  - hogFeast 7y ago
    They didn't. That is a misconception borne out of reading our methods of economic policy onto a different context. The MoF, not the BoJ, controlled not only monetary policy but pretty much all aspects of the economy (they even directed lending by banks at the level of individual loans). This changed in the late 90s but through to the early 90s, it was all the MoF.
- surfmike 7y ago
  The policy error in 2008 was not enough easy money early enough. https://www.cato.org/sites/cato.org/files/serials/files/cato-journal/2019/5/cj-v39n2-12.pdf https://www.cato.org/sites/cato.org/files/serials/files/cato...
- hogFeast 7y ago
  It happened in 1958 (it may have been '56, my memory is poor), and 1920-1. In the case of the Fed, the last central banker to take this approach was Martin in the 1960s ("leaning against the wind")...and his legacy ended up being inflation. You are basically correct but these factors are essentially structural. For example: is the central bank independent from the govt? How much oversight is there over policy decisions? Etc. In the West, it has been politically impossible to actually do this. Your understanding of early 1990s Britain is not correct. The UK was forced to raise rates because of the ERM and rising inflation. The govt ran the BoE so it should be quite obvious that they had no desire to slow the economy down but were forced to do so.
  - H8crilA 7y ago
    They wanted high rates because ERM was the main policy goal of the prime minister. Super high rates were also choking the economy. It was a choice between ERM and easier recession, and the breakage of the pound forced them to no ERM and easier recession. The bundesbank was the one to put the final nail in the UK Euro coffin. Also, this is not about the FED being dependent or independent from the government. This is about the widespread idiocy of thinking that expensive assets = well-being of the country. Dotcom and 2008 (and today, but let's wait for it to burst first) are all FED's pedal-to-the-metal work.
    - hogFeast 7y ago
      > They wanted high rates because ERM was the main policy goal of the prime minister. Again: no they didn't. They didn't "want" high rates. You understand how dependent the Conservatives were on home owners and the structure of UK mortgages? The reason ERM was the main policy goal of Major was inflation. The Bundesbank was the immediate cause but the reason they got into that position was inflation (if you read the research, even the die-hard Lawson fans believe that the ERM set the stage for the 1990s). Yes, the nature of the relationship between the central bank and the govt determines the response to those events. Do you realize that there have been substantial changes in this relationship since the Fed was created? The Fed is politically unable to respond. I don't understand the relevance of your point about expensive assets...that determines nothing, the market will go up and down regardless of anything.
madengr 7y ago
Then why not short sell stocks and become rich?
- abcpassword 7y ago
  Because it can’t actually be predicted or they would do just that.
- take_a_breath 7y ago
  Stocks aren’t necessarily an indicator of economic strength. The S&P 500 is in an earnings recession right now, but continues trading at all-time highs. The market can stay irrational longer than you can stay liquid.
  - tryptophan 7y ago
    This is not true. Sp500 earning are near ATH. https://www.multpl.com/s-p-500-earnings https://www.multpl.com/s-p-500-earnings
    - take_a_breath 7y ago
      Your chart is earnings per share, it’s also from June. That has increased because of all the stock buybacks following the new tax law. Total earnings are down. MarketWatch - https://www.marketwatch.com/story/the-sp-500-is-in-its-first-earnings-recession-in-three-years-2019-09-18 https://www.marketwatch.com/story/the-sp-500-is-in-its-first... CNBC - https://www.google.com/amp/s/www.cnbc.com/amp/2019/06/24/analysts-now-expect-the-earnings-recession-to-last-through-the-third-quarter.html https://www.google.com/amp/s/www.cnbc.com/amp/2019/06/24/ana...
ur-whale 7y ago
That sounds like a conspiracy theory. Also, I fail to see how this theory applies to the recession of '08.
- viburnum 7y ago
  I said most. Occasionally there are bank crises (like in 2008). This isn’t a big secret, it’s right there in FOMC meeting notes. Google Greenspan and punch bowl. Google Kalecki and politic aspects of full employment.
GuB-42 7y ago
Conspiracy aside, that doesn't make it easy to predict. It is like saying that wars are easy to predict because they are (obviously) the result of governments declaring war. Same thing for companies, even if a layoff is planned, no one knows exactly when it will happen, not even the people who planned it. It may be earlier than expected, or later, or not at all depending on the results, the whims of the market, the legal framework...
- BenoitEssiambre 7y ago
  While it doesn't make things predictable unless you can predict central banker's whims, this is no conspiracy theory. It's a fairly accurate description of mainstream Keynesian macroeconomics. I might tone it down by saying bad recession happens when central banks accidentally overdo their inflation control but sometimes it doesn't seem so accidental, and more a question of incompetence. Like when central bankers refused to use negative interest rates even though the natural rate was clearly plunging into the negative. In 2009 their own Taylor rule models put the correct rate at negative 4% (https://www.brookings.edu/blog/ben-bernanke/2015/04/28/the-taylor-rule-a-benchmark-for-monetary-policy/ https://www.brookings.edu/blog/ben-bernanke/2015/04/28/the-t...). Central banks kept interest rates very high at zero.
aguyfromnb 7y ago
>intentionally triggered by central banks with the aim of controlling inflation by putting a lot of people out of work This is the top comment, while someone calling it a conspiracy theory is down-voted. That is sad. The Fed was founded in 1913. The US had recessions in 1785, 1789, 1796, 1802, 1807, 1812, 1815, 1822, 1825, 1828, 1833, 1836, 1839, 1845, 1847, 1853, 1857, 1860, 1865, 1869, 1873, 1882, 1887, 1890, 1893, 1902, 1907, 1910. Do you notice how frequent recessions were, pre-Fed? The average duration was also much longer. Blaming recessions on the Fed (who are trying to manipulate the business cycle) doesn't jibe with the data.
- davidw 7y ago
  > This is the top comment, while someone calling it a conspiracy theory is down-voted. That is sad. Perhaps it's my perception, but I've noticed this more lately. I mean, there's always been a perception, for as long as I've been on this site that "things used to be better", so take that with a grain of salt, but objectively, if we don't have the "antibodies" in this community to reject obvious conspiracy theories like this... we're in a bad spot.
- burlesona 7y ago
  Also note how few of those made any real impact on the people of the time or were noteworthy enough that the average person has heard of them. I think the current finance era may come to be viewed in the same light as the fire-fighting practices of the past century. Always working to prevent the little fires leaves the forest unhealthy and sets up an eventual inferno that no one can control.
  - aguyfromnb 7y ago
    >Also note how few of those made any real impact on the people of the time or were noteworthy enough that the average person has heard of them. Indeed. That's the norm with recessions. It just so happens that the last one, the one we all remember (2008) was...really bad. It will affect people's perceptions for the rest of their lives, much like the Great Depression.
- hogFeast 7y ago

