Recession next year?

Dr Steph wrote...

Not much of a cat fight at all. Rates hiked, US economy falters, US economy slows, world economy slows more, US and world interest rates fall, but US spread higher than world rates so US dollar remains more bid than expected. Stocks meander, oil remains unchanged in real terms, bonds rally, and US economy starts up again so that it can raise again. That's the plan for the next 36 months, anyway.


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Excellent Commentary as usual...

So dollar protection first by rising rates....the total slows down...dollar is buoyed by a wider int gap than usual...oil equal in real terms...real rates down...thus equities back in vogue...

Very very good insight and thought....I like this...In simple terms ...all fractionally equal but down relative to the implied reduction in the constant...Thus this implies more oil shifts to Euro valuation during this period....
 
Quote from drsteph:

Not much of a cat fight at all. Rates hiked, US economy falters, US economy slows, world economy slows more, US and world interest rates fall, but US spread higher than world rates so US dollar remains more bid than expected. Stocks meander, oil remains unchanged in real terms, bonds rally, and US economy starts up again so that it can raise again. That's the plan for the next 36 months, anyway.
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Exactly!
 
Capmac.....excellent clip....

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What I heard in this clip was a 50% dollar decline...

The question is....what gains as the dollar loses...

Yen...Euro....Yuan....S Franc....Ruble....Bzl Reale...foreign stocks...

What does the multi currency landscape look like say 36 months out in accordance with this forecast...?
 
Quote from drsteph:

Not much of a cat fight at all. Rates hiked, US economy falters, US economy slows, world economy slows more, US and world interest rates fall, but US spread higher than world rates so US dollar remains more bid than expected. Stocks meander, oil remains unchanged in real terms, bonds rally, and US economy starts up again so that it can raise again. That's the plan for the next 36 months, anyway.
More...

Not a bad plan since low rates is exactly what US, Europe and Japan needs the next years to take advantage of this period with high labor supply and make as much real investment as possible to prepare for a period with less labor supply when the boomers retire.

But… Nothing works out as planned. There are always unwanted consequences. Flexibility and honest information is all that is needed if stability and growth is of importance. Planners don’t want stability; they want the opposite to make sure people get in and out at the worst times so they can be squeeezed as hard as possible. Even if they have good intentions they can never compete with the wisdom of the all knowing market.
 
I dare anyone here to bet against the consumer; any consumer - American, Russian, Chinese, Korean or Chilean.

You'll lose 99 times out of 100.

Will this time be different?

Only if people are literally afraid to spend money....literally afraid. And they stary hording. And money stops circulating.

It could happen. But history strongly bets against it.
 
BuyLoSellHi Wrote...

I dare anyone here to bet against the consumer; any consumer - American, Russian, Chinese, Korean or Chilean.

You'll lose 99 times out of 100.

Will this time be different?

Only if people are literally afraid to spend money....literally afraid. And they stary hording. And money stops circulating.

It could happen. But history strongly bets against it.
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Excellent Commentary

These are good points....the propensity to spend is extremely high in that it is an easy choice since for every $1000 saved one is rewarded less than $40 per year... The mode to consume savings instruments is just not there...However when the reward is greater ...then the mode to consume savings instruments goes up...

Another mode setter would be to shock the mind with the stark reality of having nothing with no immediate way of attaining what is needed...then the human emotion would be to have something ...the next time it happens....

The current set of spenders has not had the depression experience...is not in their psyche...Thus they will spend spend spend....as long as it is possible....
 
Quote from libertad:

"... The current set of spenders has not had the depression experience...is not in their psyche...Thus they will spend spend spend....as long as it is possible....
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AND... Consumers plan to NEVER pay off their debts unless doing so can be done with home refinance. Sounds reckless and sick, but why not? The Gummint plans to NEVER pay off its debts either.... well, they might just print monopoly money and tell creditors "you've been paid", but that's not the same.
 
Quote from capmac:

This is what may happen:


http://www.europac.net/media/Schiff-Bloomberg-8-23-06.wmv
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capmac GREAT FIND,

Schiff was on CNBC on monday afternoon on kudlow and he was debating with this other guy, dont remember his name but he is a usual on cnbc and they were both debating on a recession and housing slump.

This GUY IS 101% RIGHT. He puts all the others to shame when they talk about a soft landing and no recession. Schiff says it perfectly, i dont know how anybody could disagree. I think a recession is on the way, housing is slowing and that is what fueled this economy for the last 5 years.
 
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