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“A Mild Recession”

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Re: “A Mild Recession”

#91

Post by [deleted] »

jpadkins wrote: post #46
upupandup wrote: post #41

We enjoyed 12+ years of cheap capital. Our stock market were largely bubble of tech companies that used this cheap capital to achieve insane market cap. Those days are over and will not come back for a loooong time. ex) Japan has not reached its 1989 peak and its nearly going into 40 years no sign of stopping. Globalization is also come to an end and our economy built around cheap capital and Chinese labor is over. T…

what tech companies were using cheap capital to achieve insane market cap? Very few tech companies borrow money. Unless you meant people were buying tech stocks with leverage, which I agree with...

[deleted]

Re: “A Mild Recession”

#92

Post by chucksta »

vorpalhex wrote: post #47
samsonradu wrote: post #35

Earlier quoted context omitted.

I used the word ‘statistically’ to underline the fact that it will not happen to everyone, and specially not to you in particular. > Meanwhile you hold a belief like, "the future will be good because capital will be allocated better" Yes

Do you have any actual statistics or are you just saying you do to borrow an air of authority?

OP: >Too young to understand what happened in the 2008 GFC

so no statistics or experience

Re: “A Mild Recession”

#93

Post by UkrainianJew »

epups wrote: post #22

Honestly I don't think the issue is that another recession is coming. It's going to be the fourth or fifth serious economic crisis I've experienced in my lifetime. What worries me is that the quality of our political leadership and in general our ability to diagnose and address complex issues is, in my view, at an all-time low.

The quality of the political leadership is a direct consequence of what average people want from their leadership.

For the past decade or so the modus operandi has been:

1. Print more money, give it to bureaucrats and corporations

2. Toss in some non-monetary issue that will piss of ~50% of the population, while making the other ~50% feel entitled.

3. Promise one half to serve their interests by punishing the other half.

4. Print more money, give more to bureaucrats and corporations.

5. Rinse and repeat.

It seemed to work for over a decade: people gave up dreams of retirement, property ownership, having children, we were headed straight for normalizing living with parents while eating factory-produced bug proteins. Thankfully, the black-swan COVID-19 happened, the money printer got too cocky and people finally started to notice a problem.

The quality of life will decrease in the short term. But once enough people admit it's a bigger problem than being offended by what somebody on the Internet said, there will be finally demand for competent politicians offering viable solutions.

Re: “A Mild Recession”

#94

Post by nathanaldensr »

voisin wrote: post #57
atlgator wrote: post #29

Earlier quoted context omitted.

They are downplaying this whole thing heading into the midterm elections. Inflation is transitory, it's the supply chain, it's Putin, it's gas station owners and oil companies, we're doing a soft landing. These are all cover stories for doing nothing. Low interest rates + $5T in bond purchases fueled remarkable growth and all time high employment. Raising interest rates and selling those bonds will do the opposite. T…

> fueled remarkable growth Much of which was growth in name only and will prove to be investments in unproductive assets that never would have made it out of the brainstorming session if there was an actual opportunity cost of capital.

Right; it's "growth" instead of growth.

Re: “A Mild Recession”

#95

Post by doktorhladnjak »

pwinnski wrote: post #53
samsonradu wrote: post #6

Earlier quoted context omitted.

Too young to understand what happened in the 2008 GFC but I doubt the 'feeling prepared' part works like this. First of all, the recessions tend to last longer than most people expect/plan for. Statistically, it will turn out their 'secure' jobs will be less 'secure' than expected. Meanwhile their emergency funds will start shrinking (slowly at first, then all at once) due to loss of purchasing power & eventual job l…

I'm old enough to remember 2008 and several other recessions as well, and "feeling prepared" works exactly like that. Not all jobs are secure during a recession, but job security is relative--and often knowable. Emergency savings are something few people actually have, and can make a world of difference when times are hard. On the other hand, there is no guarantee whatsoever that capital will be better allocated afte…

I'm at a VC-funded, private company (too mature and big to be a "startup" anymore). I hear my coworkers talk about how we're all safe because the company won't go away and is profitable, but that's not always how it works.

Very few jobs are truly secure ever. Your company can avoid being impacted by the macroeconomic situation of a particular recession or financial crisis, but that doesn't mean you won't be fired or laid off or need to quit your job, then find a new one in a less than great job market.

I've been through layoffs at more economically sound companies where the leadership decided something had to be done to mollify shareholder anxiety about the larger economic situation. I've been through layoffs at companies where the writing was on the wall (especially in retrospect).

I worked with somebody who developed a major health problem during our time as coworkers. He had to quit because he couldn't do the work until that was squared away. It took him years to be well enough to work again, and by then he needed to live near family in a lower wage/higher cost of living area that still scrambled his financial plans.

Most of us have worked at a company where a new boss came in, and some people just didn't get along with them or didn't see eye-to-eye on whatever or otherwise couldn't work there anymore. Or where there's a reorg and suddenly the work isn't a match anymore.

Everyone should be prepared at any time. If fear of recession gets folks thinking about that, great. But they should do it regardless.

Re: “A Mild Recession”

#96

Post by seanmcdirmid »

worker_person wrote: post #83
seanmcdirmid wrote: post #50

Earlier quoted context omitted.

