8 ms·

'The worst is yet to come' for the global economy, IMF warns

52 points by yi_xuan 4y ago

encryptluks2 4y ago
I don't think there is anything wrong with the economy per se, just that there are things wrong with people and the things people do for it. The economy is mostly imaginary... So many jobs and companies basically doing useless tasks in order to try to make more money but their products and contributions a negative to equality and a balanced society. If we could somehow actually shift the focus to making sure basic needs are met first, like all basic needs, then I don't think the economy would be seen as something to discuss.
- 2MuchMoney 4y ago
- lumost 4y ago
  These are coupled. Historically, it's been impossible to differentiate "productive" and "un-productive" labor over prolonged periods. The artist makes people happy, those people are then more motivated to work, innovate, or both. The banker helps ensure that prices are roughly accurate throughout the economy. The grant writer at a non-profit helps avoid externalities. Are these things out of whack right now? probably, but that doesn't mean the economy is imaginary.
  - mikewarot 4y ago
    >Historically, it's been impossible to differentiate "productive" and "un-productive" labor over prolonged periods. Not true, either you helped in the production of sufficient food to allow a surplus, and thus enabled specialization of labor, or you didn't. It is only the addition of billions of "virtual laborers" fuel by underpriced energy in the form of stored ancient sunlight that the labor market became so distorted. The past 200 years have been the anomaly, not the norm. The pulse of underpriced energy is coming to an end.
    - deleted 4y ago
      [deleted]
- StanislavPetrov 4y ago
  >The economy is mostly imaginary... Unfortunately this is also true about the "assets" that reflect retirement accounts, pension funds, bonds and savings of all kinds. These are basically promissory notes to be paid by the future productivity of the "economy". If the economy doesn't grow, or if contracts, these promissory notes cannot be repaid which either means defaulting or printing money (hyperinflation). Either way, all kinds of people with "savings" and paper assets (which many depend on to survive and/or hope to use to retire some day) will be wiped out. >If we could somehow actually shift the focus to making sure basic needs are met first, like all basic needs, then I don't think the economy would be seen as something to discuss. The above is why it isn't as simple as just figuring out what people need today and shifting production around to take care of basic needs, unless you plan on zeroing out all debts, savings and paper assets (which won't be popular with people who have savings and paper assets). If the system is teetering on the edge of total collapse, however, this might be unavoidable (some might even call it "the great reset").
- imtringued 4y ago
  Introduce negative interest rates on cash.
pcurve 4y ago
Good news is, IMF has a really lousy record of forecasting recession. https://www.ft.com/content/60581224-3335-11e8-b5bf-23cb17fd1498 https://www.ft.com/content/60581224-3335-11e8-b5bf-23cb17fd1... Bad news is, they always underestimated the recession.
behnamoh 4y ago
Correction: The worst outcome for ordinary folks, not the wealthy. I don't make 6 figures but I would imagine just earning that money boosts the confidence that "I can create value despite the economy". Your world view just changes the moment you make more than you will ever need. Your concerns would also be different. Right now I must be worried about my savings, rent, and TV news. At >$1M, I'd be worried about other "stuff". I've always thought that it's not like everyone who makes >$80K is ever going to use all that money. Much of it would be spent on kids' colleges (if any), and the rest of it allows you to retire >10 years before others. Idk what people do with the money.
- NoPicklez 4y ago
  I suppose it depends, even those on 80-100k would still be living somewhat frivolously. Perhaps they use the money for kids colleges, paying off mortgages sooner, paying off car loans, paying of student debts entirely, perhaps even going on a holiday. Reducing financial stress would be the main target. Also there's being able to retire >10 before others, or also being able to retire when others do but with more in the tank. Above that any additional money allows people to again, pay things off sooner or increase their lifestyle. More holidays, latest gadgets, multiple cars, holidays etc.
- anm89 4y ago
  None of this is particularly great for the wealthy. They disproportionately own the assets that are tanking in value. From a quantitative (not qualitative), relative basis and absolute basis, this is worse for the wealthy then for the poor
  - imtringued 4y ago
    >They disproportionately own the assets that are tanking in value You don't seem to understand how this game is played. You keep 10% of your portfolio as liquid money or near liquid assets. This means a rise in asset values increases your dry powder. But since dry powder doesn't go down in value as fast as other assets, you get to buy all the distressed assets on during the fire sale. That is the essence of speculation. If a 4% mortgage crashes housing prices, your money goes that much further, but you only benefit from the crash if you have enough money to buy the home outright. If you must borrow part of the money, then you must pay interest which means you aren't getting a discount on the house, you're paying the same monthly payment but some of it is going to the bank.
pagthem 4y ago
I know many who are just hoping for a recession for prices (especially real estate) to come down.
- Cymrukicks 4y ago
  I just don't see it happening, The UK housing market has all the coming issues which have been spoken about but no single politician came out and said the truth. One of the biggest issues people are going to suffer with their mortgages is house prices are insanely high. During the pandemic they went up nationally around 17% thats a bubble you're going to lose when the bubble bursts. If no one is willing to tell people the truth then I don't see how they can stabilise properly.
  - mFixman 4y ago
    That's the exact reason why the housing bubble will never pop: the government will prop up the entire industry before having its voters lose money in their housing gambles. The BoE spent billions to support pension funds that made risky and ridiculous bets on bond markets, so there's no reason to not be as leveraged as you can in those areas.
- hericium 4y ago
  Skimpflation brings not the prices down, but quality.
- bsaul 4y ago
  in paris prices are not going down that much, they just stay the same. However if you adjust for the 2% inflation a month we're going through, then you can consider real estate prices are crashing.
- kioleanu 4y ago
  I’ve seen a really good summary for this situation and for people hoping that the recession will bring prices down: - house in 2021: 500k €, monthly mortgage 1500€ - same house in 2022: 450k €, monthly mortgage 2000€ It’s not seeing the forest for the trees.
watmough 4y ago
As usual the poorest will suffer worst. In people terms, and at the level of countries and continents. For those lucky enough to be within clinging reach of the lower middle class, efforts towards energy and food independence will reap huge rewards. Spain and Portugal could be taken as exemplars of embracing renewables. Even the UK, Australia and the Southern US have embraced solar and wind. The poorest, thinking of Africa, India, Pakistan, Sri Lanka will continue to, and escalate in suffering as energy pricing and climate chaos continue to steadily worsen.

