Why The Next Recession Will Morph Into A Decades Long Depressionary Event

[Asiantravel]

Bloomberg recently reported the Thai economy will expand 3.3 percent a year which is the weakest among eight developing Southeast Asian nations

without simply resorting to the usual doom and gloom labelling, would anyone care to rationally debate why the following theory about what exactly is happening could be wrong?

 

Quote

 

The next business cycle recession will be unending and is very likely to run years into decades and perhaps a century or more.  A declining population already indebted with record debt and zero interest rates will consume less...meaning overcapacity and excess inventories will never be fully cleared before the next downturn...and on and on and on.

But the absence of a growing consumer base isn't just a US issue...this is a global problem.  The annual growth of the 0-64yr/old population of the combined OECD nations (most the EU, US, Canada, Mexico, Chile, Japan, S. Korea, Australia / New Zealand) plus China, Brazil, and Russia show the growth that has driven nearly all economic growth has come to an end...and begins declining from here on.  And when importers are shrinking, exporters have no one to export to...and on and on and on.  A recent article helps to detail the depopulation we are now facing...not simply a demographic issue that so many believe

 

 

https://econimica.blogspot.com/2017/06/why-next-recession-will-morph-into.html

[swissie]

The "overcapacity" problem is only part of it. Yes, woldwide we have reached production-capacity levels of goods in an unprecedented way. So, despite the world being awash in "Fiat-Money" = no inflation.

A bigger problem is on the horizon:
Central Banks are trying to carefully tip-toe out of the "Quantitative Easing" programs, enabeling interest rates to rise (no more "Free Money").
Will be interesting to see, how the World Economy (addicted to "Free Money" by now), will digest this. Holds tremendeous deflationary potential.
That's why the central-banks are so hesitant and nervous about this. More hesitant and nervous than a country-girl before her first date.
Interestig times ahead.
Cheers.

[soalbundy]

Bring it on, the world economies are run by 'experts' what can go wrong ? Up next AI will replace millions of jobs in the future, from line workers to surgeons and production managers as well as stockbroking and investment managers, 'happy times are here again.....'

[little mary sunshine]

"Prophet of Doom and Gloom".... " The Sky Is

falling, The Sky Is Falling"

[tonray]

"Thai government announces new Visa rules:

 

1) Marriage to a Manufacturing Robot of Thai origin now only requires 200K baht in bank for 3 months"

 

2) Skint Backpackers welcome to sell travel photos outside of Victory Monument as long as they maintain 4 Thai assistants to help show the photos

 

3) Retirement Visa requirements amended to allow under 30 years olds to apply

[shaurene]

I think China will cause the next depression. They are swamped with Debt. So many Chines peole are buying into mortgage depts the housing bubble will explode and the banks will get ruined with npaid dept. This is what i read from financial experts.

[F4UCorsair]

29 minutes ago, little mary sunshine said:

"Prophet of Doom and Gloom".... " The Sky Is

falling, The Sky Is Falling"

There's never a shortage of doomsayers....they thrive on negativity, house prices are about to crash, the markets are about to collapse, we'll all be living on rabbit stew, etc.

I've been investing for a long time, and the value just keeps increasing, with 'corrections' along the way.

[F4UCorsair]

2 minutes ago, shaurene said:

I think China will cause the next depression. They are swamped with Debt. So many Chines peole are buying into mortgage depts the housing bubble will explode and the banks will get ruined with npaid dept. This is what i read from financial experts.

If you're listening to 'financial experts,  you'll end up in financial trouble.

Just invest in blue chip stocks, top 20 companies, paying good dividends, relax and wait for your investments to bear fruit.

Forget the speculative stocks and get rich quick schemes because you can get poor just as quickly.

[mfd101]

The demographics are interesting. Some 'Western' countries will continue to grow in population - notably Usofa (which will still fall from 3rd largest to 4th behind Nigeria by 2050) and Australia & Canada - the great 3 Anglo countries of immigration. And the world as a whole is moving up from 7 billion currently to 11 billion by end of the century.

 

So the notion of lack of people is a furphy. But of course there's the question of distribution.

 

Japan & Russia are now steadily decreasing in population. Russia is predicted to be no larger than Germany by mid-century. And Japan is a nice example of what happens to such a country economically & socially: conservative, money under the mattress, lack of investment, 1-student classes ... Anyone who expects Japan to grow economically (and we've been waiting now for over 2 decades) doesn't know the meaning of the word 'demographics' ...

[Krataiboy]

Yeah, but. . . 

 

What about the Robotics Revolution. This is going to sweep away, if the experts are right, around 70 per cent of jobs currently done by humans over the next few decades. How recessionary will that be, with only 30 per cent of the population able to earn a wage!