huffmsa 7y ago

What's in the author's portfolio will really tell you what they think about the next proximity of the next recession.

strandedfoe 7y ago
It’s amazing the amount of effort people are willing to convince themselves and others that the US Economy is failing when it’s the strongest in the world. When it affects themselves and their fellow Americans. Just because they hate the sitting president. So much that they are willing to delude themselves about the economy, fake impeachment, Evilness of china, Democrats with their 3 year prosecution that amounts to nothing, etc
- Craighead 7y ago
  It's amazing the amount of people who forget the past, and are unable to read things like the Mueller report, or understand what quid pro quo means.
AznHisoka 7y ago
“Don’t tell me what you think. tell me what’s in your portfolio”

Gusen 7y ago

"Impeachment" Is A Diversion And Delay: President Donald J. Trump raped and killed 15 boys in Buffalo, New York on 10Jan2019. Complete and uncut audio of it all, along with Obama, Pelosi, & Schumer's direct involvement. 298+ boys die here during Jan 2019 from wealthy and high profile child rapists \\Full audio from 10th January 2019. Download the .mp3 file, put on headphones, and turn the volume all the way up.. 10JanCh3_1255 -1557.mp3 https://drive.google.com/file/d/18lTt_YKFEtsV6YDNzXFVQYLkStY-kSg2/view?usp=sharing https://drive.google.com/file/d/18lTt_YKFEtsV6YDNzXFVQYLkStY... \\Previously reported: This is audio of the President, Donald J. Trump, demanding a four billion dollar bribe from child rapists to “take a blind eye” on January 3rd, 2019. Trump becomes one on January 14th, 2019. Also, this is the big reason the major networks do not report any of it. (Media moguls are in on it also) //Download the video, turn the volume all the way up and put head phones on. Note: there is not much to see in the video, the audio is picked up from another [illegal surveillance] system. Trump is on a call from with Henry Porter and Gigi Hadid. See page 63. Bribe demand at 10:18am: 3JanCh3_900 -1100.avi https://drive.google.com/file/d/1Grdr8xF2psKNsuYlEnl9dIRV-77YG0Vr/view?usp=sharing https://drive.google.com/file/d/1Grdr8xF2psKNsuYlEnl9dIRV-77... //President of the United States, Donald Trump, rapes and kills his first boy at 6:32am. Video link below: 14JanCh3_600avi https://drive.google.com/file/d/154QvA5hwyHGYIVXtod1ZbsOHFUJNbqZW/view?usp=sharing https://drive.google.com/file/d/154QvA5hwyHGYIVXtod1ZbsOHFUJ... 14JanCh2_600 -700.avi https://drive.google.com/file/d/19UkqmnMwZiWy7xxWngltqwoKLTJL-IZ_/view?usp=sharing https://drive.google.com/file/d/19UkqmnMwZiWy7xxWngltqwoKLTJ... //On January 18th, 2019 at 8:31am (see page 8) Trump acknowledges the FOUR billion dollar bribe and says: "Let's get it done and get to fucking some kids." Video link below: 18JanCh3_725-.avi https://drive.google.com/file/d/1bVTcGq5Z9oOSAiOQcKYrmuK4TwoNmY1h/view?usp=sharing https://drive.google.com/file/d/1bVTcGq5Z9oOSAiOQcKYrmuK4Two... //The major reason this has not been reported by the major news networks is right here. Lester Holt of NBC Nightly News, apparently a member of the Illuminati since the 80's, along with ABC Nightly News lead anchor David Muir, stop over to the Porter studio in Buffalo, NY on January 14th, 2019 at 5:00 am. They both rape and kill about two dozen boys by 6:00 am. David Muir starts around 5:12 am, then Holt about 5:36 am. Multi-billionaire Rupert Murdoch, owner of News Corp & Fox Corporation, takes his turn after Holt. Video links below: 14JanCh3_500- 601.avi https://drive.google.com/file/d/1i7NKepeyG_FfdQRrM7KsnFOZOOX3o7UL/view?usp=sharing https://drive.google.com/file/d/1i7NKepeyG_FfdQRrM7KsnFOZOOX... 