A global recession is on the horizon - please read OP for mod warning

Relax brah · 24-05-2022 10:47am #1

If you've been paying any attention, you'll know that COVID played havoc with the world economy and we're about to see even worse as a result of the Ukraine war and the Chinese Zero COVID policy.

Russia is one of the world's top exporters of several utterly crucial things: oil, natural gas, wheat, cooking oil, fertilizer, pesticides/herbicides, copper, platinum group metals, timber, and iron ore are just a few of the headlines. Russia will be exporting severely reduced amounts of all of those things this year. Ukraine is the world's 5th largest exporter of wheat and a major exporter of cooking oil and fertilizer.

The world is going to experience major energy and food shortages by the end of 2022, shortages the likes of which we haven't seen in several decades. There will be famine in poorer countries and much heightened food prices in rich countries. Agricultural output the world over will also decrease, because many countries, Brazil sticks out as a major one here (the world's #2 exporter of food), since they're extremely reliant on outside inputs to keep the food growing. Their farmland, while there is a lot of it, sucks and they need loads of fertilizer/pesticide/herbicide (among other things, like compounds to adjust the pH of their farmland) that they won't have enough of for a while.

Energy-wise, the world is going to see $100+/barrel prices (up from around $70 for most of the 2010s) for the foreseeable future. When you remember that the price of energy affects the price and amount produced of every other good and service you'll see why that's important.

On top of that, China has locked down several of the world's most productive cities. It's exports are already way down and probably won't get back to normal....ever. They're having loads of other problems (housing market has been tanking for almost a year now, household debt is higher than it's ever been, equity markets are less stable than they've ever been, unemployment is at an all time high, etc.) that will probably depress their economy for...again probably ever.

Depending on where you live, things are going to get pretty rough by the end of this year.

What are your thoughts?

Mod Warning

Please use the relevant thread to discuss Russia/Ukraine.

dashoonage · 24-05-2022 10:48am

jaysus relax brah...

Calahonda52 · 24-05-2022 10:57am

Dont forget the inflation wage hikes job layoff cycle.

This winter will be very rough for a large swathe of the population

Fandymo · 24-05-2022 11:02am

Bring it on. The global systems we have now to eke every penny of profit from every possible consumer isn't able to work long term. Hopefully a rise in nationalism will happen, the EU will go back to a trading/travelling bloc and prices will reset to the norm. Countries should be looking to be as self sustainable as possible to look after the needs of THEIR citizens, and not the entire world's people.

Pussyhands · 24-05-2022 11:07am

We need a recession to reset the economy. It's out of kilter now with so many imbalances.

Relax brah · 24-05-2022 1:18pm

https://www.boards.ie/discussion/comment/119106200#Comment_119106200

Completely agree that it’s needed.

https://youtu.be/mEpgo14jwSk

This sort of explains it , But from an Economist's Pov it's obviously a lot more complicated than just that

Beasty · 24-05-2022 1:31pm

Need to add Climate Change into the mix. Is it right that cheap goods should be sent halfway around the world when there may be more expensive local alternatives? If countries fail to start to address some of the climate issues things are going to get worse

Countries are going to need to look even deeper into supply chains. We are already seeing more costly extreme weather events and it's probably going to get worse even if we do make efforts to halt the slide

We've probably lived through the best times during the last 2 decades, but the chickens are coming home to roost with all these global issues hitting and we are probably all going to see some decline in living standards to get to a sustainable level

slay55 · 24-05-2022 1:48pm

Well I for one, am glad I decided to open this thread. Feel really positive now !

Wanderer78 · 24-05-2022 2:05pm

https://www.boards.ie/discussion/comment/119106177#Comment_119106177

...ah yea, increasing tensions and the possibility of serious conflicts, definitely will solve this one!

Pussyhands · 24-05-2022 2:12pm

https://www.boards.ie/discussion/comment/119106838#Comment_119106838

What does a world look like where we don't have access to cheap labour?