52 points by yi_xuan 4y ago

I don't think there is anything wrong with the economy per se, just that there are things wrong with people and the things people do for it. The economy is mostly imaginary... So many jobs and companies basically doing useless tasks in order to try to make more money but their products and contributions a negative to equality and a balanced society. If we could somehow actually shift the focus to making sure basic needs are met first, like all basic needs, then I don't think the economy would be seen as something to discuss.

2MuchMoney 4y ago
lumost 4y ago
These are coupled. Historically, it's been impossible to differentiate "productive" and "un-productive" labor over prolonged periods. The artist makes people happy, those people are then more motivated to work, innovate, or both. The banker helps ensure that prices are roughly accurate throughout the economy. The grant writer at a non-profit helps avoid externalities. Are these things out of whack right now? probably, but that doesn't mean the economy is imaginary.
- mikewarot 4y ago
  >Historically, it's been impossible to differentiate "productive" and "un-productive" labor over prolonged periods. Not true, either you helped in the production of sufficient food to allow a surplus, and thus enabled specialization of labor, or you didn't. It is only the addition of billions of "virtual laborers" fuel by underpriced energy in the form of stored ancient sunlight that the labor market became so distorted. The past 200 years have been the anomaly, not the norm. The pulse of underpriced energy is coming to an end.
  - deleted 4y ago
    [deleted]
StanislavPetrov 4y ago
>The economy is mostly imaginary... Unfortunately this is also true about the "assets" that reflect retirement accounts, pension funds, bonds and savings of all kinds. These are basically promissory notes to be paid by the future productivity of the "economy". If the economy doesn't grow, or if contracts, these promissory notes cannot be repaid which either means defaulting or printing money (hyperinflation). Either way, all kinds of people with "savings" and paper assets (which many depend on to survive and/or hope to use to retire some day) will be wiped out. >If we could somehow actually shift the focus to making sure basic needs are met first, like all basic needs, then I don't think the economy would be seen as something to discuss. The above is why it isn't as simple as just figuring out what people need today and shifting production around to take care of basic needs, unless you plan on zeroing out all debts, savings and paper assets (which won't be popular with people who have savings and paper assets). If the system is teetering on the edge of total collapse, however, this might be unavoidable (some might even call it "the great reset").
imtringued 4y ago
Introduce negative interest rates on cash.