[Brunolem]

13 hours ago, swissie said:

The "overcapacity" problem is only part of it. Yes, woldwide we have reached production-capacity levels of goods in an unprecedented way. So, despite the world being awash in "Fiat-Money" = no inflation.

A bigger problem is on the horizon:
Central Banks are trying to carefully tip-toe out of the "Quantitative Easing" programs, enabeling interest rates to rise (no more "Free Money").
Will be interesting to see, how the World Economy (addicted to "Free Money" by now), will digest this. Holds tremendeous deflationary potential.
That's why the central-banks are so hesitant and nervous about this. More hesitant and nervous than a country-girl before her first date.
Interestig times ahead.
Cheers.

Actually, it is not "central banks" but rather the US Federal Reserve that is trying to get out the ZIRP and QE schemes.

Others, such as the ECB (Europe) simply can't do that because these policies are the only thing that holds their house of cards (the euro, the Italian and Spanish bonds) together.

The UK and Japan are in no better shape.

Only the US has some room to try something because it still has the huge advantage of printing the world reserve currency,

Since 2008, it has all been a game of extend and pretend (keeping the world economies under both steroids and respiratory assistance while pretending that the patient was fine), but this won't last forever, and when the whole scheme will collapse, the 2008 crisis will look like a walk in the park.

[timendres]

The sky is not falling. But the world is changing. Change is relentless.

 

WRT to the "AI will leave us all unemployed", the research I have seen does not suggest 70% will lose their jobs to AI, but something on the order of 40+%. This reminds me of the poor "buggy whip" employees. When the automobile replaced the horse, the same "the world is ending" arguments were made. When computers replaced phone operators, it was the end of the world as we know it. Job disruption has been a fact of life since the dawn of time. The only difference today is that is happens at a faster pace. Not happy times for the taxi drivers (unless they find jobs they enjoy more), but good times for AI programmers and AI module repairmen.

 

WRT perpetual recession, one needs to look at the definition. For the past 300 years, we have defined economic well-being as an economy in growth mode. And that definition has served society well. However, we are now in an age where perpetual growth is becoming unsustainable. With 7B+ people on the planet, the idea of perpetual 3% growth becomes a road to disaster. Natural resources are under serious pressure. We are coming into an age were we need to redefine our economic model to one that is more sustainable. In fact 0% growth may be the desired result. We should not cling to a broken model, but instead adapt and find the best way to move forward.

 

We have survived the industrial age, and the technology age, and now we enter the automation age. Humans adapt. Some better than others.

[chingching]

34 minutes ago, Brunolem said:

, but this won't last forever, and when the whole scheme will collapse, the 2008 crisis will look like a walk in the park.

The scheme since since the dark ages, but more so after WWII was inflation.  Inflation let countries borrow tons of money, and then repay it the next year with "cheaper" money.  To keep inflation growing, you need to consume more goods, which means you need more people, which means you need more jobs, which means you must use up more natural resources, like copper, iron, petroleum, clean water, and arable land.

The problem with year after year of inflation is that you cannot increase the population forever, eventually you run out of the natural resources to keep the population growing. I believe we will hit that point far before a population of 11 billion people. 

[Grumpy Duck]

2 hours ago, F4UCorsair said:

There's never a shortage of doomsayers....they thrive on negativity, house prices are about to crash, the markets are about to collapse, we'll all be living on rabbit stew, etc.

I've been investing for a long time, and the value just keeps increasing, with 'corrections' along the way.

I am by no means a financial expert, however I have done university level research papers on the US Great Depression. Some of the big contributors were labor unrest, corporations buying each other out, large inventory surpluses in warehouses and a stock market rapidly growing on inflated values. Conservative government supporting the wealthy and corporations. The great depression was preceeded by a couple of recessions and never really recovered. The American workforce could not afford to buy items they made. Also there was a devastating drought destroying many farms. Sweden was the first nation to recover from the depression, they did it using Kenesian economics. Created good paying jobs, which created tax revenue and people spent money buying things. FDR's New Deal created jobs which created tax revenue as well as spending, He also was labor friendly, backing unions, as did Truman and Eisenhower. As I recall Ike raised taxes on the wealthy to 90%. In the late 1940's thru the 1960's & early 70's  the US middle class was born, Nixon and then Reagan started the war on the working class and Reagan gave the wealthy record tax cuts at our expense example, increasing the FICA tax by trillions of dollars to "save" social security. Instead it financed his tax breaks for the rich. Bush cut taxes turning a huge surplus into debt, as well as starting 2 unfunded wars one based on lies. We. now have an unstable inexperienced idiot in the whitehouse, again planning more tax cuts, cuts to social security. Again the banks have even more power, the stock market is at record highs based on false statistics made by corporations to impress stock holders (and gain record paychecks). The next depression will make the great depression seem mild. 