The global economy has been built on capitalism where developed economies leverage the cheap labour of Asia to improve the standards of living in the developed economies.

It's essentially a pyramid scheme of grand proportions.

joseywhales · 24-05-2022 2:16pm

I am 35, when my dad was 35 it was 1985. My standard of living is much much better than his was in Ireland in 1985. Obviously a lot of people are in a hard place but relatively people have a fantastic standard of life. In 1985-2000, we thought we were well off if we had 3 meals a day, a roof over our head, a day out at a local match on a Saturday and one car that barely ran and anything that was broken was fixed or mended by us. A small dip now is not a big deal, though one thing I would worry about is that if we can feel the pinch here, you can be sure there will be mayhem in the developing world and that could lead to the contagion of conflict and mass migration.

Wanderer78 · 24-05-2022 2:23pm

https://www.boards.ie/discussion/comment/119107218#Comment_119107218

its virtually impossible to directly compare generational differences, as theres so many differences, but its clearly obvious, our most critical of needs are deteriorating rapidly, this can be clearly seen with our property markets, health care systems and of course our environmental issues. yes life was very difficult for older generations, but getting access to these critical needs was actually easier then than now, and of course our environmental issues were not as serious. something has clearly gone catastrophically wrong in this period....

24-05-2022 2:38pm

Good.

Hopefully house prices will collapse with it.

24-05-2022 3:19pm

https://www.boards.ie/discussion/comment/119106177#Comment_119106177

Yeah because natioanisim hasn't been the cause of major conflicts and other issues in the past two plus centuries, and countless didn't assist other countries with humanitarian efforts either during those periods.

Most countries haven't the raw materials needed to properly clothe their population, fertilise their crops, run transport systems etc, including Ireland and that doesn't change regardless of how much some think it will with an Irexit, and other break ups of trade groups and agreements.

I swear some of ye had parents who were related or they rocked ya to close to the wall.

Fandymo · 24-05-2022 3:26pm

https://www.boards.ie/discussion/comment/119107693#Comment_119107693

that doesn't change regardless of how much some think it will with an Irexit, and other break ups of trade groups and agreements. - Missed the whole EU remaining as a trade block part, eh??

Yurt2 · 24-05-2022 3:27pm

https://www.boards.ie/discussion/comment/119106838#Comment_119106838

Read an article that the US industry in particular is slowly but steadily onshoring it's productive capacity away from China. China's productive capacity peaked somewhere around 2003-5 and the last decade has meant it's no longer a low-wage country any longer. And in any case, automation means there is nothing that can be done in China that can't be done in the US for more or less the same cost. What higher labour costs there is, will be made up for with shorter supply chains.

It will take time extracting critical industries away from China, but the process is well underway.

As much as I'm loathe to give the man credit, Trump helped this process along the way with a lot of inducements to American industry.

DaBluBoi · 24-05-2022 3:29pm

Last straw would be if China invades Taiwan now…

If that happens, we’re basically f***ed

Yurt2 · 24-05-2022 3:30pm

https://www.boards.ie/discussion/comment/119107427#Comment_119107427

I'm not saying you're wrong or right in feeling this way, but you're not alone in holding this sentiment.

Policy makers the world over could do with sitting down and have an honest conversation with themselves why vast swathes of the developed world would be so unhappy in a growing economy and would cheerlead a recession.

freemickey · 24-05-2022 4:14pm

Unsustainable and downright idiotic behaviours have brought us here.

Booming inequality, housing scarcity, social immobility, increasing poverty, decreasing opportunity, homelessness, educational ignorance, anti-science, media bias, climate problems.

The plague of big tech companies has taken a grip on this country, like everywhere else they land. Companies whose raisin d'etre is selling your privacy for advertisement or becoming unnecessary middle men. A bubble of outrageously overpriced unproductive nonsense bound for the burst.

