Economy At a crossroads: Is a global recession avoidable?

[Brampton_Boy]

For the most part, I try and avoid the war room. It's too easy to get drawn into arguments that are driven my emotion as opposed to fact, running around in circles with seemingly no resolution in site.

However, after watching Trump's response to the potential trade war with China, I can't help but feel we are on the precipice of a disaster, with the global economy a couple of tweets away from a collapse.

On one hand, unemployment is at historic lows, corporate earnings remain strong and consumer sentiment is near all time highs. Conversely, national debt has more than doubled, the central bank has limited tools to enact monetary policy (interests rate are already super low) and the president has embraced protectionist policies that violates the spirit of free and open trade.

At first, I thought Trump was taking a hard line on China merely to appease his base - paint China out as the economic Boogeyman, and talk about bringing jobs back to America. In the past week though, he has unraveled, doubling down on threats of increased tarriffs, ordering American businesses to find alternatives to China, and when questioned about the legality of the latter, he said he would declare a national emergency to force businesses to comply.

Almost universally, economists have derided his approach, with numerous studies demonstrating that tariffs are hurting Americans more than its helping. Large corporations have pleaded with Trump to slow down on his rhetoric, which has only fueled him more.

When the stock market dropped 600 points on Friday, Trump pointed blame at the federal reserve, taking no accountability for market volatility. In fact, his most recent tweet is that his affect on the stock market should be judged solely on what occurred the day after his election (where it rallied significantly).

While I am critical of Trump, I have always felt that there was a method to his madness, and that he would deliberately make inflammatory statements knowing it would get a reaction. Now I'm wondering whether he cares more about his ego and image than the economy - that his presidency has less to do with serving the American public, and more to do with him having to get his way.

Early reports out of the G7 suggest that Trump has been extremely difficult to work with and unwilling to compromise. Looking at the futures market for tomorrow, stocks are already down well over 300 points.

Being heavily invested in the stock market, I legitimately get anxious every morning opening up my portfolio to see just how badly I've been fucked (although I can't blame Trump for that, I am invested heavily in oil and nat gas which has been crushed lately).

What are your thoughts on likelyhood of a recession? Is this a temporary blip and the bull market will continue to run, or is this the start of something much more sinister, with a repeat of 2008/2009 on deck?

 

[Stoic1]

Recessions are 100% inevitable. Trump has much less to do with it than you think.

 

[Phr3121]

Is a global recession avoidable?

No.

 

[Damien Karras]

If there is a recession, Trump will spin as the Fed’s inability to respond pre-emptively. His supporters will eat it up. If Trump took a shit in the middle of the road, his supporters would be telling everyone he’s printing cash.

 

[JudoThrowFiasco]

Simply from an ebb and flow standpoint, a recession is likely just can't say within time frame. People seem to be spending and unemployment is low - not sure how the tariffs will ripple effect towards layoffs, or if companies eat the cost because the demand is still there

Pretty happy I sold off energy sector investments in favor of prescious metals. Time to hedge bets

 

[jk7707]

A recession is inevitable sometime in the near future. The problem is that we are already running a huge deficit during the good times because of Trump's idiotic tax cut so when everything starts crashing and burning we are fucked.

 

[kenetics]

For the most part, I try and avoid the war room. It's too easy to get drawn into arguments that are driven my emotion as opposed to fact, running around in circles with seemingly no resolution in site.

However, after watching Trump's response to the potential trade war with China, I can't help but feel we are on the precipice of a disaster, with the global economy a couple of tweets away from a collapse.

On one hand, unemployment is at historic lows, corporate earnings remain strong and consumer sentiment is near all time highs. Conversely, national debt has more than doubled, the central bank has limited tools to enact monetary policy (interests rate are already super low) and the president has embraced protectionist policies that violates the spirit of free and open trade.

At first, I thought Trump was taking a hard line on China merely to appease his base - paint China out as the economic Boogeyman, and talk about bringing jobs back to America. In the past week though, he has unraveled, doubling down on threats of increased tarriffs, ordering American businesses to find alternatives to China, and when questioned about the legality of the latter, he said he would declare a national emergency to force businesses to comply.

Almost universally, economists have derided his approach, with numerous studies demonstrating that tariffs are hurting Americans more than its helping. Large corporations have pleaded with Trump to slow down on his rhetoric, which has only fueled him more.

When the stock market dropped 600 points on Friday, Trump pointed blame at the federal reserve, taking no accountability for market volatility. In fact, his most recent tweet is that his affect on the stock market should be judged solely on what occurred the day after his election (where it rallied significantly).