 

[Asiantravel]

2 hours ago, F4UCorsair said:

There's never a shortage of doomsayers....they thrive on negativity, house prices are about to crash, the markets are about to collapse, we'll all be living on rabbit stew, etc.

I've been investing for a long time, and the value just keeps increasing, with 'corrections' along the way.

and there is never a shortage of those who are too scared to even debate the issue which of course delights the policymakers because it gives them a feeling they can get away with anything short term

[Asiantravel]

1 hour ago, Grumpy Duck said:

I am by no means a financial expert, however I have done university level research papers on the US Great Depression. Some of the big contributors were labor unrest, corporations buying each other out, large inventory surpluses in warehouses and a stock market rapidly growing on inflated values. Conservative government supporting the wealthy and corporations. The great depression was preceeded by a couple of recessions and never really recovered. The American workforce could not afford to buy items they made. Also there was a devastating drought destroying many farms. Sweden was the first nation to recover from the depression, they did it using Kenesian economics. Created good paying jobs, which created tax revenue and people spent money buying things. FDR's New Deal created jobs which created tax revenue as well as spending, He also was labor friendly, backing unions, as did Truman and Eisenhower. As I recall Ike raised taxes on the wealthy to 90%. In the late 1940's thru the 1960's & early 70's  the US middle class was born, Nixon and then Reagan started the war on the working class and Reagan gave the wealthy record tax cuts at our expense example, increasing the FICA tax by trillions of dollars to "save" social security. Instead it financed his tax breaks for the rich. Bush cut taxes turning a huge surplus into debt, as well as starting 2 unfunded wars one based on lies. We. now have an unstable inexperienced idiot in the whitehouse, again planning more tax cuts, cuts to social security. Again the banks have even more power, the stock market is at record highs based on false statistics made by corporations to impress stock holders (and gain record paychecks). The next depression will make the great depression seem mild. 

 

the Japanese stock market has been in a bear market for nearly 30 years and during three decades has never recovered even 50% of the losses that those people incurred when the market first fell in 1989. Why isn't it possible that following the next correction the rest of the world will suffer similar conditions?in other words this is as good as it ever gets?

Edited June 26, 2017 by Asiantravel

[midas]

3 hours ago, F4UCorsair said:

If you're listening to 'financial experts,  you'll end up in financial trouble.

Just invest in blue chip stocks, top 20 companies, paying good dividends, relax and wait for your investments to bear fruit.

Forget the speculative stocks and get rich quick schemes because you can get poor just as quickly.

And does your recommendation not to listen to financial experts also extend to ignoring what hedge funds are doing? Because according to this article hedge funds are now net sellers of stocks

 

“Smart Money” Investors Are Now Net Sellers Of U.S. Stocks

http://jaytaylormedia.com/smart-money-investors-are-now-net-sellers-of-u-s-stocks/

 

 

 

[Asiantravel]

16 hours ago, swissie said:

The "overcapacity" problem is only part of it. Yes, woldwide we have reached production-capacity levels of goods in an unprecedented way. So, despite the world being awash in "Fiat-Money" = no inflation.

A bigger problem is on the horizon:
Central Banks are trying to carefully tip-toe out of the "Quantitative Easing" programs, enabeling interest rates to rise (no more "Free Money").
Will be interesting to see, how the World Economy (addicted to "Free Money" by now), will digest this. Holds tremendeous deflationary potential.
That's why the central-banks are so hesitant and nervous about this. More hesitant and nervous than a country-girl before her first date.
Interestig times ahead.
Cheers.

 

Plus  the credit dynamo behind global growth has not only stopped, but is now fully in reverse mode. 

The second derivative of credit growth and arguably the biggest driver behind economic growth and world GDP has now abruptly stalled, as a result of a sudden and unexpected collapse in the said impulse.

From peak to trough the deceleration in global credit growth is now approaching that during the global financial crisis (-6% of global GDP)

 

 

 

[Grumpy Duck]

2 hours ago, Asiantravel said:

the Japanese stock market has been in a bear market for nearly 30 years and during three decades has never recovered even 50% of the losses that those people incurred when the market first fell in 1989. Why isn't it possible that following the next correction the rest of the world will suffer similar conditions?in other words this is as good as it ever gets?

Historically I agree. Perhaps the Japanese markets do not allow CEO's to manipulate the market. 