Reliance on migration to provide never ending cheap labour without a single regard for capacity.

Commodification and speculation on life's necessities such as housing, a tiny country put up for sale to anyone from anywhere, practically colonial times again.

No thought to the medium or long term future by any political system or group. Money now, whatever about later.

Those are the four horsemen of this apocalypse, big tech, migration, commodification and ignorance to the future. The links between them are obvious and the whiplash of reality is going to be something to behold. Less a recession and more a reckoning.

victor8600 · 24-05-2022 4:24pm

Sure, it's just business as usual. Haven't we had a dot-com crash in 2001? And a financial crash in 2008? The solution for any crisis is to become very rich and to rip the benefits of a good crisis at the expense of the huddled masses:

Ten richest men double their fortunes in pandemic while incomes of 99 percent of humanity fall

Boggles · 24-05-2022 4:49pm

https://www.boards.ie/discussion/comment/119107293#Comment_119107293

its virtually impossible to directly compare generational differences

Like fúck it is, I remember the 80s vividly, that decade was beyond grim.

SuperBowserWorld · 24-05-2022 4:56pm

https://www.boards.ie/discussion/comment/119108109#Comment_119108109

Some good music in the early eighties and we had 40 years to something about climate and environmental damage. So it wasn't all bad. 😆

Boggles · 24-05-2022 5:00pm

https://www.boards.ie/discussion/comment/119108140#Comment_119108140

I'd question the music.

As for environmental damage.

https://www.vox.com/future-perfect/22686105/future-of-life-ozone-hole-environmental-crisis

Geuze · 24-05-2022 5:05pm

https://www.boards.ie/discussion/comment/119107962#Comment_119107962

Income poverty has been falling in Ireland.

SuperBowserWorld · 24-05-2022 5:24pm

https://www.boards.ie/discussion/comment/119108165#Comment_119108165

Yep, the ozone problem was tacked nicely, but it's solution did not involve changing the energy source, economy and infrastructure, mindset, politics ..on the planet at runtime as climate change mitigation requires.

But, it does show what's possible and is a huge success story for science.

Anyway, this thread is about recession, not existential issues.

Wanderer78 · 24-05-2022 5:25pm

https://www.boards.ie/discussion/comment/119108109#Comment_119108109

again, yes previous generations did indeed have a very difficult time, yes the 80's was extremely tough, but now its virtually impossible for many to get access to their most critical needs, and this is growing rapidly, whereby in the 80's, it was just extremely difficult for most. yes we now have far greater access to far better quality goods and services, but, as mentioned above......

freemickey · 24-05-2022 5:26pm

https://www.boards.ie/discussion/comment/119108193#Comment_119108193

You'll note how you have to add extra words to poverty to make it seem better.

Situational poverty, housing poverty and so forth.

Shorthand, poverty is increasing in this country. Depending who you ask, there are well over 600,000 people living below the poverty line, a third of which are children. Definitions definitions. It doesn't really matter in the big picture of how totally bollicked it all is.

Boggles · 24-05-2022 5:56pm

https://www.boards.ie/discussion/comment/119108262#Comment_119108262

Ah no, by every single measurement we are infinitely better off now.

From quality of life to health outcomes to quality of housing to peace. It's not even close.

I'm not saying we don't have challenges now, but looked at it stark terms the 80s were horrendous, Ireland was absolutely horrible.

Geuze · 24-05-2022 6:05pm

https://www.boards.ie/discussion/comment/119108266#Comment_119108266

All three measures of poverty are falling:

https://www.cso.ie/en/releasesandpublications/ep/p-silc/surveyonincomeandlivingconditionssilc2021/povertyanddeprivation/

Geuze · 24-05-2022 6:07pm

See data from the SILC.