14JanCh2_530 -600.avi https://drive.google.com/file/d/1NZzgN5ilI7ToroU5cfqMaL4o2u1RwidV/view?usp=sharing https://drive.google.com/file/d/1NZzgN5ilI7ToroU5cfqMaL4o2u1... \\Adding to the (media protection) reason this is not picked up by the media, CBS and Viacom owner Sumner Redstone and Leslie Moonves rape and kill several boys following the President. 14JanCh3_700.avi https://drive.google.com/file/d/10XDw6x3ldnnQiq7oIjpdYVENyXaB4aI0/view?usp=sharing https://drive.google.com/file/d/10XDw6x3ldnnQiq7oIjpdYVENyXa... 14JanCh2_700- 800.avi https://drive.google.com/file/d/1NS_e6AzEZ05wnfljkGMETGU5CWYKfRDp/view?usp=sharing https://drive.google.com/file/d/1NS_e6AzEZ05wnfljkGMETGU5CWY... //Full 97 page PDF [updated 22nd Nov'19]: FBI_FinalDraft_26Jul2019_BSchlenker.pdf https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJc9cGk/view?usp=sharing https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJ... \\This post will be censored when this account logs off, the posts are "shadow banned". They try to make it look like the post is live, but it is not. Here is an example. https://drive.google.com/file/d/1zxS8JESoIg7uxRkUgdptMsF6SuJedYKz/view?usp=sharing https://drive.google.com/file/d/1zxS8JESoIg7uxRkUgdptMsF6SuJ... \\@ Listen to Speaker of the House, Senator Nancy Pelosi, accept a THREE billion dollar bribe from wealthy high profile child rapists for safe passage to get Asian boys through the border at "Monterrey" on January 17, 2019. New York senator Chuck schumer rapes and kills a boy later that afternoon to secure his $2 billion dollar bribe. //Download the video, turn the volume all the way up and put head phones on. Note: there is not much to see in the video, the audio is picked up from another [illegal surveillance] system. Nancy Pelosi call starts at 10:31am. 17JanCh3_949 -1100.avi https://drive.google.com/file/d/1eodHu4o5Cm3xEWhDqipSuTj-M1CZUvmE/view?usp=sharing https://drive.google.com/file/d/1eodHu4o5Cm3xEWhDqipSuTj-M1C... 17JanCh4_1017 -1100.avi https://drive.google.com/file/d/1y-nWEQbempkVZSz230j9wTyduZNjDmnk/view?usp=sharing https://drive.google.com/file/d/1y-nWEQbempkVZSz230j9wTyduZN... Excerpts of the dialogue: \\Speaker of the House Nancy Pelosi returns to the Porter camera system at 1031 for a check-in. "Nancy Pelosi is here and she wants $3 billion to keep the border open at Monterrey. $3 billion dollars to keep that shit open do you believe that?" Matthew Porter commentates. Pelosi states 1034: "I think he [Brian Schlenker] needs to be removed. I think we need to get this guy out of here". Speaker Pelosi then agrees to call back at 7pm PST. Gigi Hadid at 1034: "Thanks for calling us. I've got you down for three minutes". Pelosi don't worry about that I've got 3 billion. 1031 Matthew Porter: Nancy Pelosi is on and she wants $3 billion dollars to keep the border open at Monterrey. Three billion dollars to keep that shit open do you believe that? 1033 Nancy Pelosi: I don't think that will be necessary unless you insist. 1033 Donald Reeves: We insist. 1033 Nancy Pelosi: Ok then I guess we have a deal. 1033 Matthew Porter: Thank you Mrs. Pelosi. 1033 Nancy Pelosi: Please call me Speaker Pelosi. 1033 Nancy Pelosi: We want to make sure you have safe passage at Monterey. 1033 Matthew Porter: We appreciate that Speaker Pelosi. 1033 Gigi Hadid: I think we may have to scale back a little bit though. 1033 Nancy Pelosi: Gigi I think we'll be just fine. 1035 Nancy Pelosi: God damn it! I want Kamala to get a billion out of yours, not out of mine. 1035 Gigi Hadid: I think we can accommodate you but we need to find out if Monterrey will be open on the 30th of January. 1036 Nancy Pelosi: Of course it will Gigi. 1036 Nancy Pelosi: $3 billion goes a long way Peter. 