[Thaidream]

There is no doubt that a population decline will affect growth- however countries that allow Immigration will survive with excellent growth  (that being 3%). You will notice that Japan has had little or no growth simply because it has an aging populace and little immigration.

 

The greatest danger- in my opinion- is the disproportionate share of created wealth which makes the 99% of  population poorer while 1 % get richer and their share of the wealth is completely out of synch  with  positive growth and a positive society.  This problem is severe in the West and has contributed in America to the election of Donald Trump and in Europe to Brexit and right wing parties in other countries.. There is an inordinate section of the population that is desperate or becoming desperate. They lack hope as prices rise beyond their reach while income stays flat.  Greedy corporations; banks; and other financial institutions have been aided by incompetent governments which allow this massive maldistribution of wealth. A Donald Trump will contribute to this decline as he increases military spending; pushes a decline in Immigration; refuses to go to a single payer healthcare system and instead continues to reward for profit hospitals and Big Pharma; and refuses to promulgate a real tax reform that allows redistribution of wealth.

 

What does all this portend for the future- massive instability and potential revolution. There's many more poor than there is rich and at some point they are going to realize they have had enough of the utter BS that politicians exist on.

[Asiantravel]

6 minutes ago, Thaidream said:

There is no doubt that a population decline will affect growth- however countries that allow Immigration will survive with excellent growth  (that being 3%). You will notice that Japan has had little or no growth simply because it has an aging populace and little immigration.

 

The greatest danger- in my opinion- is the disproportionate share of created wealth which makes the 99% of  population poorer while 1 % get richer and their share of the wealth is completely out of synch  with  positive growth and a positive society.  This problem is severe in the West and has contributed in America to the election of Donald Trump and in Europe to Brexit and right wing parties in other countries.. There is an inordinate section of the population that is desperate or becoming desperate. They lack hope as prices rise beyond their reach while income stays flat.  Greedy corporations; banks; and other financial institutions have been aided by incompetent governments which allow this massive maldistribution of wealth. A Donald Trump will contribute to this decline as he increases military spending; pushes a decline in Immigration; refuses to go to a single payer healthcare system and instead continues to reward for profit hospitals and Big Pharma; and refuses to promulgate a real tax reform that allows redistribution of wealth.

 

What does all this portend for the future- massive instability and potential revolution. There's many more poor than there is rich and at some point they are going to realize they have had enough of the utter BS that politicians exist on.

some on the Internet write that they believe the "Elites " in America (if you believe there are puppet masters above Trump such as George Soros and even Henry Kissinger i.e. The New World order supporters) are deliberately engineering all this including the revolution you refer to so they can crash the US dollar and then introduce a new single world currency- possibly totally digitised and at that point we we'll be in a horrible  new  totalitarian world.

[Thaidream]

I don't believe in conspiracy theories- but I do believe the super wealthy will resist any type of change that will redistribute wealth.  Their greed knows no bounds. At the moment- Trump plays directly into their hands and they would love to see him as President for 8 years so they can continue the assault against the other 99%.

 

The real problem in the World is what I call materialistic capitalism which espouses the 'greed is good' philosophy.   During the last 40 years- large corporations and banks have  created little real essential goods but many services and financial instruments that have no real value. Such things as derivatives and bundled mortgages simply push money around the World like a Ponzi scheme.

 

The average person simply wants to make a decent living; have a home and a car; send their children to a  safe and decent school ; be taken care of when ill; and hopefully retire with dignity.All of this is under assault by the materialistic capitalists that will continue to push for more wars; increased military spending; higher prices for medical care and life saving drugs; and higher costs for education. None of this is sustainable simply because what has taken place in the last 40 years has shown the inequality of such a program.

 

This will only end when a leader emerges that cannot be bought by either money or fame; and tells the populace the real truth and the real solutions that will  allow the 99% to regain control over their lives. The interesting thing is that the wealthy will still be rich even with a radical restructuring of the economy- they just won't be super rich. If the wealthy were smart- they would co-operate in the restructuring and support it because during a revolution they won't fare as well.

Edited June 26, 2017 by Thaidream

[MyFriend You]

9 hours ago, F4UCorsair said:

There's never a shortage of doomsayers....they thrive on negativity, house prices are about to crash, the markets are about to collapse, we'll all be living on rabbit stew, etc.

I've been investing for a long time, and the value just keeps increasing, with 'corrections' along the way.

I like rabbit stew........raised my own in Vietnam but the snakes liked them as well.

[Thaidream]

I also like rabbit stew-father used to catch wild rabbits back in Ohio and cook up a stew. Today, no more wild rabbits and I predict  one day no more  super rich.