NSAman · 24-05-2022 6:08pm

https://www.boards.ie/discussion/comment/119108406#Comment_119108406

Agree with most of what you have said. We are better off, however, societally we are not. Crime is far worse now, than back then. Social interaction nowadays in limited. We may be financially better off, but we are poorer in many respects. OK, emigration was horrendous in the 80s. It was a grim place to be financially.

I do think that Wanderer is under estimating the "correction" that is coming. Personally, I think this will be the biggest SH!TSHOW that has been seen since the 1920s. The free money, the crazy economic models that have been evolving, the spend spend spend mantra to keep people going, this all has to be paid for. In my opinion it will cause either one of two things to happen, widening the wealth gaps even further or social unrest/war.

24-05-2022 6:18pm

Something like 50% of the population are burning through savings to keep on top of day-to-day expenses.....with food & energy price inflation still to peak...

whole thing is being run over a cliff......and the clowns in the dail are just sitting on their hands waiting for their summer holidays,shades of 'let em eat cake' imo

rossie1977 · 24-05-2022 7:02pm

https://www.boards.ie/discussion/comment/119107735#Comment_119107735

Not going to happen. A Chinese invasion of Taiwan would make Russians invasion of Ukraine look like a successful operation. Chinese don't have the naval firepower to even take the western half of the island never mind the whole thing.

Plus Chinas economy is hugely dependent on Taiwan existing in its current state. Taiwan is the most advanced microchip manufacturer on the planet and where China gets most of its microchips from. If Taiwan were taken out the entire Chinese economy would suffer massively.

DaBluBoi · 24-05-2022 7:48pm

https://www.boards.ie/discussion/comment/119108662#Comment_119108662

CCP members has repeatedly stated that Taiwan is a "breakaway" province that needs to be subjugated and integrated into the mainland. Furthermore, Taiwan forms part of a geopolitical "line" made up of US-backed states which can blockade and starve China easily of supplies and ships:

If China were to invade Taiwan, it would break this line, making a blockade much more difficult and allow for Chinese ships to easily travel to and from China, particularly in military conflicts

Furthermore, the lockdown in Shanghai and potentially Beijing has made a lot of people have negative perceptions against the CCP. I might imagine them invading Taiwan to distract those in Shanghai

Granted, an invasion of Taiwan would require an enormous amount of troops crossing the South China Sea and would use up a massive amount of resources, not to mention the economic sanctions that China would most likely face, judging by the international reactions to the Russian invasion of Ukraine. I merely suggested it may take place, basing on geopolitics alone

Cluedo Monopoly · 24-05-2022 7:57pm

https://www.boards.ie/discussion/comment/119106838#Comment_119106838

Yep when I started buying grapes for 2 Euros that originated in Chile, I knew something was very wrong with the global supply chain network. Especially when I threw half of them out because they went off so quickly. They must be frozen en route which is incredibly energy inefficient and probably does not improve the nutrition value. I think we need to stop demanding foodstuffs that are not locally grown (e.g. France) or in season.

Relax brah · 24-05-2022 8:33pm

https://www.boards.ie/discussion/comment/119108456#Comment_119108456

Ireland would not be exempt from a global recession

Geuze · 24-05-2022 9:52pm

https://www.boards.ie/discussion/comment/119108508#Comment_119108508

Total Household savings are rising every month, as households save each month.

Deposits are growing by 100m per week.

hayse · 24-05-2022 9:55pm

https://www.boards.ie/discussion/comment/119109370#Comment_119109370

I question that.

Geuze · 24-05-2022 10:03pm

I will get the data for you, give me 20 mins, but first of all, have of read of Seamus Coffey, on our national balance sheet:

https://economic-incentives.blogspot.com/2022/05/the-continuing-improvement-of-national.html

Geuze · 24-05-2022 10:06pm

And here is more from Seamus Coffey of UCC on household savings and assets in 2021:

https://economic-incentives.blogspot.com/2022/04/the-household-sector-in-2021.html

Geuze · 24-05-2022 10:09pm

"For the first three quarters of 2021, the Central Bank data shows a €15 billion rise in the deposits of the household sector. Loan liabilities were essentially unchanged over the period. The latest figures show the household sector to have €180 billion of currency and deposits and €128 billion of loans which is an incredible reversal of the position of just 15 years earlier. But maybe now we need a little more spending."

