KindaSkolarly wrote:Humanity's fiat paper money system is on its last legs.
I have seen such warnings for more decades than I have been a professional economist. The proposed chains of events never materialize, because the forecasters don't know what they are talking about. In the more unusual case of Nouriel Roubini predicting the end of the real estate bubble in 2008 and its dire consequences, he actually did know what he was talking about. The information was kicking around, as Michael Lewis recounted in
The Big Short, but the Wall Street (and London and Frankfurt) bankers were determined to squeeze their eyes shut harder and pretend there was no problem.
No such corresponding set of disaster signals exist for some kind of crash today. If Dear Leader's anti-globalism was going to cause a collapse, we would probably already see signs of it.
KindaSkolarly wrote: China has bad problems and it's running out of options. Its economy could implode soon.
China's overextension of credit has been supposed to be a disaster waiting to happen since at least 1995. McKinsey forecast it in the early 00's, and they are a serious bunch. Evidently, however, we have a lot to learn about how credit is rationed, and bailed out, in a one-party state. We are hearing dire predictions again because some property investment is going bust and their growth rate is down to (Gasp!) 5 percent or lower. I have still not heard any rational analysis about how a crash is supposed to be generated by their problems. If anything I suspect that their equity-based and speculation-resistant business sector will surprise a new cohort of analysts with the ability to ride out the Trump crisis with ease. The supposedly untenable debt burden is held by the State Owned Enterprises, and those can be opened and closed with the ease of government agencies. So far the government's ability to print money for any liquidity crisis has not been abused and seems to have plenty of room for expansion without a threat of inflation.
KindaSkolarly wrote:But I suspect the EU will beat it to the punch. Deutsch Bank may go under soon, and it'll take Europe with it.
Deutsche Bank has certainly been lurching from one tight spot to another since even before the 2008 crisis, but their loan portfolio is concentrated in the most solid manufacturing sector in the world, and I would be truly shocked to see them fail. Germany's property sector has a big problem: rising demand has outpaced the country's ability to negotiate a lid on price increases. Financial crises are not born of such problems.
KindaSkolarly wrote:Boris Johnson in his first speech as the new British PM said that he WILL pull Britain out of the EU on Oct 31, so maybe the next Great Depression will be blamed on that.
Large scale crises do not simply emerge from headlines like Athena out of Zeus's head. Britain will live through some problems in the next year or two, but there is no reason to expect them to lead to a crisis, especially outside the U.K.
KindaSkolarly wrote:But there won't be any coming back from this depression. Buy guns and gold while you can.
The biggest source of economic trouble on the horizon is climate change, and gold will definitely not help with that. For that matter, guns won't solve the problem of drought either, though it might be prudent these days to have a Mormon basement filled with emergency supplies.
KindaSkolarly wrote:Is This What Has Got the Fed So Spooked?
The Fed is hardly spooked, though they have revised their forecasts downward significantly in the last 6 months, and all indications are they have it right. I just heard a Fed economist do a once-over-lightly on the economy, and his take is that there is a backlog of demand for up-to-date equipment and we can look forward to a surge in capital formation (finally, if so: it has been notably absent as a response to the corporate tax cut) soon. That is at least as likely as any crash.
KindaSkolarly wrote:If he serves a second term it will be because he's been allowed to by Silicon Valley. Maybe that's why he's indicated approval for increasing the number of foreign technical workers allowed into the US:
Silicon Valley loves their H-1B's, but they are long since able to substitute subcontracting to get the work done by smart Indians and Filipinos, and probably Chinese and Taiwanese as well, though the Taiwanese make as much or more as a programmer or engineer in Chicago.