[thailand49]

If it happens, you won't hear it from the Thai Government, they have a belief here that a white lie can be good for you. What you don't know won't hurt you.

[Brunolem]

4 hours ago, Thaidream said:

I don't believe in conspiracy theories- but I do believe the super wealthy will resist any type of change that will redistribute wealth.  Their greed knows no bounds. At the moment- Trump plays directly into their hands and they would love to see him as President for 8 years so they can continue the assault against the other 99%.

 

The real problem in the World is what I call materialistic capitalism which espouses the 'greed is good' philosophy.   During the last 40 years- large corporations and banks have  created little real essential goods but many services and financial instruments that have no real value. Such things as derivatives and bundled mortgages simply push money around the World like a Ponzi scheme.

 

The average person simply wants to make a decent living; have a home and a car; send their children to a  safe and decent school ; be taken care of when ill; and hopefully retire with dignity.All of this is under assault by the materialistic capitalists that will continue to push for more wars; increased military spending; higher prices for medical care and life saving drugs; and higher costs for education. None of this is sustainable simply because what has taken place in the last 40 years has shown the inequality of such a program.

 

This will only end when a leader emerges that cannot be bought by either money or fame; and tells the populace the real truth and the real solutions that will  allow the 99% to regain control over their lives. The interesting thing is that the wealthy will still be rich even with a radical restructuring of the economy- they just won't be super rich. If the wealthy were smart- they would co-operate in the restructuring and support it because during a revolution they won't fare as well.

A revolution seems unlikely because the conditions aren't there...as long as there is TV and food, most people won't move from home, no matter what.

Since the end of WWII, the world economy has gone through 3 main phases: growth, plateau and decline.

In 2008, it finally hit a wall and since then has survived only thanks to unsustainable measures, such as ZIRP, or even NIRP (negative interest), QE (money printing) and piling debt, which has almost doubled, globally, during the last 8 or 9 years, even though the 2008 crisis was the result of too much debt.

Comparisons between the economy and stars are often made, which I think are quite accurate.

Being unsustainable, the system could go supernova, that is explode, or it could collapse upon itself, to become the equivalent of a white dwarf, or even of a neutron star, that is a much smaller and dim version of its former self.

I think that the more time elapses without going supernova (major crashes, revolutions...), the more we are in for the slow decay version (no real growth, save for debt, reduced income for the majority, reduced freedoms to maintain order, lower education, morality and so on).

Historically, as far as I know, collapses have always followed that slow path (Mesopotamia, Greece, Rome...) and it seems likely that we are well engaged in that direction.

Now, with a Trump a the helm, one never knows...things could drastically change with just a few tweets...

[F4UCorsair]

7 hours ago, Thaidream said:

I also like rabbit stew-father used to catch wild rabbits back in Ohio and cook up a stew. Today, no more wild rabbits and I predict  one day no more  super rich.

No more super rich rabbits???   The thought is too much to bear.....maybe no more rich bears either??

[rickudon]

As world population growth slows (yes, it will, look at fertility rates, only above 3 in Africa) so will the possibility of ever expanding growth. We are entering the stable/stagnation era, Japan got there first and Europe is following. The automation issue will just compound this - capacity may increase, but if half the world isn't working who can buy this stuff?

 

I think we will eventually transform to a stable/zero growth economy, but there will be a lot of ups and downs before we get there.

[Asiantravel]

3 hours ago, rickudon said:

As world population growth slows (yes, it will, look at fertility rates, only above 3 in Africa) so will the possibility of ever expanding growth. We are entering the stable/stagnation era, Japan got there first and Europe is following. The automation issue will just compound this - capacity may increase, but if half the world isn't working who can buy this stuff?

 

I think we will eventually transform to a stable/zero growth economy, but there will be a lot of ups and downs before we get there.

it is very hard to  imagine any peace or stability with a zero growth environment even with just our existing 7.5 billion population

Edited June 27, 2017 by Asiantravel

[suzannegoh]

the Japanese stock market has been in a bear market for nearly 30 years and during three decades has never recovered even 50% of the losses that those people incurred when the market first fell in 1989. Why isn't it possible that following the next correction the rest of the world will suffer similar conditions?in other words this is as good as it ever gets?

 

Obviously it would have been a big loss if someone invested once and once only in Japanese stocks and they made that investment in 1989, but have you ever run the math on what rate of return a Japanese salaryman would have achieved if he dollar-cost-averaged into Japanese stocks starting in the mid 80's and put X% if his salary into Japanese stocks each month at whatever the prevailing price of stocks was at the end of that month? In that scenario, he would have done a lot of buying when prices were depressed and achieved a much higher ROI than someone who made a single investment at the market peak in 1989.