1036 Peter Thiel: Excellent answer. 1043 Gigi Hadid: I think we need to give Kamala a billion dollars to keep her [happy]. 1043 Matthew Porter: I think we can do that but we need to get her to do something first. 1043 Gigi Hadid: She did. We got her fucking Rahm Emmanuel Monday morning [14Jan] at 235. 1043 Matthew Porter: Perfect, then we're all set. Send her the billion. 1043? Nancy Pelosi: She'll accept the money, I guarantee it. 1043? Gigi Hadid: Nancy thank you for everything. <ch4> 1036 Donald Reeves: Don't listen to her. She will close down the border if it's not there. Make sure she gets the three billion. This is the tip of the iceberg. Full 97 page document [updated Nov 17th 2019]: FBI_FinalDraft_26Jul2019_BSchlenker.pdf https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJc9cGk/view?usp=sharing https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJ... //*This post will be censored when this account logs off. Posts are "shadow banned". They try to make it look like the post is live, but it is not. Here is an example. https://drive.google.com/file/d/1zxS8JESoIg7uxRkUgdptMsF6SuJedYKz/view?usp=sharing https://drive.google.com/file/d/1zxS8JESoIg7uxRkUgdptMsF6SuJ... \\$ \\New York Senator Charles Schumer rapes and kills one boy looking for his two billion dollar payment from 1700-1730. Schumer at 1701: "Let's get him out of there, and get to fucking some kids!” Download the video, turn the volume all the way up and put head phones on. Note: there is not much to see in the video, the audio is picked up from another [illegal surveillance] system. Just as a head’s up, there is a vacuum running intermittently in the beginning and some loud noises. \\Representative from New Orleans Steve Scalise rapes and kills three 17:25+. Video links below. Each channel has different system users of varying importance, and one may be easier to hear than another. This is explained in better detail in the PDF. 17JanCh3_1644.avi https://drive.google.com/file/d/1caUbmhIf8z264w1MWeOzm0VQIG_h3rtA/view?usp=sharing https://drive.google.com/file/d/1caUbmhIf8z264w1MWeOzm0VQIG_... 17JanCh4_1700-1800_redo.avi https://drive.google.com/file/d/1Md911Z2vXJzJEmNAiJcOkHDKIl15GUmz/view?usp=sharing https://drive.google.com/file/d/1Md911Z2vXJzJEmNAiJcOkHDKIl1... \\Back on January 13th, a deal to bring over the boys from North Korea & China, 300 boys for $375 million through “Monterrey”, is discussed with Barack Obama, Charles Schumer, Henry Porter, and Donald Reeves. Jack Dorsey is there and also discusses possibilities for 500 boys over 300. See pages 37 and 38. You will hear the deal go down later that afternoon between 1:30pm and 3:00pm. Here are the links for the first discussion, which begins around 8:40 with an anxious Barack Obama., the rest are in the PDF: 13JanCh2_700-900.avi https://drive.google.com/file/d/1iUr44-U3dpt0cBlhlOgM071HAtei-g6G/view?usp=sharing https://drive.google.com/file/d/1iUr44-U3dpt0cBlhlOgM071HAte... 13JanCh3_800-845.avi https://drive.google.com/file/d/1m3bBVPra2BEgzmM2QNJsR-JA7rw__oOW/view?usp=sharing https://drive.google.com/file/d/1m3bBVPra2BEgzmM2QNJsR-JA7rw... 13JanCh3_845-954.avi https://drive.google.com/file/d/1XFCDABfGb10oAwCLt7gc4XbsOMxgpKPT/view?usp=sharing https://drive.google.com/file/d/1XFCDABfGb10oAwCLt7gc4XbsOMx... \\Events were excerpts from this 101page PDF . It keeps getting censored, but with enough public awareness, they will eventually have to face justice. Please help get this around [updated 22Nov]: FBI_FinalDraft_26Jul2019_BSchlenker.pdf https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJc9cGk/view?usp=sharing https://drive.google.com/file/d/1Sj9EN_pHmicKS6rFQlmk67knMdJ...