While I am critical of Trump, I have always felt that there was a method to his madness, and that he would deliberately make inflammatory statements knowing it would get a reaction. Now I'm wondering whether he cares more about his ego and image than the economy - that his presidency has less to do with serving the American public, and more to do with him having to get his way.

Early reports out of the G7 suggest that Trump has been extremely difficult to work with and unwilling to compromise. Looking at the futures market for tomorrow, stocks are already down well over 300 points.

Being heavily invested in the stock market, I legitimately get anxious every morning opening up my portfolio to see just how badly I've been fucked (although I can't blame Trump for that, I am invested heavily in oil and nat gas which has been crushed lately).

What are your thoughts on likelyhood of a recession? Is this a temporary blip and the bull market will continue to run, or is this the start of something much more sinister, with a repeat of 2008/2009 on deck?

Bitcoin about to moon if it does .

 

[Last Samurai]

Now I'm wondering whether he cares more about his ego and image than the economy - that his presidency has less to do with serving the American public, and more to do with him having to get his way.

Well, yeah

His policy has always been Trump first

 

[donkeypunch2012]

If Trump took a shit in the middle of the road, his supporters would be telling everyone he’s printing cash.

 

[AndroidRage]

Recessions are 100% inevitable. Trump has much less to do with it than you think.

So he is responsible when the economy is good.... but not responsible if the economy goes bad?

 

[AndroidRage]

If there is a recession, Trump will spin as the Fed’s inability to respond pre-emptively. His supporters will eat it up. If Trump took a shit in the middle of the road, his supporters would be telling everyone he’s printing cash.

They would catch that shit with their gaping mouth and "two girls, one cup" that shit.

 

[Andy Capp]

Now I'm wondering whether he cares more about his ego and image than the economy - that his presidency has less to do with serving the American public, and more to do with him having to get his way.

You're now wondering something I have been sure was the case since before he was even elected. A global recession is inevitable because it is caused by greedy people who don't give a flying fuck if there's a recession because they'll still be loaded; all the money they suck out of the economy is the cause, not a symptom. Financial loopholes exist because the rich people who benefit from them are the ones making the rules. I think you have to be very naive to think such people have anyone's best interests in mind other than their own. Even changes to rules that would require fiduciary responsibility of financial services suppliers are being stifled.

"The Fiduciary Rule Under President Trump
The regulation was initially created under the Obama administration, but in February 2017, President Trump issued a memorandum that attempted to delay the rule's implementation by 180 days. This action included instructions for the DOL to carry out an “economic and legal analysis” of the rule's potential impact.


Then, on March 10, 2017, the DOL issued its own memorandum, Field Assistance Bulletin No. 2017-01, clarifying the possible implementation of a 60-day delay to the fiduciary rule. Full implementation of all elements of the rule had been pushed back to July 1, 2019.


Before that could happen—on March 15, 2018—The Fifth Circuit Court of Appeals, based in New Orleans, vacated the fiduciary rule in a 2-to-1 decision, saying it constituted "unreasonableness," and that the DOL's implementation of the rule constitutes "an arbitrary and capricious exercise of administrative power." The case had been brought by the U.S. Chamber of Commerce, the Financial Services Institute, and other parties. Its next stop could be the Supreme Court.



On June 21, 2018, The Fifth Circuit Court of Appeals confirmed its decision to vacate the ruling.

Fiduciary is a much higher level of accountability than the suitability standardpreviously required of financial salespersons, such as brokers, planners, and insurance agents, who work with retirement plans and accounts. "Suitability" means that as long as an investment recommendation meets a client's defined need and objective, it is deemed appropriate.


Under a fiduciary standard, financial professionals are legally obligated to put their client’s best interests first, rather than simply finding “suitable” investments. The new rule would have therefore eliminated many commission structures that govern the industry.


Advisors who wished to continue working on the commission would have needed to provide clients with a disclosure agreement, called a Best Interest Contract Exemption (BICE), in circumstances where a conflict of interest could exist (such as the advisor receiving a higher commission or special bonus for selling a certain product). This was to guarantee that the advisor was working unconditionally in the best interest of the client. All compensation that was paid to the fiduciary was required to be clearly spelled out as well."
--https://www.investopedia.com/updates/dol-fiduciary-rule/

 

[SammyPops]

Its a natural part of the economic cycle, so no.

 

[7437]

permanently? no. you can certainly mitigate the damage, or make the damage worse though.

 

[High Altitude]

Even without a trade war, a recession is going to happen for sure. A trade war just speeds everything up, makes it worse etc...

I think the USA is still 2-4 years out, Europe is pretty much there.

