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The Great Recession of 2018?

Pro and Con

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Dec 17, 2017, 8:13am Top

Desmond Lachman, a resident fellow at the American Enterprise Institute, is a former deputy director in the International Monetary Fund’s policy development department and a former economic strategist at Salomon Smith Barney:

The Global Economy Is Partying Like It’s 2008

...global asset prices are once again rising rapidly above their underlying value — in other words, they are in a bubble.

...bubbles...are now to be found in almost every corner of the world economy.

...highly unorthodox monetary policy by the world’s major central banks has created a global government bond bubble, with long-term interest rates plumbing historically low levels. (margd: similar to short term even)

...stock values are at lofty heights that have been reached only three times in the last century....housing bubbles...in...Australia, Britain, Canada and China...interest rates have been driven down to unusually low levels for high-yield debt and emerging-market corporate debt.

....the years of low interest rates and avid central bank government bond buying that spawned the bubbles now appear to be drawing to an end.

The (US) Federal Reserve...European Central Bank...Bank of Japan...

...fault lines in a number of major economies. Italy...Brazil...China...

...termination of the North American Free Trade Agreement...other protectionist tendencies...Korean Peninsula...

...so-called shadow banks (hedge funds, private equity funds, large money market funds and pension funds) play (dominant role) in the American financial system now. Unlike the banks that were covered by the Dodd-Frank regulations, these institutions are lightly regulated — but...subject to deposit runs just like banks.

...(too late to prevent bubble, but) policymakers...(could) free us from the boom-bust cycles that we seem to be experiencing every 10 years...for example, create a program that in a severe downturn would give every citizen a cash grant to be spent at their discretion, what Milton Friedman called “helicopter money.” (margd: in 2009, appliance rebate programs, cash for clunkers, etc.?)

...Trump administration’s budget-busting tax cuts risk overheating markets even further and limiting the government’s ability to respond when the bubbles pop. This heightens the risk that when the bubbles burst, we’ll be forced to rely yet again on artificially low interest rates, which will set us up yet again for another boom-bust cycle. (margd: doubts that this Admin would be as flexible, fleet-footed as GW Bush's was in responding in 2008, with follow through by Obama)


Aug 14, 7:47am Top

David Frum @davidfrum | 8/14/2019

Trump has got the ultra-low interest rates he wants. US 30-year bond falls to lowest interest rate in American history, lower even than during Great Recession

Result of all this Trump success in achieving his economic agenda: US stock markets accelerate their slide, as more and more indicators flash impending recession.

Not since 1837 has a US crash been more the work of 1 single person. It's all Trump's doing


U.S. 30-Year Yield Falls to Record Low and Curve Warns of Recession
Benjamin Purvis | August 14, 2019

U.S. 30-year yields fell to their lowest level ever as investors sought shelter amid a fraught geopolitical backdrop and concern increased about the impact of the escalating global trade war on economic growth.

Meanwhile, the stream of investors into the safest parts of the market has triggered yet another recession warning, driving the 10-year Treasury yield below the two-year one.

The 30-year yield tumbled as much as nine basis points to 2.0738%, below the previous record low of 2.0882% from July 2016. The gap between 5-year and 30-year debt, a widely watched yield curve, flattened to 54 basis points, while the equivalent gap between 2-year and 10-year debt inverted for the first time since 2007.


Aug 14, 9:32am Top

What goes up eventually comes down. What's been happening though pretty much since the Reagan years though is that corporations and the truly wealthy are indemnified against their losses which instead have been passed on to the public to bear the brunt of their gambling and manipulations. Two recent examples of that are when the Mexican peso collapsed in 1996 and the investment bank debacle of 2008.

Edited: Aug 14, 12:27pm Top

It appears that Trump's tariff war may be igniting, or hastening, a world-wide recession ~ the GOP must be sooooo proud of its presidential candidate.

Aug 15, 8:10am Top

While these things are somewhat cyclical, they can be hastened and worsened.
Wharton Business School must be so-o proud. NOT!

#Trump Recession!!

Edited: Aug 15, 8:23am Top

>5 margd:

Trump's Wharton degree isn't worth the paper it is printed on. I wonder if a Wharton Business School education is really as elite as it is advertised to be?

Aug 15, 8:22am Top

This guy bankrupted a casino.

Aug 16, 8:34am Top

The only 'silver lining' to a recession, should Dems take over, is that there will likely be less C emissions, and
any stimulatory spending could be spent on Green New Deal.


The 'bloodbath' in America's trucking industry has officially spilled over to the rest of the economy
Rachel Premack | 8/16/2019

The inverted yield curve is a sinister sign of a forthcoming recession, and investors are freaking out that a downturn is nigh.

Indicators from the ($800 billion) trucking industry have for months been warning of an economic recession, as truckers have seen their pay slashed in what has been called a "bloodbath" in the industry.

Freight recessions are often a leading indicator of when the rest of the economy is headed for a downturn.

...This year alone, some 2,500 truck drivers have lost their jobs as trucking companies large and small declare bankruptcy.

Major carriers like J.B. Hunt, Knight-Swift, and Schneider have been forced to cut their annual outlooks.

...the volume of trucks purchased in July fell to its lowest level in nearly 10 years.

...Rates in the spot market tumbled by 37% this July from July 2018.

And the Cass Freight Index says year-over-year trucking volumes have slipped for eight consecutive months...


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