The first signs of the next recession

[Soph0571]

There is little reason for optimism that the world’s political leaders are well-equipped to confront the recessionary world when it emerges. This is not necessarily because the cast of characters now in office is diminished in quality compared to a decade ago. The effect of political leaders’ actions in response to the 2008 crash is often overstated. It mattered much more what the central banks, and the Federal Reserve Board in particular, did. It wasn’t Gordon Brown who saved the Royal Bank of Scotland, but Ben Bernanke, chair of the Federal Reserve from 2006 to 2014.

Rather, this time around political leaders will not be able to let central banks make monetary decisions as if they do not have political consequences. Dispersing helicopter money and abolishing physical cash will not look like technocratic judgements and, thanks in part to analysis by some central banks and the rhetoric of the 2016 US presidential election, more citizens may now understand that QE drives up wealth inequality. Nor, in an age of political disruption in which the traditional centre is weak, will governments readily find common ground with each other. This problem will be compounded by the clashes of interest between advanced economy states over oil and gas, in circumstances where energy supply cannot be separated from monetary policy.

Fear at what comes next stalks the world economy even, or perhaps especially, in those markets where investors appear most indifferent to risk. Finding a way beyond it will entail a reckoning with the last recession and the monetary world that central banks made in its aftermath. The 2007-09 recessions exposed the political discontent that had grown in Western democracies over the previous decade. The next recession will begin with that discontent already bringing about substantial political disruption – from Brexit to Trump’s election to the Lega-Five Star coalition in Italy – which in itself has become a source of economic fear. The economic dangers that lurk are only likely to increase political fragmentation, especially when there is little understanding of the structural economic forces that serve to divide people.

[link:https://www.newstatesman.com/politics/economy/2018/11/first-signs-next-recession|

This is a long read - but worth it - very interesting and disturbing...

[Demsrule86]

1. I have seen the signs for months. When you are an auto worker's wife...you see the signs well before

others do...and the market resemble 2007 going into early 2008.

[Perseus]

14. I have too, so his sentence "Yet it is also far from clear what is causing the slowdown"

I find it is bull. Bad governments will create economic chaos, an example is the eight years of GW Bush and, RIP, his father, Reagan.

The trump tax plan, the tariffs, the corruption, the lack of leadership worldwide, and nationally for that matter, the enabling of countries like Russia and now Saudia Arabia, the total craziness in the current congress that helps with the instability at home and abroad, etc., etc.

I have been forecasting what is coming, and not because I am an economics guru, or anything close to that, but the writing is on the wall. Everyday we see more countries electing inept people like the one at home, people who are only interested in their well being and not of the country they pretend to lead, violence, a resurgence of white supremacy and Nazism, all these things are creating an unbalance which forces people and companies to lay low when it comes to investing.

Corruption is rampant all over the World, a repeat of the French Revolution will happen in many places on earth, the corruption from the elite that has been going on for a long time is no longer sustainable, Mark Cuban predicted it in his articles "They will be coming after us with pitch forks" (or something like that). That is exactly what happened in Venezuela, Chavez was able to get in because of the discontent of the masses, the elite had been enjoying years of corruption, then came a "savior", the whole country supported him, and we all know how that worked out...It can happen here, it can happen anywhere...no country is exempt of a bloody revolution when the masses decide they have had enough, and I fear that in too many countries that is the feeling of the people.

[workinclasszero]

2. 5 plants shutting down and 14000 people losing high wage and benefits jobs tells you all you need

to know.

Trump's massive recession is coming.

The auto worker layoffs and farm bankruptcies are just the beginning.

[sarcasmo]

13. Farmers bankruptcies at an all time high, this recession will be Ugly.

[workinclasszero]

15. Yup

Might be as bad as Shrub Jr's.

Time to hunker down

[former9thward]

19. Farm bankruptcies are not "at an all time high"

They are only 2.5 per 10,000 farms. Most businesses would love to be in that category.

[Quixote1818]

3. Trump has put us in a terrible position to respond to a recession

His giant tax cut is already blowing up the deficit spending any kind of new spending or tax cuts are going to triple it once the economy slows down. Interest rates are already rock bottom. We are fucked.

[Soph0571]

4. AS has Brexit over here

[Demsrule86]

18. Trump and the Russians were involved in Brexit too...I think.

[watoos]

5. I have been saying that about Trump's tax cut scam since he did it.

Income inequality is what will bring down our nation. 2/3 of our GDP comes from consumer spending. Trump's tax cut scam will just widen the income inequality gap.

Wait until tax time when Trumpers find out that extra 25 dollars per pay is going to disappear with their smaller returns. That tax return they used to use to pay their taxes, or insurance, or that trip to the races is going to go poof for a lot of people.

[workinclasszero]

6. All hell is gonna break loose when workers who fell for Trump's GOP tax bill lies

find their tax refund cut in half or they actually have to pay the IRS instead!

That's coming right up soon!

[Soxfan58]

8. The repubs will tell them its the

Dem houses fault. They will believe it.

[roamer65]

20. Especially in CA, NY, NJ and New England.

The SALT deduction limitation will ensure the death of the Repukes in those states.