In 39 weeks Irish households added 15 bn to deposits.

That is 385m per week.

AdamD · 24-05-2022 10:12pm

Kinda of baffled as to why anyone would welcome a recession. If you don't like the way things are now, you can be absolutely guaranteed a recession will make them worse.

Geuze · 24-05-2022 10:19pm

https://www.boards.ie/discussion/comment/119109386#Comment_119109386

@hayse, see table 9.1a of the financial accounts data published by the CBI

https://www.centralbank.ie/statistics/data-and-analysis/financial-accounts/data

Household holdings of currency and deposits, AF.2

2019 Q4 = 151bn

2021 Q4 = 181bn

Households added 30 bn in holdings of cash and deposits in 24 months.

Strumms · 24-05-2022 10:29pm

https://www.boards.ie/discussion/comment/119107218#Comment_119107218

The biggest challenge to our wellbeing is no longer a pandemic or war… it’s mass inward migration, immigration which is on course to really negatively impact this country and limit the success and wellbeing of our citizens…

Yurt2 · 24-05-2022 10:30pm

https://www.boards.ie/discussion/comment/119109492#Comment_119109492

Which households and where in the income distribution are the savings concentrated?

What we have from Coffey is aggregate numbers. The question I have posed is rhetorical, I think we both instinctually know that deposits on the upper end of the income distribution grew rapidly.

The poster posited the experience of those lower on the income distribution (who are disproportionately harder hit by inflation) and the response came back with aggregate data about savings.

Geuze · 24-05-2022 10:35pm

The most recent data on wealth by decile is here:

https://www.cso.ie/en/csolatestnews/presspages/2022/householdfinanceandconsumptionsurvey2020/

Sierra Oscar · 24-05-2022 10:46pm

https://www.boards.ie/discussion/comment/119109446#Comment_119109446

Get out of here with your facts! Conjecture, doom and gloom is all that we want here!

HBC08 · 24-05-2022 10:47pm

https://www.boards.ie/discussion/comment/119106838#Comment_119106838

When more immediate real world events occur then as you may have noticed climate change falls down the list.

People (if they are in such a position, like most first world countries) are not going to accept a decline in living standards for more sustainability. The sustainability will have to come up to a level that it doesn't inconvenience people too much or it won't happen.

Yurt2 · 24-05-2022 10:48pm

https://www.boards.ie/discussion/comment/119109586#Comment_119109586

Unless there is some underlying data what we have there is a top-line statistical release from 2020 respondents - the most sui generis economic year in global and Irish history.

What the poster said is undoubtedly true. Lower income households and individuals are burning through what meagre savings they have as inflation bites. Aggregate savings data from 2021 is a blurry picture indeed and is the most sunny-side-up interpretation possible of how 2022 realities are effecting people on median incomes and below.

HerrKapitan · 24-05-2022 10:50pm

https://youtu.be/o6zJqd2gl2A

I don't know if deliberate or manufactured recession are worse than natural ones but I guess we are going to find out.

I guess we can have a great reset and build back better.

Sierra Oscar · 24-05-2022 10:53pm

https://www.boards.ie/discussion/comment/119109664#Comment_119109664

The poster has produced actual hard facts showing savings have increased massively over the last decade, that's a reality. They accelerated during the pandemic, naturally enough, and have probably fallen back now. What you're saying is an opinion not backed by any hard facts as of yet and that's worth mentioning.

Yes, people are likely saving less due to inflation - but this conjecture that the collective Irish economy is burning through savings with just a few weeks or months left to survive is absolute tripe.

A global recession is on the horizon - please read OP for mod warning

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