 

[Cid]

Being heavily invested in the stock market, I legitimately get anxious every morning opening up my portfolio to see just how badly I've been fucked (although I can't blame Trump for that, I am invested heavily in oil and nat gas which has been crushed lately).

What are your thoughts on likelyhood of a recession? Is this a temporary blip and the bull market will continue to run, or is this the start of something much more sinister, with a repeat of 2008/2009 on deck?

The best time to buy is when you have money; and the best time to sell is never. - Warren Buffett.

There are numerous studies that have proven the vast, vast majority of people who invest in shares will be substantially beaten by the market. Even if you're a professional investor you're still not likely to beat it. Warren Buffett put an open bet out 10 years ago that any one could pick any hedge fund out there and over the span of 10 years they would lose to the market.

He won pretty convincingly in the end, over double the return IIRC.

Stop checking your portfolio and worrying about what might happen. You'll make more money doing nothing and not caring than you will trying to play the market.

 

[Damien Karras]

Its a natural part of the economic cycle, so no.

No but it's the government's duty to ensure that recessions, as naturally occurring as they do in an open-market economy, incur as little impact on the vulnerable population as possible.

Starting trade wars on a whim, deregulating the financial market to pre-2008 levels, reducing the social safety-net for the benefit of tax cuts to the ultra rich and others is a direct contradiction to that of which the actions have been decried by several, if not most, credible economists.

 

[Ophydian]

For the most part, I try and avoid the war room. It's too easy to get drawn into arguments that are driven my emotion as opposed to fact, running around in circles with seemingly no resolution in site.

However, after watching Trump's response to the potential trade war with China, I can't help but feel we are on the precipice of a disaster, with the global economy a couple of tweets away from a collapse.

On one hand, unemployment is at historic lows, corporate earnings remain strong and consumer sentiment is near all time highs. Conversely, national debt has more than doubled, the central bank has limited tools to enact monetary policy (interests rate are already super low) and the president has embraced protectionist policies that violates the spirit of free and open trade.

At first, I thought Trump was taking a hard line on China merely to appease his base - paint China out as the economic Boogeyman, and talk about bringing jobs back to America. In the past week though, he has unraveled, doubling down on threats of increased tarriffs, ordering American businesses to find alternatives to China, and when questioned about the legality of the latter, he said he would declare a national emergency to force businesses to comply.

Almost universally, economists have derided his approach, with numerous studies demonstrating that tariffs are hurting Americans more than its helping. Large corporations have pleaded with Trump to slow down on his rhetoric, which has only fueled him more.

When the stock market dropped 600 points on Friday, Trump pointed blame at the federal reserve, taking no accountability for market volatility. In fact, his most recent tweet is that his affect on the stock market should be judged solely on what occurred the day after his election (where it rallied significantly).

While I am critical of Trump, I have always felt that there was a method to his madness, and that he would deliberately make inflammatory statements knowing it would get a reaction. Now I'm wondering whether he cares more about his ego and image than the economy - that his presidency has less to do with serving the American public, and more to do with him having to get his way.

Early reports out of the G7 suggest that Trump has been extremely difficult to work with and unwilling to compromise. Looking at the futures market for tomorrow, stocks are already down well over 300 points.

Being heavily invested in the stock market, I legitimately get anxious every morning opening up my portfolio to see just how badly I've been fucked (although I can't blame Trump for that, I am invested heavily in oil and nat gas which has been crushed lately).

What are your thoughts on likelyhood of a recession? Is this a temporary blip and the bull market will continue to run, or is this the start of something much more sinister, with a repeat of 2008/2009 on deck?

Every day someone else wakes up and realizes this country is being run by a conman.

 

[Ophydian]

Recessions are 100% inevitable. Trump has much less to do with it than you think.

No.

Anyone who thinks a man who uses bankruptcy like a prostitute uses abortion will be able to navigate the US out of the next recession should be stockpiling for their underground bunker.

You realize Trump only has the greatest, biggest and best so a recession under Trump should be spectacular

 

[Higus]

It's a 2 part problem.
Recessions are sometimes unavoidable, but they can either be managed or made worse by policy.
A huge issue if there is a recession now is that Trump has not set the country up to bounce back from it. The main levers to absorb the impact of a recession are to lower interest rates and increase government spending. At a time when the economy is relatively healthy, you should ideally be paying down the debt and increasing interest rates, kind of like saving money during good times so you have a safety net if things go wrong. Instead, the rates have been kept low (encouraging people to take loans), and have increased the size of the debt. If/when a recession happens (conveniently when a Democrat is about to take office), they won't have any leverage to recover from it. The GOP will then blame the Dems for blowing up the debt and tanking the economy and the cycle will repeat itself.