NPMaxwell 7y ago

The 1929 crash and the 2008 crash that started the great recession were both caused by uncovering the bezzle. The "bezzle" is what Galbraith called fake monetary supply: money that doesn't exist because it has already been embezzled (but still shows up on accounting statements). Trump signaled that there would be very lax regulation, meaning "your bezzle is safe from us." The next crash will appear when major corporations believe that it is in their interest to lay off CEO's and take their big baths. That will be sometime when they are convinced that the next Executive Branch administration will be checking accounting statements.

NPMaxwell 7y ago
https://moneyfyi.wordpress.com/2013/11/15/5358/ https://moneyfyi.wordpress.com/2013/11/15/5358/ https://en.wikipedia.org/wiki/Big_bath https://en.wikipedia.org/wiki/Big_bath
take_a_breath 7y ago
If your hypothesis is correct, we have the signal: “A total of 1,160 CEOs in the US have left their jobs in the first nine months of 2019, according to data from recruitment firm Challenger, Gray, & Christmas. That’s up 13% from the same period in 2018, and the highest turnover at this point in the year since the company first began tracking CEO departures, in 2002.” https://qz.com/work/1727662/why-ceo-turnover-in-2019-is-at-a-record-high/ https://qz.com/work/1727662/why-ceo-turnover-in-2019-is-at-a...
- NPMaxwell 7y ago
  Cool! I bet it needs to be fine-tuned: % of Fortune-50 companies with CEO departures and losses taken on financial statements > 5%. Or something like that.

perspective1 7y ago

There's so much effort put into timing the next recession. It's not just that they can't even do that with meaningful certainty-- it's that they also can't tell you how significant the recession will be. I mean, with full employment right now, of course a recession is on the horizon (who knows when). But, going from full employment to 1% less doesn't mean the economy or its people is even worse off than they were 2 years ago. Same thing with virtually any thing else that plugs into GDP.