pcurve 4y ago

Good news is, IMF has a really lousy record of forecasting recession. https://www.ft.com/content/60581224-3335-11e8-b5bf-23cb17fd1498 https://www.ft.com/content/60581224-3335-11e8-b5bf-23cb17fd1... Bad news is, they always underestimated the recession.

behnamoh 4y ago

Correction: The worst outcome for ordinary folks, not the wealthy. I don't make 6 figures but I would imagine just earning that money boosts the confidence that "I can create value despite the economy". Your world view just changes the moment you make more than you will ever need. Your concerns would also be different. Right now I must be worried about my savings, rent, and TV news. At >$1M, I'd be worried about other "stuff". I've always thought that it's not like everyone who makes >$80K is ever going to use all that money. Much of it would be spent on kids' colleges (if any), and the rest of it allows you to retire >10 years before others. Idk what people do with the money.

NoPicklez 4y ago
I suppose it depends, even those on 80-100k would still be living somewhat frivolously. Perhaps they use the money for kids colleges, paying off mortgages sooner, paying off car loans, paying of student debts entirely, perhaps even going on a holiday. Reducing financial stress would be the main target. Also there's being able to retire >10 before others, or also being able to retire when others do but with more in the tank. Above that any additional money allows people to again, pay things off sooner or increase their lifestyle. More holidays, latest gadgets, multiple cars, holidays etc.
anm89 4y ago
None of this is particularly great for the wealthy. They disproportionately own the assets that are tanking in value. From a quantitative (not qualitative), relative basis and absolute basis, this is worse for the wealthy then for the poor
- imtringued 4y ago
  >They disproportionately own the assets that are tanking in value You don't seem to understand how this game is played. You keep 10% of your portfolio as liquid money or near liquid assets. This means a rise in asset values increases your dry powder. But since dry powder doesn't go down in value as fast as other assets, you get to buy all the distressed assets on during the fire sale. That is the essence of speculation. If a 4% mortgage crashes housing prices, your money goes that much further, but you only benefit from the crash if you have enough money to buy the home outright. If you must borrow part of the money, then you must pay interest which means you aren't getting a discount on the house, you're paying the same monthly payment but some of it is going to the bank.

pagthem 4y ago

I know many who are just hoping for a recession for prices (especially real estate) to come down.

Cymrukicks 4y ago
I just don't see it happening, The UK housing market has all the coming issues which have been spoken about but no single politician came out and said the truth. One of the biggest issues people are going to suffer with their mortgages is house prices are insanely high. During the pandemic they went up nationally around 17% thats a bubble you're going to lose when the bubble bursts. If no one is willing to tell people the truth then I don't see how they can stabilise properly.
- mFixman 4y ago
  That's the exact reason why the housing bubble will never pop: the government will prop up the entire industry before having its voters lose money in their housing gambles. The BoE spent billions to support pension funds that made risky and ridiculous bets on bond markets, so there's no reason to not be as leveraged as you can in those areas.
hericium 4y ago
Skimpflation brings not the prices down, but quality.
bsaul 4y ago
in paris prices are not going down that much, they just stay the same. However if you adjust for the 2% inflation a month we're going through, then you can consider real estate prices are crashing.
kioleanu 4y ago
I’ve seen a really good summary for this situation and for people hoping that the recession will bring prices down: - house in 2021: 500k €, monthly mortgage 1500€ - same house in 2022: 450k €, monthly mortgage 2000€ It’s not seeing the forest for the trees.

watmough 4y ago

As usual the poorest will suffer worst. In people terms, and at the level of countries and continents. For those lucky enough to be within clinging reach of the lower middle class, efforts towards energy and food independence will reap huge rewards. Spain and Portugal could be taken as exemplars of embracing renewables. Even the UK, Australia and the Southern US have embraced solar and wind. The poorest, thinking of Africa, India, Pakistan, Sri Lanka will continue to, and escalate in suffering as energy pricing and climate chaos continue to steadily worsen.