The Recession Megathread

[Solmyr]

Meri, if you have to choose, then I'd say pick Spain over Italy. The latter is currently ruled by far right nationalist traitors in Putin's pocket.

[celedhring]

Two weeks ago I was talking to one of our macroeconomics experts at the business school I collaborate with. FWIW he was expecting Spain to enter recession in Q4 2020.

[Admiral Yi]

I keep having thoughts of a man in naval uniform (which is how always imagine Grumbler) and a Minotaur running in panic.

OK, I"m going to have to withdraw the lucid comment. 

[Tamas]

How much is the severity of a recession linked to reputable analysts warning about the recession and market participants acting on those warnings?

IIRC it was last week Economist ran an analysis on the puzzling phenomenon of a recession not starting despite it should. I think one of the big puzzlements was the lack of inflatory pressure in the world.

[Tamas]

I of course managed to buy my couple of stocks near the top of the heydays.  But whatever, I am not going to sell them, will ride out the storm, it's very little money anyways.


The million dollar question though is: can I expect the English property market to see a significant downturn i.e. cheapening? Originally I was hoping that the removal of government incentives to have buy-to-rent properties, coupled with an upward creeping base interest rate will wipe off most of the profit of the tons of amateur middle-class investors, pushing prices downwards as they begin to sell.

The market has been stagnating it would seem, and even declining in my area a bit (allegedly), but if we go back to absolutely zero interest rates, I doubt this will continue.

[crazy canuck]

How much is the severity of a recession linked to reputable analysts warning about the recession and market participants acting on those warnings?

The problem with recessions is we could already be in it without knowing it yet because of the lag time in assessing the economic data.  By the time a recession is confirmed it has already happened.  There has been a lot of talk about the end of this unprecedented economic growth for a few quarters.  What effect did that analysis have in actually causing a recession?  Good question.

[DGuller]

How much is the severity of a recession linked to reputable analysts warning about the recession and market participants acting on those warnings?

IIRC it was last week Economist ran an analysis on the puzzling phenomenon of a recession not starting despite it should. I think one of the big puzzlements was the lack of inflatory pressure in the world.

If I were to guess, I think lower inflation and income inequality are linked.  The growth in income mainly goes to the class that spends extra money not on extra consumption, but on extra investment.  Therefore inflation manifests itself as an asset bubble rather than a classic demand-pull inflation.

[The Minsky Moment]

We are in a rentier-favorable economy.  Piketty thesis.

[dps]

Meri, if you have to choose, then I'd say pick Spain over Italy. The latter is currently ruled by far right nationalist traitors in Putin's pocket.

I think that she speaks Spanish anyway, but AFAIK not Italian, so I'd think Spain would be a better choice for her simply on that basis.

[Razgovory]

I keep having thoughts of a man in naval uniform (which is how always imagine Grumbler) and a Minotaur running in panic.

OK, I"m going to have to withdraw the lucid comment. 

I have no idea what people are saying now.  Minotaurs I get.  When Pasiphae said she was feeling "quite bullish" I knew exactly what she was going on about.  When Dguller talks about asset bubbles, I'm completely lost.

[Tamas]

German GDP growth was -0.1% last month, and the US yield curve has apparently inverted, for the first time since 2007. The UK one followed suit as a good vassal state should.

[The Minsky Moment]

German GDP growth was -0.1% last month, and the US yield curve has apparently inverted, for the first time since 2007. The UK one followed suit as a good vassal state should.

The US yield curve has been inverted for months, IIRC since March.

[Tamas]

IDK they seem to be making a big deal out of it happening today:

https://www.theguardian.com/business/live/2019/aug/14/germany-economy-shrinks-gdp-recession-uk-inflation-stock-markets-business-live?page=with:block-5d53de348f084f687f3563bc#block-5d53de348f084f687f3563bc

[Tamas]

Also, Trump's cabinet is declaring that it is all the Fed's fault for not slashing interest rates quickly enough.

That's going to help!

[FunkMonk]

China released some economic data today that were below expectations as well.

Germany's GDP growth has been essentially flat since 3Q 2018. Hard Brexit is likely to happen. Ongoing trade war between U.S. and China. Nowhere to go for yield except US treasuries, driving down the yield further.

Everyone sees what's happening.