Why a global recession is inevitable in 2023 • Hacker News Board

Re: Why a global recession is inevitable in 2023

#211

Post by hyperpape » Sun, Jan 01, 2023, 9:39 PM UTC

lamontcg wrote: post #184

hyperpape wrote: post #146

Earlier quoted context omitted.

You should say more about why you think 6-8% unemployment is required. From September 2014 - February 2020, unemployment was below 6% without signs of significant inflationary pressure. I'm not saying you're wrong (those periods are different from the present in a lot of ways), just that your reasoning isn't very apparent.

I didn't say that inflation would reappear at 5.99% unemployment. They need >6% so there's a gap between here and there. Right now we're clearly at the rail and unemployment has not budged. The jobs overhang has significantly abated, but that has been a short-term reaction to the policy changes, and it can change back on just as short of a term.

> I didn't say that inflation would reappear at 5.99% unemployment.

I didn't say you did, just that you haven't said anything to motivate the 6-8% number. It's plausible sounding, but as far as what you've said so far, you might as well have drawn those numbers out of a hat.

Re: Why a global recession is inevitable in 2023

#212

Post by petre » Sun, Jan 01, 2023, 9:42 PM UTC

gambiting wrote: post #188

hdjjhhvvhga wrote: post #134

Earlier quoted context omitted.

> 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.

As a Pole, I'm very much nervous about the fact that China is not outright denouncing the aggression on Ukraine, and instead keeps promising tighter alliance with Russia. It could be just that they want to reap all the benefits of Russian resources by being the only place that will really trade with them in any capacity, but if they start supplying Russians with weapons and pushing towards escalating the conflict....…

China supplying Russia with weapons is probably not going to happen. Not if they want to do any commerce with the US, UK and Australia, NZ and probably the EU. The Chinese, including chairman Xi are anything but stupid. They want cheap Russian resources and food, they want to buy and replicate some Soviet tech, so they are playing Russia with the cooperation card. The Chinese also have big investments in Ukraine's agricultural sector which Russia is screwed with, like the Nikolaev grain and sunflower oil terminal. So far they've avoided outright bombing the COFCO investments, but the blockade meant threatening China's food supplies.

Re: Why a global recession is inevitable in 2023

#213

Post by hdjjhhvvhga » Sun, Jan 01, 2023, 9:42 PM UTC

AnimalMuppet wrote: post #168

olonn wrote: post #158

Earlier quoted context omitted.

probably finland and other countries near russia

Yeah, high-up Russian politicians have been talking about invading Finland or Poland or both. And if the GP says that they don't have the military strength to pull that off, well, they don't. But they don't have the military strength to defeat Ukraine, and yet the fighting goes on, in complete defiance of sanity. No, Russia can't (successfully) invade either place. That doesn't mean he won't try. If I were Finland or…

The reason the war in Ukraine goes on is that Putin was misled. The original plan was to conquer Kiyv in a few days, kill Zelensky and others and install a puppet government. The whole "military operation" was just that. They had no plan B. I mean, they are trying to do their plan B now, with no hope of getting anywhere. But from Putin's POV in February it all made sense, and the fact that Ukraine repelled the initial attack surprised everybody, including the allies - and Ukrainians themselves.

On the other hand, in Finland and Poland there is no similar plan A, only total war with NATO. It is not impossible, but from the geopolitical POV it makes no sense at all.

Re: Why a global recession is inevitable in 2023

#214

Post by BoiledCabbage » Sun, Jan 01, 2023, 9:44 PM UTC

lamontcg wrote: post #140

opportune wrote: post #124

Earlier quoted context omitted.

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…

Wage growth is not driving inflation. Pushing unemployment higher isn't the route to fix inflation.

Recent inflation was driven primarily by two things significant increase in energy costs. Just like in the the 70s large oil spikes will drive large inflation as the cost of everything requires energy.

Second was sever supply constraints due to lack of labor due to Covid (either people out side, plants running minimally, or older people retiring, or deaths). Labor force participation rates dropped 2% world wide 3% in the use. Overall labor force participation has been slowly decreasing over time (due to countries moving up the development index), but that was roughly a decade worth of gradual reduction that just dropped overnight due to Covid. Supply became severly constrained for the same number of people. Increasing unemployment will only make the situation worse.

