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Why a global recession is inevitable in 2023

economist.com

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Re: Why a global recession is inevitable in 2023

#141

Post by BirAdam »

zuminator wrote: post #110
BirAdam wrote: post #55

Earlier quoted context omitted.

Yes. And it’s actually correct. I’ve thought that US financial system and US dollar would fall since I was roughly 13. The problem is that at some point central banks and governments will be unable to avoid hyperinflation due to debt accumulation. They will be forced to print. Additionally, the debt is inevitable when politicians are bought and paid for and therefore incentivized to provide lucrative contracts to don…

"At some point" does a lot of heavy lifting. Without any information to quantify when this breaking point might occur, one might as well be talking about the heat death of the universe. And what do you mean by "sacrifice the wealth of future generations for the sake of the current"? The government issues bonds to pay for stuff. Then at some point :) the bonds presumably become due, and future generations have to pay…

Yeah, I’ve thought an economic calamity was likely for over 20 years. As I stated, the math is there but the timing is always unknown. We’re talking about the actions of billions of human beings, and therefore it’s difficult to predict with certainty. What can be said definitively is that the debt service of the US federal government will exceed the current defense budget by 2025. Things are getting closer and closer.

Re: Why a global recession is inevitable in 2023

#142

Post by pastacacioepepe »

slaw wrote: post #139
Zaskoda wrote: post #93

Earlier quoted context omitted.

> 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.

> To lower house prices would require heavy deregulation of the housing market

There's no actual requirement for deregulation.

Austrians made prices affordable and improved housing quality with public intervention, and it worked well[0]. I yet have to see an housing deregulation experiment that worked.

.0: https://www.youtube.com/watch?v=41VJudBdYXY

Re: Why a global recession is inevitable in 2023

#143

Post by marcosdumay »

Zaskoda wrote: post #77
BirAdam wrote: post #55

Earlier quoted context omitted.

Yes. And it’s actually correct. I’ve thought that US financial system and US dollar would fall since I was roughly 13. The problem is that at some point central banks and governments will be unable to avoid hyperinflation due to debt accumulation. They will be forced to print. Additionally, the debt is inevitable when politicians are bought and paid for and therefore incentivized to provide lucrative contracts to don…

> On another note, there is inherent instability in debt-based economics From an adequate distance, fraction reserve banking looks a whole lot like a ponzi scheme.

Only if the debits are large enough.

Interest-paying debit can be quite healthy. It does not have to be a ponzi scheme.

Re: Why a global recession is inevitable in 2023

#144

Post by jasonwatkinspdx »

yucky wrote: post #125
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. You are not forced to spend above your ability to pay. People used to be ok with buying smaller homes, or in less hip neighborhoods. If you can afford a $500k house you can also afford a $350k house. People need to stop making excuses for living above their means.

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've seen a decades long pattern of migration towards them. This is a huge underlying force in so much of US economics, politics, and culture. At the same time, these metro areas have not come close to matching demand with increased housing supply.

The result is increasingly people facing the dilemma where the best economic option for their family is for them to spend 3+ hours of their day commuting to an urban core from an outlying area they can just barely afford to rent in. And god help you if your kid gets sick or your car gets totaled. This is the reality for most working class Americans. It's not a matter of them living above what they can afford, it's about our society becoming so broken many people will never reach a threshold of affording anything like middle class prosperity.

And I am entirely out of patience for folks that earn tech industry money while moralizing about how poverty is just people overspending in some purely hedonistic stupid way.

Re: Why a global recession is inevitable in 2023

#145

Post by opportune »

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…

Typical targets for “full employment” are around 4%. 6-8% is not only unnecessary but contrary to the Fed’s other raison d’etre (besides combatting inflation) of full employment, which includes combatting higher unemployment than is necessary.

Increasing interest rates has systemic effects that take a while to propagate. We have already seen this reflected in CPI (which is also partially due to stabilizing after the supply shock of the war in Ukraine), and unemployment may get a bit worse than it is now, but the Fed absolutely will not want to increase unemployment into the ranges you mention unless absolutely necessary to combat inflation, because it’s contrary to their goals.

Re: Why a global recession is inevitable in 2023

#146

Post by hyperpape »

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…

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.

Re: Why a global recession is inevitable in 2023

#147

Post by julienchastang »

lvl102 wrote: post #16

I am pretty sure the Economist cover has been repeatedly mocked as counter-indicator for many years now.

Yeah, the article is a lot of FUD as usual. One sentence I have learned you can completely ignore in life is "Economist predict...". That said, I am sure that at some point there will be a global recession and a bad one, but it never plays out in the manner experts envision. Moreover, there is reason for optimism, at least in the long term. Look at the tremendous advancements playing out in the AI/ML arena and its implication for drug discovery, medicine, you name it. As for personal finances, be fully diversified across a suite of index funds and have a sizable nest egg. "Markets can stay irrational longer than you can stay solvent" is the old adage.

Re: Why a global recession is inevitable in 2023

#148

Post by marcosdumay »

oneoff786 wrote: post #12
paulpauper wrote: post #3

Hasn't it been inevitable every years? It seems like the media writes this headline every year. Anyone can find reasons for recession if you look hard enough. Who knows. I am not selling stocks.

Not at all. A global recession has not been strongly forecasted like this for a long time. Sure, anyone can make a prediction, and you will always find some people predicting both directions, but that doesn’t form a common consensus. A likely recession does not mean that selling stocks is advisable either.

I don't think there has been a consensus recession forecast since the early 90s. At the 00 and the 08 ones there were plenty of people denying it.

Re: Why a global recession is inevitable in 2023

#149

Post by yucky »

jasonwatkinspdx wrote: post #144
yucky wrote: post #125

Earlier quoted context omitted.

> Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it. You are not forced to spend above your ability to pay. People used to be ok with buying smaller homes, or in less hip neighborhoods. If you can afford a $500k house you can also afford a $350k house. People need to stop making excuses for living above their means.

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 metro areas. These are not rural communities, millions of people live and work in these and other metropolitan areas.

People who say this are convinced they need to move to SF/LA/NYC/Boston/Seattle. Yes, real estate is prohibitively expensive in San Francisco, we get it. So don't move there.

Re: Why a global recession is inevitable in 2023

#150

Post by [deleted] »

ianai wrote: post #41
cosmojg wrote: 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.

[deleted]
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