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Why a global recession is inevitable in 2023

economist.com

131–140 of 281 posts

Re: Why a global recession is inevitable in 2023

#131
post #95
post #76

Earlier quoted context omitted.

I'm not aware of them buying any individual stocks recently. They did, however buy several (like GM) during the 2008 recession.

Right, they bailed out corporations and threw people out of their homes. Never forgive, never forget. I’d still largely say this Fed is departing from history. The economy last saw a pandemic like covid in 1918. And that was during a world war.

> Right, they bailed out corporations and threw people out of their homes. Never forgive, never forget.

So you would've preferred that the whole system came crashing down and believe that average people would've had a better long term outcome from that?

Re: Why a global recession is inevitable in 2023

#132
post #95
post #76

Earlier quoted context omitted.

I'm not aware of them buying any individual stocks recently. They did, however buy several (like GM) during the 2008 recession.

Right, they bailed out corporations and threw people out of their homes. Never forgive, never forget. I’d still largely say this Fed is departing from history. The economy last saw a pandemic like covid in 1918. And that was during a world war.

> Right, they bailed out corporations and threw people out of their homes. Never forgive, never forget.

Who is "they"? The fed I presume? I doubt they were directly involved in foreclosures.

Re: Why a global recession is inevitable in 2023

#134

When I see predictions like this I think "awesome, no global recession coming in 2023". I have not done a study on this, but it seems like every prediction I come across is just wrong. Its like when I watch Artosis or Tasteless give a prediction during an SC2 tournament and immediately be wrong. "caster's curse" i think its called.

Major economies are already in deepening recessions. Major producers are starting the year with significant impairment from COVID and supply line pressures. The threat of Russia's aggression affecting other countries remains. Energy prices are still obscene in Europe. I hope things get better, but I think you'd be mad to plan for global growth this year.

> The threat of Russia's aggression affecting other countries remains.

Like what countries exactly? They can't even hold the ground they conquered in the previous months in Ukraine. Armenia already asked Russia's help and they refused - it was effectively a fatal blow to CSTO and has far-reaching consequences to the way Russia is perceived among its current and former allies.

Re: Why a global recession is inevitable in 2023

#135

When I see predictions like this I think "awesome, no global recession coming in 2023". I have not done a study on this, but it seems like every prediction I come across is just wrong. Its like when I watch Artosis or Tasteless give a prediction during an SC2 tournament and immediately be wrong. "caster's curse" i think its called.

It’s fair to be skeptical of economic predictions, as yes, most end up being wrong. But in this case the Fed is quite clearly aiming to orchestrate a spike in the unemployment rate, and pretty much all of history is pointing towards the current macro setup ending with recession. By and large people tend to be overly optimistic that this time is different re economic cycles and monetary policy. E.g. Wall Street analys…

Economics as a "science" is when psychology majors cosplay as mathematicians. They demonstrate all of the trappings of a science; specialist jargon, mathematical notation, journals, conferences, but have scant little to show for it. They will be the first to tell you that the economic system is too complex for any one of them to understand, and point at "markers" to which they attach a level of causal significance that would make a real mathematician blush.

They are throwing darts in the dark.

God bless them, it's a hard job and someone should probably be looking into it, but never kid yourself about what their predictions are actually capable of.

Re: Why a global recession is inevitable in 2023

#136
post #41
post #31

Earlier quoted context omitted.

> They bought actual stocks during the Pandemic-a sure high point of departure from the past. Is this true? I'm pretty sure the wildest thing they did was purchase corporate bonds via ETFs.

Buybacks were rampant through this era. Difference without a distinction.

>Difference without a distinction.

No, you're just playing fast and loose with facts. The fed also financed the federal government through treasury purchases, and the federal government sent out stimulus checks to americans, some of which bought crypto/meme stocks, but it would be disingenuous to write a screed about how bad the fed is because they bought "crypto/meme stocks" using the aforementioned reasoning.

Re: Why a global recession is inevitable in 2023

#137
post #99

Earlier quoted context omitted.

Most recessions are identified after they've occurred, particularly on a global scale, since the evidence is rarely obvious. Not all countries, industries, states will be affected equally. It's completely possible the recession has already occurred and we're currently in the midst of it.

We need to get some crossover between virologists and economists. Virologists always seem to know when pandemics are coming.

This is not a bad analogy. I remember at least one time when virologists announced a pandemic too early and were criticized for it later, and at least one time when they waited for too long.

Re: Why a global recession is inevitable in 2023

#138
post #71

Earlier quoted context omitted.

Capitalism no longer exists. Current economic systems are based around debt and not capital.

That’s seems like a very very narrow definition of capitalism

No, the idea of capitalism is that one acquires capital for future investment. One forgoes wealth in the present for wealth in the future. In debt based economics, this process is reversed. The future is leveraged for the sake of the present.

Re: Why a global recession is inevitable in 2023

#139
post #93

Disclaimer, I have no idea if this is even slightly logical, I'm not an economist. House prices have increased significantly above inflation for decades to the point of absurdity, many multiples of a households income. People in their 20s (and 30s) increasingly don't believe they will ever own a home. If we have a period of inflation, with increased wages (obviously with a painful lag), but house prices remain stagna…

> If we have a period of inflation, with increased wages (obviously with a painful lag), but house prices remain stagnant with no increase This would require heavy regulation of the housing market. For example, we could add a hefty tax on any home that isn't owner-occupied. Otherwise, housing will remain one of the better places to invest earnings and the cost of housing will continue to rise with earnings. However,…

To lower house prices would require heavy deregulation of the housing market. Zoning regulation and building constuction regulations.

Re: Why a global recession is inevitable in 2023

#140

When I see predictions like this I think "awesome, no global recession coming in 2023". I have not done a study on this, but it seems like every prediction I come across is just wrong. Its like when I watch Artosis or Tasteless give a prediction during an SC2 tournament and immediately be wrong. "caster's curse" i think its called.

I am pretty into investing and for the past two years have been doing it almost solely on the basis of macro principles. Inflation in the last 6 months in the US, as measured by the Fed’s CPI, has been about 2%. All the higher inflation headlines are simply comparing the CPI 12 months ago to today, but the fact of the matter is ever since June/July CPI’s annualized inflation is already at roughly 4% or lower. The Fed…

Because unemployment is low that means that the Fed can't drop rates at all or else inflation will come back. And it is likely that if the Fed pauses rate hikes and the economy doesn't fall into recession that there will be another boom and high inflation again, which will kick off more rate hikes. This is the difference between short-term reactions of inflation to rates and long-term reactions.

What the Fed needs to meet its goals is unemployment running at 6-8% so that there's slack in the labor market. Until that happens, inflation will persistently come back. That implies that the Fed must create a recession to increase unemployment before it meets its goals.

And I suspect that it will be sufficient for the Fed to maintain rates at roughly where they are for 6-12 months in order to achieve a recession. We've spent way too long on cheap rates and there's too many zombie investments that require borrowing at stupidly low rates. When those loans adjust to higher rates and the borrowing costs of those entities double or triple (just like an ARM) those entities should all go under. You don't have to look past the vacancies in the malls and downtown cores of cities.

my view of "everyone is probably wrong" is how much everyone is predicting a soft-landing or mild recession in the US (including the title article, which is a good gauge of the centrist position). Rates are already at a level where they should cause detonations in the US economy -- it will just take 6-12 months at these current levels (and historically recessions that followed rate hikes have happened after 6-12 months -- there are time delays in the system).

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