Look at world labor force participation rate [1], it still hasn't recovered raising unemployment will only make it worse. Or look at US which dropped almost 3%.

What needs to happen is that needs to recover. It started recovering slightly but still not back to the level it needs to be. That's what will fix inflation, increasing production of goods and services, not restricting them more.

What will increase labor force participation? Increasing wages. For almost-retirees, those with deciding whether to work or not wages aren't sufficient to incent them to do so. Raising wages would bring people back into the labor force (without causing inflation in real terms). Capital is taking such a large portion of the gains of productivity in high productivity countries that wages aren't drawing in people to work. Increase the wages and that will fix itself. That started to happen and the economy started rebalancing, and then govts began stepping in to halt it. As a result the are pushing us towards lower production with supply shortages (more or less stagflation).

1. https://data.worldbank.org/indicator/SL.TLF.CACT.ZS 2. https://www.bls.gov/charts/employment-situation/civilian-lab...

Re: Why a global recession is inevitable in 2023

#215

Post by w1nst0nsm1th » Sun, Jan 01, 2023, 9:50 PM UTC

jjeaff wrote: post #152

frankfrankfrank wrote: post #35

Earlier quoted context omitted.

I think you should reconsider the position that inflation is a sign of a booming economy. It is an erroneous albeit common perception and perspective. Inflation, the fraud of increasing the number of IOU Currency tokens called {fill in your currency of choice} in circulation simply by copying them is the cause of increasing prices, not inflation itself. It’s a matter of misunderstood definition. An analogy is an arti…

No, inflation is not the same thing as increasing the money supply. Increasing the money supply is one of the many things that can cause inflation. But to thing it is the only factor is overly simplistic, sort of Laffer-curve-esque. In that it makes a lot of sense in an economics 101 class but the reality is a lot more complex. For example, if you double the money supply tomorrow but most of that extra money ends up…

High inflation has always been the effect of massive increase of money supply, typically for the purpose of paying back creditors by state actors.

What account for money supply can be gold (Spain Inflation, 16th century), diluted gold coins (look for monetary crisis in Roman Empire), paper and scriptural money emission backed by unchanged gold possession (French Franc, after 1913 ; US dollar in the late '60), paper money not backed by gold (look for chinese ligatures), scriptural and paper money backed by a mix of other currencies (in the form of foreign government bonds) and gold (central bank system after 1973)...

...And homeland government debts (central banks system after 2008), which is called debt monetization https://en.wikipedia.org/wiki/Debt_monetization, which was, strangely enough, the polite way to say printing money when I was a kid.

Re: Why a global recession is inevitable in 2023

#216

Post by dchristian » Sun, Jan 01, 2023, 9:53 PM UTC

yucky wrote: post #149

jasonwatkinspdx wrote: post #144

Earlier quoted context omitted.

You are ignoring the reality many are facing, where essentially all the available options are above their means. Back in the late 80s Elizabeth Warren and coauthors showed that the most common reason American families went bankrupt was because their high housing costs were an attempt to get their kids into better schools. The blunt truth is the 20 major metro areas are where nearly all the high income jobs are, so we…

> You are ignoring the reality many are facing, where essentially all the available options are above their means. Again, this just simply isn't true. Go to Zillow, and set your filter to houses under say $150k and check the metro areas of Kansas City, St Louis, Dallas, Little Rock, Memphis, Cleveland, Charlotte, Detroit, Milwaukee, Pittsburgh, Cincy, etc. etc. and you will get hundreds of hits in every one of those…

The bottom end of the housing market is usually junk or otherwise tied up legally. Just because you get hits, doesn't mean that's a viable option.

I just did a housing search recently and found this out the hard way.

Look at the median for an area and then figure that you can go 10-20% below that for a "fixer upper". Even that isn't an option if you don't have DIY skills.

Re: Why a global recession is inevitable in 2023

#217

Post by dgudkov » Sun, Jan 01, 2023, 10:01 PM UTC

The world has been on the bull run powered by QE and zero rates for 13 years or more, then the fun ended, and suddenly it's all the disasters in the world that will inevitably lead to a recession.