buboard 7y ago
> There's so much effort Because there is nothing else to do? Whatever happens to the market it keeps going up. There is little reason to search for an upturn (and you don't want to jinx it), so they are searching for a downturn.

lordnacho 7y ago

I'm not gonna put out my own model, but this one seems strangely, suspiciously well fitted to the historical data. How can you have a model that gives a 100% chance of something happening in the future? Yet that's what it says during the last recession. And it falls off a cliff when the actual recession ended in June 2009. I was alive and trading during that time, and I reckon the business cycle would be quite easy to predict -as in, the model would be in a textbook- if you could be that confident of recession one day and the opposite the next.

hogFeast 7y ago
I think the 100% is when the data shows the recession is occurring i.e. if a recession is occurring now, then the chances of one occurring in the next 3 months are clearly 1 (I get your point however...it is odd). There are other factors in the model aside from the ones with charts. The model isn't in a textbook because predicting the economy is nothing to do with economics as it is taught at universities. Economists use complex structural models because they are fun to teach and create barriers to entry. This is why DSGE models are so popular in universities, govt, and central banks but barely used anywhere else. If you want to forecast the business cycle, you just need linear regression. You can't ever be 100% (unless a recession is already occurring) because the economy is always changing but basic models are pretty accurate (the BIS has done quite a bit on this recently - https://www.bis.org/publ/work818.htm https://www.bis.org/publ/work818.htm - funnily enough, the term spread isn't the be all...but economists have a big problem with including things like credit.

michalu 7y ago

During the height of the bitcoin bubble I had my gym coach leave job and become "crypto investor" ... Katy Perry changed her nails to each look like one of the popular coins. And yes I did have an uber driver talk to me about crypto. The mainstream media were shilling Ripple at its highest price ever. Today, all the same people talk about coming recession. I was lucky to have my first job in finance during the credit crunch crisis. Until it was over media we're adamant it's just a correction. We did not believe it either ... we all thought it's a good time to buy cheap before the next bull run. Only about 3 people actually predicted it (even though AFTER the recession media came up with a dozen people who claimed so - none of them ever made any bets on it) It's hard to imagine recession come when everyone expects it.

all2 7y ago
When the street gets out, it's time to get in.
- throwawayhhakdl 7y ago
  When the street gets out a recession has started. Probably still a good time to get in, nonetheless
isimluk 7y ago
I agree with what You said. However, You can still have downward spiral even in case "everyone is talking/preparing for coming crisis". Imagine this: - China going finally bust - honkong peg to dolar broken (financial companies there going bust) - australia mining slowdown and property market bust - australia banking woes Even though there are money on the sidelines, you can have crisis and even more money on the sidelines during few fearful quarters.
- thatiscool 7y ago
  in your pipe dream.
  - 7y ago

puranjay 7y ago

Around the last recession, I had this distinct feeling: that this exuberance is a little too irrational. The press was constantly talking about how great the economy was, and people I knew around me were splurging on things they could in no way afford. I used to trade domain names at that time, mostly to fund my college. Everyone in my industry was talking about how the value of certain domains will 10x in the next 5 years and other irrational projections. Maybe its that experience, but I've since maintained a personal theory that a serious recession hits when people least expect it. When there is too much easy credit in the system and business optimism isn't grounded in any fundamentals, that's when you should fear a recession. Not when everyone is telling you that a recession is just around the corner. Because then you're already more careful in your decision making Not sure how much of this is founded on economics of course

cellular 7y ago
Yeah I think that too. Everyone else too! No way a recession is coming!!! ... ... Opps : recession. ;-) it's a paradox
samsonradu 7y ago
This likely happens when the upcoming recession is brutal, which was the case in 2008. But if the recession is moderate it could be anticipated for. I also believe that a moderate recession every decade is healthy, cleaning up the economical landscape of unproductive investments.

chiefalchemist 7y ago

The issue I have with historic based models is that today's "global economy" is not enough like the past. If the USA goes into a recession, chances are that's - more and more - the reflection of some other economy(s). And of course, vice versa. The biggest impact on the econony - via the spending minds of the masses - is how the mainstream media plays the strenght of the economy in the context of the USA's 2020 election. The middle to the left will be pulling out the stops to look for bad Trump-sourced economic news. That could become self-fulfilling.

