Europe heading into recession
Discussion
The way I view markets like this is that they are like a rubber band.
Pick one up. Stretch it. Pull a bit more. You think it’s going to snap. It doesn’t. So you pull a bit more, even though you know it is going to really hurt when it goes. And, inevitably, as night follows day, it will go. And then it does.
Things not looking great across the pond either. Much weaker than expected US jobs report, a growing yield curve inversion and Fed rate cuts expected next month. It's becoming increasingly accepted America will go into recession over the next 12 months but no one is quite sure how deep it will be. Here's one not so positive take.
https://www.zerohedge.com/news/2019-06-08/why-you-...
https://www.zerohedge.com/news/2019-06-08/why-you-...
loafer123 said:
Lots of noise in the press about Target 2.
Particularly interesting in the Telegraph this morning was the informed view that the debt converts to Lira if Italy leave the Euro.
That would be a big big problem for Germany.
Moreso for France IIRC.Particularly interesting in the Telegraph this morning was the informed view that the debt converts to Lira if Italy leave the Euro.
That would be a big big problem for Germany.
They hold the lion's share of Italian bank debt.
ETA - https://www.bloomberg.com/graphics/2019-italian-ba...
Whichever, the two big boys of the EU are horribly exposed. Hence the need for an EU army to be able to acquire assets if need be.
Can't pay? We take it away...
Edited by Mothersruin on Sunday 9th June 09:47
booboise blueboys said:
Things not looking great across the pond either. Much weaker than expected US jobs report, a growing yield curve inversion and Fed rate cuts expected next month. It's becoming increasingly accepted America will go into recession over the next 12 months but no one is quite sure how deep it will be. Here's one not so positive take.
https://www.zerohedge.com/news/2019-06-08/why-you-...
Brexit has done us a favour in my view, as it has depressed our markets and we already look cheap without having the crash. https://www.zerohedge.com/news/2019-06-08/why-you-...
Look at the FTSE 100 v. S&P 500 over the last five years, for example;
https://www.nytimes.com/2019/07/09/business/econom...
I still believe wage stagnation is a big contributor. Around 2010-11ish the veterinary clinic my wife worked at said there was no pay rises due to the economic situation, however the company then boasted about record level of profits in the company magazine that was issue around four months later.
I still believe wage stagnation is a big contributor. Around 2010-11ish the veterinary clinic my wife worked at said there was no pay rises due to the economic situation, however the company then boasted about record level of profits in the company magazine that was issue around four months later.
Tlandcruiser said:
https://www.nytimes.com/2019/07/09/business/econom...
I still believe wage stagnation is a big contributor. Around 2010-11ish the veterinary clinic my wife worked at said there was no pay rises due to the economic situation, however the company then boasted about record level of profits in the company magazine that was issue around four months later.
Sounds familiar - many years ago, I was working for a FTSE100 retailer. At 8am, we received an email telling us we hadn't hit our targets to unlock our bonus.I still believe wage stagnation is a big contributor. Around 2010-11ish the veterinary clinic my wife worked at said there was no pay rises due to the economic situation, however the company then boasted about record level of profits in the company magazine that was issue around four months later.
At 9am, our CEO was on Breakfast News telling shareholders there was a 50% increase in dividend payments as we'd had such a good year!
I didn't last long after that.
mike74 said:
Down and out said:
Because the EU is the answer to all ills, it's infallible.
No, printing money out of thin air and having ''emergency'' interest rates for 10 years (and counting) is the infallible miracle cure to all economic ills.The government want everyone in debt, consuming as much as they can and living on printed money. The greatest trick they ever pulled was renaming debt to credit and convincing everyone that having credit was the new being rich.
Trouble is, I think the majority of people have reached peak stuff and have more than enough possessions, hence retailing is dying.
I suspect there will plenty more PPI refund misseling scandals in future to helicopter drop money to the people who are most likely going to blow it and not just hoard it.
fesuvious said:
I'm not going to disagree with most of that.