[workinclasszero]

21. Let's hope the GOP hung themselves

I will sit back and admire their stupidity

[elmac]

7. the last recession never really ended for the average American

Last edited Sun Dec 2, 2018, 01:42 PM - Edit history (1)

who has been trying to play catch up for a decade. It was great for the uber rich who saw their profits, income explode to the upside.

[dalton99a]

9. +1

[workinclasszero]

10. True

At the moment we have "full employment" at 1970's level pay and 2018 prices.

Dump's sugar rush tax cut for the rich and big business is over, now comes the hangover and its going to be bad for the average American.

[Javaman]

11. K & R nt

[The Liberal Lion]

12. The truth of the matter the capitalist world order has failed

it's not failing, what we have right now is merely a debt inflated illusion of prosperity, and if not prosperity, at least order. Capitalism collapsed in 1998 with the implosion of LTCM. It may have happened before then but if not it certainly did happen then. Ten years later we had the great mortgage collapse and the resulting great recession. Many will say capitalism was saved by the efforts of central banks with their QE and bad asset purchasing. This is not true, only the illusion was maintained. Central banks around the world keep creating debt on fiat currency, something that in reality does not exist, and in creating this debt they enslave the peoples of the nations stealing from them something very real: their productivity and the fruits of such. While capitalism has already failed, it is now the final facade that is crumbling. I am a verbose man on this subject, so I will not bore you with my constant jibber jabber. I will say this: there is a short term solution for individuals that those who can should start working on now (I already started myself two years ago when I saw the unmistakable signs of what I described above) and there is a long term solution that will come from the short term solution. The short term solution is self sufficiency. Governments are incapable of securing the peace and prosperity for the populace anylonger. If you can't tell already then you will know soon, governments are right now only in the business of making sure an elite class of people does not pay the price for the destruction of our economies. Government, whether left or right oriented can not have nor will they have in their current form solutions for you and I, the common people. Therefore all those who can MUST become self sufficient. Many will not be able to, and as a result many will suffer grievously. This will naturally lead to revolutions.
This leads then to the long term solution. Right now we are at the beginning of a right wing authoritarian revolution. Those of us who love freedom, I mean true freedom not just the platitudinous notion of such, have the duty to not only fight and resist this authoritarian take over but we must as well work to build a new system to replace it. Resistance is not enough we must build a new as we destroy the old. It is no longer a matter of democrats vs republicans here in America, and left vs right elsewhere. All of it must be destroyed. We need a revolution of rationality. This revolution must be replace the current failed systems with a system that works truly for all humans, not just national interest AND that works in concert with nature instead of against it. Myself, I believe that resource based economics as espoused by Jacques Fresco is the next logical step in human social/governmental development. Some will say that Fresco's vision is too utopian and can not be achieved. Well my response to them is this: humans can achieve whatever they want and set their minds to doing OR they can accept what's handed to them and allow others to determine their fate. The choice is yours and the choice is ours.

[ancianita]

17. +1000 for more big picture -- I've always wished we could clone Jacques Fresco.

[ancianita]

16. A predominant world of silence over climate change is still the elephant in the global room.

When you said:

There is little reason for optimism that the world’s political leaders are well-equipped to confront the recessionary world when it emerges. This is not necessarily because the cast of characters now in office is diminished in quality compared to a decade ago.

I can't help thinking:

How are the upcoming recession and climate change related. We need to address that each one affects the other. In my view, woe to world banks and leaders who won't see the connection.

I like how Chris Hedges thinks: "... We don't need leaders. We need movements. ... It's always those movements that have to keep leaders in check ... starting with the Powell Memo ... make power frightened of us, not to ever trust in power ... we have to rebuild movements to pit power against power ...
Roosevelt said 'we gotta give up something or we're going to get revolution... it was those old movements that pushed Roosevelt ... "

"... the belief that tech will save us is as specious as that of climate deniers ... what will save us is not even articulated ... that's dangerous ... I don't share this culture's mania for hope ...

The hardest thing before us is to face what's before us honestly. I've got kids! ... we're not responding because the people who have total control are blinded by a mania for profit, by idols, by a cult of the self, and it's not just Trump."

You don't have to respond.

I just feel that this examining of global financial decision making is just one flash point for examining our leaders.

To me, the things that concern us are the things we and they are so frightened so speak of. The Big Thing that we can't wrap our head around -- like climate change and its feedback loops that will incinerate all that we build and those we love -- the global problem that we and our leaders have to become creative and rational about finding solutions to, the problem financial and political world leaders won't bring themselves to deal with. At least along with global publics.

I appreciate your OP attempt to address our problems from a global outlook on who has led what.

I just think that we planetary beings have to think ahead of those you've noted -- through movements. Movements. Which I see in EU protests over the climate change inertia of global leaders.

We must speak to the future, not just analyze the commodified present.

We might be precise about what we see in leaders we never really chose, but in doing so, we sill still miss the mark on how to steer forward toward our future generations' survival.

I want to know before I die that my grandchildren will have a future that we helped steer global populations toward, instead of analyzed, in the short term, the consequences of our leaders' financial decisions.

Maybe my reaction is out of place here, but you got me to trying to see a bigger picture that your OP points to, at least for me.

Thank you for an effortful post in what I think is a dark time.