zeeone 7y ago

Most modern recessions are caused by investor fear and panic. In March 2020, if Elizabeth Warren gets the democratic nomination, you can expect a medium to deep recession caused by her high tax plan and business-hostile policies. You can gauge this by the high number of put option contracts with March expiration being purchased, compared to all other months.

ced 7y ago
Link?
- formercoder 7y ago
  https://www.wsj.com/articles/bridgewater-bets-big-on-market-drop-11574418601 https://www.wsj.com/articles/bridgewater-bets-big-on-market-...
beatgammit 7y ago
Would that result in a spike if Trump looks like he'll win the general election?
- zeeone 7y ago
  Yes. As it already did in 2016.

rayshan 7y ago

There's not enough discussion about the eventual recovery in all these recession articles. I was looking at the last 2008 recession and found some interesting gems. For example, if you bought AIG, one of the main causes of the financial crisis, you would've made out like a bandit during the recovery period. Definitely too big to fail. Here's all the data on how stocks performed during and after the last recession: https://shan.io/writing/learnings-from-the-2008-great-recession/ https://shan.io/writing/learnings-from-the-2008-great-recess...

Mikeb85 7y ago

Given how poorly most people are able to predict these things, I'm going to go out on a limb and say the next recession will happen when everyone is overly bullish on the economy. The amount of scepticism today combined with the actual economic data lead me to believe things will be OK for a while yet.

scyclow 7y ago

These metrics are totally meaningless. If some metric claims that there is a 50% chance of recession in the next 12 months, I'd expect it to be right roughly half the time it makes that confident a claim. Similarly, I'd expect a recession one third of the time that the metric says 33%. The year leading into the Great Recession was mostly around 36%. One year before the 2001 recession it was 24%. And then we have spikes around > 40% in 1999, 2002, 2003, 2006, 2016, and 2018, none of which "paid off". So how are we supposed to interpret these numbers? That a 40% chance of a recession has a 15% chance of actually predicting a recession?

throwawaymath 7y ago
> If some metric claims that there is a 50% chance of recession in the next 12 months, I'd expect it to be right roughly half the time it makes that confident a claim. Similarly, I'd expect a recession one third of the time that the metric says 33%. What if the forecast is Bayesian rather than frequentist?
- scyclow 7y ago
  It's fine if the underlying model is Bayensian, but if you're going to present a time series graph then those past numbers don't mean a whole lot. Why not adjust the past data to be frequentist at that point?

arminiusreturns 7y ago

I don't think it is as near or going to be as bad as some people think, but with caveats. Listening to the guy who the big short was based on now, my main takeaway is that the banks deleveraged significantly since 07/08, down to ~11 vs ~30 then. Of course, part of the problem is they were using financial tricks to cover up bad assets... so I think they might be more leveraged than they are letting on. Second, the legislation afterwards only really did one thing: make the "fix", aka fed bailout, automatic. This means there should be less time between drop and recovery. At the same time, it creates incentive for bankers to be more reckless. Politically, midterms are always about the economy at heart. If Trump is serving Wall Street well enough they will try to keep him propped up for 2020, and would probably try to delay the big dip till either right after or till 2023/24. https://econbrowser.com/archives/2019/06/recession-anxieties-june-2019 https://econbrowser.com/archives/2019/06/recession-anxieties... https://www.investmentwatchblog.com/rosenberg-on-lagged-effects-of-fed-tightening-corporate-deleveraging/ https://www.investmentwatchblog.com/rosenberg-on-lagged-effe...

sprash 7y ago

Every crisis since 1929 has been manufactured. Just look at what the central bank(s) are doing and you get reliable results. The current monetary system creates money in form of debt with interest which can only be paid by issuing even more debt. As soon as the central banks pull the plug on liquidity (either by raising rates or fixing the balance sheet) you will have a cascade effect of bankruptcies which "clears out" all debt that could never be repaid in the first place. Right now the central banks are increasing liquidity around the globe again hence the low probability of a recession.

bollol 7y ago

There are so many tries to guess the exact date that somebody will hit the right day :D

thatiscool 7y ago

It’s during these times when the monetary liquidity and economic growth tide go out that we find, again, who has been swimming naked. The bubble will burst soon...

masonic 7y ago

Bloomberg has successfully predicted 17 of the last 3 recessions.