I believe the rush to cashless is more to do with tax income however. Especially in terms of Greece and Italy. However, every government is missing out on income...not for long.
Goes hand in hand in this country with 'making tax digital' and incrwasing powers for hmrc.
Negative rates in the event of a major downturn would be possible. However, for (Joe public) borrowers rates to go negative you'd need minus 4% !
Therefore negative rates would only benefit the institutions.
Personally next time around I'd bet on QE to the masses. Something like raisi g the income tax threshold to 30k with newly created digital dough making up the tax loss direct to gov coffers.
Or, temporary universal income for all below 'x' income. Again, direct through taxation/benefit payment.
Either way, or something else, or maybe as you have said. None of it matters. We're so far down the rabbit hole in Narnia nobody knows how things will go.
Spot on though, renaming debt 'credit' was useful. My
My strategy is to get debt free asap, borrow nothing. No lease, no loans, no debts or obligations.
Because I just don't trust this financial world.
As for the topic. No. Stagnating existence of zombie economies is where we're at. The effects of QE and low rates. We averted and perverted the natural cycle. A cycle that cleanses and renews.
We f
ked with nature, and bore an economic frankenstein
Same strategy here: get rid of ANY debt as the future's so unknowable at this stage. I only watch this stuff now to know how to deal with mortgage decisions.I believe the rush to cashless is more to do with tax income however. Especially in terms of Greece and Italy. However, every government is missing out on income...not for long.
Goes hand in hand in this country with 'making tax digital' and incrwasing powers for hmrc.
Negative rates in the event of a major downturn would be possible. However, for (Joe public) borrowers rates to go negative you'd need minus 4% !
Therefore negative rates would only benefit the institutions.
Personally next time around I'd bet on QE to the masses. Something like raisi g the income tax threshold to 30k with newly created digital dough making up the tax loss direct to gov coffers.
Or, temporary universal income for all below 'x' income. Again, direct through taxation/benefit payment.
Either way, or something else, or maybe as you have said. None of it matters. We're so far down the rabbit hole in Narnia nobody knows how things will go.
Spot on though, renaming debt 'credit' was useful. My
My strategy is to get debt free asap, borrow nothing. No lease, no loans, no debts or obligations.
Because I just don't trust this financial world.
As for the topic. No. Stagnating existence of zombie economies is where we're at. The effects of QE and low rates. We averted and perverted the natural cycle. A cycle that cleanses and renews.
We f
ked with nature, and bore an economic frankensteinV1nce Fox said:
Same strategy here: get rid of ANY debt as the future's so unknowable at this stage. I only watch this stuff now to know how to deal with mortgage decisions.
Except my mortgage, Ive not had debt for about 10 years, other than the odd purchase on a credit card that gets cleared in a month or two....Im not a powerfully built company director driving a brand new car, my land cruiser is around 15 years old now.fesuvious said:
What I can't fathom however is why central banks haven't / didn't years ago say the following;
'righty, we've had enough of low rates, it's got to change. From next month 10basis points will go on every month for exactly 36months. Should inflation take off, or indeed should we fall into recession we reserve the right to review. Should neither happen we will stick to the plan and review again in month 37'.
If any learned person can inform me why this can't happen please do. For me however this just seems like the perfect 'forward guidance' and would get us back to normal rates.
I am curious as to why you want higher interest rates?'righty, we've had enough of low rates, it's got to change. From next month 10basis points will go on every month for exactly 36months. Should inflation take off, or indeed should we fall into recession we reserve the right to review. Should neither happen we will stick to the plan and review again in month 37'.
If any learned person can inform me why this can't happen please do. For me however this just seems like the perfect 'forward guidance' and would get us back to normal rates.
Certainly, as many people and companies are indebted, it would trigger lower spending and deflation/recession.
If you want a guide as to where we are going, look to Japan.
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