When did the economists forget the term "market correction"?

Re: Why a global recession is inevitable in 2023

#218

Post by californical » Sun, Jan 01, 2023, 10:16 PM UTC

sokoloff wrote: post #176

phkahler wrote: post #120

Earlier quoted context omitted.

>> the monthly cost of housing hasn’t changed as a percentage of take home pay, That is by design. Banks figure your monthly payment as a percent of income. Then based on interest rates they figure out how much you can borrow. Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it. This is why lower interest rate cause higher house prices. Interest rates are going up.…

> Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it. Of course those groups urge you to spend the maximum: they're all being compensated if you do exactly that. At the end of the day, it's still you who is signing the contracts, responsible for how you spend your money, and has to live with the outcome of your decisions.

Sure, personal responsibility still matters in an individual level… but that’s irrelevant to the point you’re replying to! I’m not sure of your point.

If those groups can convince a decent percent of people to spend the max that they can get away with, it doesn’t matter what you do personally. Prices will inflate because most others are still spending big.

Re: Why a global recession is inevitable in 2023

#219

Post by w1nst0nsm1th » Sun, Jan 01, 2023, 10:24 PM UTC

brookst wrote: post #38

cm2187 wrote: post #24

The economist is blaming it all on Ukraine but the reality is that rate increases will likely be the primary driver for the recession, at least in the US. And those rates hikes (and roll off of the Fed B/S) are a response to inflation. And as much as the economist or Biden would like to pin inflation on Putin, the reality is that the inflation started a year earlier than the Ukraine war, and is the result of money pr…

I knows that’s a theory, but I haven’t see any more evidence that inflation is due to monetary policy than I have that it is due to Ukraine. Lots of philosophical arguments that it must be , but no evidence. Correlation, causation, all of that. Have you seen evidence of causality that goes beyond theory? (I’m not necessarily disagreeing, just saying it often seems like a faith-based view)

It's like the apple which falls from the tree, gravity and all that...

Seriously, the effect of money supply on prices has been established for quite some time, with historical data to back it up.

Re: Why a global recession is inevitable in 2023

#220

Post by oliwarner » Sun, Jan 01, 2023, 10:24 PM UTC

petre wrote: post #212

gambiting wrote: post #188

Earlier quoted context omitted.

As a Pole, I'm very much nervous about the fact that China is not outright denouncing the aggression on Ukraine, and instead keeps promising tighter alliance with Russia. It could be just that they want to reap all the benefits of Russian resources by being the only place that will really trade with them in any capacity, but if they start supplying Russians with weapons and pushing towards escalating the conflict....…

China supplying Russia with weapons is probably not going to happen. Not if they want to do any commerce with the US, UK and Australia, NZ and probably the EU. The Chinese, including chairman Xi are anything but stupid. They want cheap Russian resources and food, they want to buy and replicate some Soviet tech, so they are playing Russia with the cooperation card. The Chinese also have big investments in Ukraine's ag…

I mean, aren't they still currently engaged in the genocide of the Uyghurs? Forcing them into work camps, breaking their spiritual freedoms, and relocating communities to forcibly dilute their unique genetic makeup? And the West did what?

China is building bases around the South China Sea, pushing borders back, commandeering fishing rights, making a claim on Taiwan and their territories, and pushing very close to US naval support in the area. What has the West done?

We're paralysed by our inability to build stuff, and our unwillingness to go against the electorate and actually stop them buying all the Chinese tat that they do. Our reliance on their mineral mining and processing means cutting them out means far worse than a recession in the short term. It would take two decades to even come close to replacing China and at an unimaginable construction cost because much of the world doesn't even make its own steel any more. And China has links, they own significant portions of Africa's mining rights.

China are untouchable and their military and their nukes have nothing to do with it. China has real power. If you ever want to imagine the end of the world, imagine what happens if we can't buy cheap shit from China and follow the thread through to a conclusion.

---

But why would they help Russia? That's probably a better avenue of thought. Russia has crazy territory, and resources without the real means to explore of extract.

Russia could make it worth their while.