They really don’t have much of a choice. None of those issues can be solved in the near term, and many of them were setup 10-15 years ago. Both parties have been irresponsible when it comes to spending, interest rates, and inflation. We should have been tightening up on interest rates and taxes during boom times so we could loosen during bust times, but it’s just been loosen loosen loosen since 2001 or so. No one is…

Gas prices are from day 1 decisions of the current president. The real fun will be when strategic reserve runs out. https://www.washingtonpost.com/business/energy/the-us-is-dep...

> Gas prices are from day 1 decisions of the current president. The real fun will be when strategic reserve runs out.

That simply isn't true at all. The only thing of consequence that Biden did was prevent Albertan oil from more easily being exported to Latin America and Europe by cancelling the keystone pipeline expansion. At the same time, oil producing states were complaining that oil prices were so low that it didn't make sense to invest in production. Now that demand has picked up and Russian oil is off the table, prices are going up worldwide, not just in the USA. The USA's production hasn't changed much since the Trump administration, which hardly changed much since the Obama administration (which has been going down because oil-shale extraction costs couldn't be covered by the price of oil for much of the time).

Democrats are blamed when oil is too cheap (because red states depend on oil production jobs), they are also blamed when the price of oil is too high. I'm just going to buy an EV and ignore the whole issue, it isn't worth my time to worry about the price of gas when we don't really have to anymore.

Re: “A Mild Recession”

#97

Post by jjav »

seanmcdirmid wrote: post #96
worker_person wrote: post #83

Earlier quoted context omitted.

Gas prices are from day 1 decisions of the current president. The real fun will be when strategic reserve runs out. https://www.washingtonpost.com/business/energy/the-us-is-dep...

> Gas prices are from day 1 decisions of the current president. The real fun will be when strategic reserve runs out. That simply isn't true at all. The only thing of consequence that Biden did was prevent Albertan oil from more easily being exported to Latin America and Europe by cancelling the keystone pipeline expansion. At the same time, oil producing states were complaining that oil prices were so low that it di…

> I'm just going to buy an EV and ignore the whole issue

But you can't get away from it because everything that you use that gets transported by someone is getting more expensive.

Re: “A Mild Recession”

#98

Post by seanmcdirmid »

jjav wrote: post #97
seanmcdirmid wrote: post #96

Earlier quoted context omitted.

> Gas prices are from day 1 decisions of the current president. The real fun will be when strategic reserve runs out. That simply isn't true at all. The only thing of consequence that Biden did was prevent Albertan oil from more easily being exported to Latin America and Europe by cancelling the keystone pipeline expansion. At the same time, oil producing states were complaining that oil prices were so low that it di…

> I'm just going to buy an EV and ignore the whole issue But you can't get away from it because everything that you use that gets transported by someone is getting more expensive.

Yep. But it is about time we revamped that infrastructure as well. There are huge opportunities in the next couple of decades with respect to transportation (toward electric from trucks and let's get those overhead wires in for our rails already) and labor (automation, productivity increases are our best way out of inflation).

However, the expected but worst thing that could happen now is oil crashes down because of a recession (demand playing most of the role in oil's price) and labor becomes cheap again.

Re: “A Mild Recession”

#99

Post by _ink_ »

dcolkitt wrote: post #32
s1artibartfast wrote: post #9

Earlier quoted context omitted.

Surely you believe there is some P/E where a company is a bad investment?

Depends on discount rates. The value of a company is the net present value (NPV) of its discounted cash flow (DCF). P/E is just a kludge to simplify the much more complex DCF analysis. And it's pretty clear that interest rates have been steadily falling for 40 years[1]. Arguably 500 years[2]. Is there temporary variation around the business cycle? Sure. But in the long-term it's extremely unlikely we return to the Th…

In the big picture interest rates have been falling since 800 years (p. 13 [1]).

[1] - https://www.bankofengland.co.uk/-/media/boe/files/working-pa...

Re: “A Mild Recession”

#100

Post by doktorhladnjak »

nonameiguess wrote: post #54
samsonradu wrote: post #6

Earlier quoted context omitted.

Too young to understand what happened in the 2008 GFC but I doubt the 'feeling prepared' part works like this. First of all, the recessions tend to last longer than most people expect/plan for. Statistically, it will turn out their 'secure' jobs will be less 'secure' than expected. Meanwhile their emergency funds will start shrinking (slowly at first, then all at once) due to loss of purchasing power & eventual job l…

What does "statistically" mean here? Even if unemployment jumps to double digits, which hasn't happened in the US since 1982, that means 93.6% of working people (0.9 / 0.961 to not inadvertently count people who are already unemployed) will continue being able to work. That's a near worst-case scenario that seems pretty damn statistically secure to me.

If you're the 1 in 10 or 12 without a job, it's obviously personally impactful and stressful to you.

It's also worth bearing in mind that when unemployment is high, there are many companies that stop or slow hiring, sticking with current staff. Many fewer are hiring at all. If there is 10% unemployment, you'd expect the number of available jobs to shrink by much more than 10% vs full employment. Losing your job compounds because finding a new one at all or at least a new one that pays the same can be harder.

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