Posted on 01/21/2013 8:08:21 AM PST by blam
The Most Likely Cause Of The Next Recession...
Joe Weisenthal
January 21,2013
Bill McBride at Calculated Risk has a great post up about the difficulty of recession forecasting.
One difficulty is incentives. Many on Wall Street have a persistent incentive towards optimism. On the other hand, blog/media pundits have more of a pessimism bias, since bad news sells.
McBride himself, who called the downturn and the upturn, writes: "Now one of my blogging goals is to see if I can get lucky again and call the next recession correctly."
So what will cause the next recession?
McBride thinks there are three likely causes: An exogenous event (like an earthquake), a major policy plunder (overly rapid austerity), or, and this is the most likely, Fed tightening.
And the latter he writes:
Most of the post-WWII recessions were caused by the Fed tightening monetary policy to slow inflation. I think this is the most likely cause of the next recession. Usually, when inflation starts to become a concern, the Fed tries to engineer a "soft landing", and frequently the result is a recession. Since inflation is not an immediate concern, the Fed will probably stay accommodative for a few more years.
So right now I expect further growth for the next few years (all the austerity in 2013 concerns me, especially over the next couple of quarters as people adjust to higher payroll taxes, but I think we will avoid contraction). I think the most likely cause of the next recession will be Fed tightening to combat inflation sometime in the future - and residential investment (housing starts, new home sales) will probably turn down well in advance of the recession.
(snip)
(Excerpt) Read more at businessinsider.com ...
“””McBride himself, who called the downturn and the upturn, writes: “Now one of my blogging goals is to see if I can get lucky again and call the next recession correctly.”
So what will cause the next recession? “”””
Maybe we should get out of the current recession before we guess when the next one will be.
Bill McBride at Calculated Risk is a hardened Obamazombie. I have stop reading his blog months ago.
According to McBride, we should NEVER cut gov’t spending or tighten rates. Spend, borrow, spend, borrow.
F*** McBride and Weisernheimer.
The media, on the whole, are nothing but a bunch of misery ghouls first, and ideological whores second. They are in the business for two reasons: 1) for the lucky photogenic few (or the especially lying, devious backstabbers) there is the real chance for fame and notariety, and 2) the intellectually lazy can use their lies and feeble "cliffs notes" minds to just reprint Democrat Talking Points. Either way, no real hard work is needed. I used to think lawyers were the real scum of the earth. I've come to believe that they are in third place behind politicians and journalists (of any media).
2 full blown recessions in a single presidency.
Is this a new record?
so....it will be caused by either a natural disaster or those wascally Conservatives again??
The next DEPRESSION will be caused by people who think they know best on how to run other peoples lives because they think their dearth of indoctrinated knowledge is superior to any sort of “common man’s common sense”.
The Fed raising interest rates to control inflation was the catalysts for the housing based economy deck of cards to collapse 2006 to2008, not that Bernanke had a choice at that point,
However the slow economy gives the Fed ability to create endless $$$ without much inflation.
No one can predict when or how-bad or why because the conditions in this economy have never been tried before in the modern era. Its not actual money printing, but the Fed stacking the banks with bytes representing dollars. And they can control how much they lend (and thus circulate and devalue).
I suspect that massive, unabated investment in swaps and bad assets, and with a sudden rise in interest rates, will cause a major crash, and the inabiliity of governments to easily borrow will make bailouts impossible.
No one can predict when or how-bad or why because the conditions in this economy have never been tried before in the modern era. Its not actual money printing, but the Fed stacking the banks with bytes representing dollars. And the Fed can control how much banks lend (and thus circulate and devalue).
I suspect that massive, unabated investment in swaps and bad assets, and with a sudden rise in interest rates, will cause a major crash, and the inabiliity of governments to easily borrow will make bailouts impossible.
If it weren’t for WW II, FDR would have gone down as one of the worst presidents in history. The people who voted him back in (over and over) after what was essentially a failed first term were idiots. But of course we finally stumbled into WW II and his reputation as a “great leader” was made.
Exactly!
The media continues to feed the population that the economy is getting better. Yet in my travels to various areas of the Country, I continue to see no evidence of improvement.
What I see are bogus statistics (such as the unemployment number) touted by the media and repeated by Democrats and "so called" Republicans, attempting to promote a false perception of improvement.
Based upon historic economic principals, there is no way that a government which continues to over spend and raising taxes will lead to an economic upturn. Instead, it will eventually cause a complete collapse of our economic system.
Democrats.
Democrats.
Democrats.
The main difference between FDR’s first term and Obama’s IMO is that in FDR’s the SCOTUS was still unafraid to slap him down over moves that were unconstitutional.
Flash Forward seven decades to John Roberts.
Or more precisely the low rates of the early 2000's combined with lack of any monetary standard (e.g. gold standard) created the bubble. Under those circumstances people will always unload their dollars into the hottest asset. Bubbles always collapse regardless of what the Fed does. This time is no different, the bubble in treasuries will collapse. The Fed can only make the collapse worse by prolonging the bubble.
How about higher taxes and more regulations?
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