Posted on 05/14/2015 6:15:18 AM PDT by Freedom56v2
HSBC chief economist Stephen King is already thinking about the next recession.
In a note to clients Wednesday, he warns: "The world economy is like an ocean liner without lifeboats. If another recession hits, it could be a truly titanic struggle for policymakers."
Here's King (emphasis added):
Whereas previous recoveries have enabled monetary and fiscal policymakers to replenish their ammunition, this recovery — both in the US and elsewhere — has been distinguished by a persistent munitions shortage. This is a major problem. In all recessions since the 1970s, the US Fed funds rate has fallen by a minimum of 5 percentage points. That kind of traditional stimulus is now completely ruled out.
King notes that this far into the recovery, there's a lack of "traditional policy ammunition." For instance, Treasury yields have not risen, the budget deficit is not falling, and welfare payments are still on the rise.
As for what might trigger the next recession, King highlighted four things:
snip.... also doesn't help that worker productivity is low). In turn, households and businesses will lose confidence in the economy, and the "equity bubble" will burst with collapsing stock prices.
Nonbank financial systems such as insurance companies and pension funds will increasingly not be able to meet future obligations. This will cause a huge demand for liquid assets, forcing people to rush to sell despite no matching demand, triggering a recession.
Forces beyond the Federal Reserve's control, including the possibility that China's economy and its currency could collapse. Weak commodity prices could also cause collapses in several emerging markets, as could continued strength in the US dollar. The Fed could cause the next recession....
(Excerpt) Read more at businessinsider.com ...
Geez, who woulda thunk that after spending money that you did not have to begin with and creating a climate in which public servant unions now resemble something out of “On the Waterfront”, that something like that could very easily happen?
When Stephen King is the chief economist, you know you’re in trouble!
There are reasons why this may be true.
During the worst recession in my lifetime, Obama decided to impose the largest tax hike in American history (Obamacare). He also pushed very unwise spending practices (rewarding unions, green energy etc., increase in public debt).
Much of the blame should reside in the White House.
Ha! That’s exactly what I was thinking.
This White House, and the last one too, sadly......
Yes.
> In a note to clients Wednesday, he warns: “The world economy is like an ocean liner without lifeboats. If another recession hits, it could be a truly titanic struggle for policymakers.”
“If” another recession hits? We ARE in a recession right now! Brought on by The King
Now that's funny right there.
Sadly, I wish it was novelist Stephen King—then the story would be fiction....
Gee. Why wouldn’t an economy built on immense borrowing and dollar printing accumulates unsustainable debt and unfunded liabilities, and is led by an Administration that publishes restrictive anti business fiats daily, runs an anti carbon energy crusade and abhors productive capitalism not have a rosy future?
This is the sad, and still pertinent as people still blame Bush for this economy. And Bush is to blame - but for the liberal things he went along with, not anything conservative that he promoted (his tax cuts). And the irony? Then nation has voted even MORE leftward.
Harry Dent—love him or hate him!—warned that the period from 2016 to 2018 is at risk of a general world war. It will take a lot of cooler heads prevailing to prevent that from coming to pass.
We never left the previous one, falsified numbers are a piss poor substitute for a recovery!
Golly, another horror story from Stephen King.
In its shortsighted effort to avoid some financial pain to normalize the economy, the Fed’s prolonged manipulation and levitation may instead contribute to a long term economic calamity.
Re the public debt, if interest rates do rise the cost of our debt service could easily double from the artificially low rates imposed by the Fed. That could be a real problem when combined with our already massive level of unfunded liabilities (a ‘mere’ $96 TRILLION).
Yep, they’re cookin’ the books big time.
+1
Good post.
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