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Recession predictions

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  • Registered Users Posts: 3,541 ✭✭✭snotboogie



    The office 9-5 is dead.

    Agreed but offices are not dead. There will be a major shift in how office space is used but it will still be needed. Will be fascinating how this plays out after social distancing is no longer needed


  • Closed Accounts Posts: 3,748 ✭✭✭ExMachina1000


    snotboogie wrote: »
    Agreed but offices are not dead. There will be a major shift in how office space is used but it will still be needed. Will be fascinating how this plays out after social distancing is no longer needed

    Government will this week begin to encourage bosses to bring their staff back to offices. It's part of the government's living with covid plan. Many will be back in the office within weeks.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Government will this week begin to encourage bosses to bring their staff back to offices. It's part of the government's living with covid plan. Many will be back in the office within weeks.


    Again, Germanys health system is probably far more robust than hours and I somehow think German's would be far more complient than ourselves


  • Registered Users Posts: 12,992 ✭✭✭✭Geuze


    https://www.rte.ie/news/business/2020/0916/1165510-oced-on-world-economic-growth/

    OECD projections

    2020 recession at -4.5% rather than -6% earlier

    2021 recovery slower than expected


    "The US, the world's biggest economy, would fare better than the global average, with a projected contraction of 3.8% this year.

    Germany would perform better than the euro zone as a whole, with its economy set to shrink by 5.4%, compared with a contraction of 7.9% for the single currency area.

    The French economy was set to shrink by 9.5%, Italy's by 10.5% and Britain's by 10.1%, the OECD predicted."



    Why is the 2020 recession in the UK much worse than in the USA or Germany?

    UK economy weighted towards services??


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Geuze wrote: »
    Why is the 2020 recession in the UK much worse than in the USA or Germany?

    UK economy weighted towards services??

    who bloody knows, but they aint helping themselves by saying ta hell with trade laws, who the hell will do a deal with them now! id imagine Brexit has spooked many, why would you wanna invest in a country, with so much uncertainty, and dreadful leadership, particularly over the last few years

    their economy probably has moved more towards the services sector, like most developed nations, could explain some of it

    any sign of major capital flight from the uk?


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  • Registered Users Posts: 2,242 ✭✭✭brisan


    Government will this week begin to encourage bosses to bring their staff back to offices. It's part of the government's living with covid plan. Many will be back in the office within weeks.

    And yet The Taoisech has said the exact opposite

    https://www.gov.ie/en/publication/18e18-level-2/#work


  • Registered Users Posts: 12,992 ✭✭✭✭Geuze




  • Registered Users Posts: 3,130 ✭✭✭KaneToad


    brisan wrote: »
    And yet The Taoisech has said the exact opposite

    https://www.gov.ie/en/publication/18e18-level-2/#work

    But people's opinions are more important than facts.


  • Registered Users Posts: 2,242 ✭✭✭brisan


    KaneToad wrote: »
    But people's opinions are more important than facts.

    Peoples VESTED opinions are more important than the facts
    Have a look at the Irish property market thread and the renting thread
    Head in the sand stuff and shouts of
    No not us ,cant happen here ,nothing to see here all from obvious landlords and multiple property owners


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Geuze wrote: »

    thank you. i wonder has their own austerity measures have a more negative effect, compared to others


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  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    ^^^ah shur with the banking moratorium coming to an end, expect big trouble for the private sector, including the banks, the government should be stepping in to back all of this up, or we re gonna end up in big trouble!


  • Registered Users Posts: 3,402 ✭✭✭Timing belt


    Banks should be sufficiently capitalised to be able to take the hit otherwise they would have failed all the stress tests.

    Yes they will feel it and it will hurt but none will go under because of it.

    Banking regulation have taken big steps forward since the 2008 banking crisis one example would be the majority of banks issuing "Bail in" Bonds that investors have bought that would convert to Equity and recapitalise the bank in the event of a situation where it goes under.

    Yes there will be a big recession and we have not seen any real impact as it time to flow through the pipes. My prediction is that we will start to see the real impact come dec/Jan/Feb.

    Obviously the world will be looking at GDP but we know that for Ireland this is meaningless due to all the intellectual rights and US companies in Ireland. The GNP is where it will be felt by the man on the street.

    The one area that I think will be in trouble and will cause ripples will be the funds industry. Especially the private equity funds that have bought good business with the plan to make them better and then sell it on in 5-10 years to make a nice profit and pay big returns to there investors. These business will end up with massive rent as the funds will have insisted on some sale and lease back scheme to generate additional capital to grow the businesses. And now end up with a struggling business that will have the addition of Rent/Debt to pay. These funds won't be able to flip them and will end up in trouble and as soon as one or two go the house of cards will come crashing down and impact the whole funds industry. The logic that risks similar to the above example are mitigated by these funds hold a diversified portfolio goes out the window when a pandemic impacts all sectors.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Banks should be sufficiently capitalised to be able to take the hit otherwise they would have failed all the stress tests.

    I'm not convinced this will be the case, I suspect the stress tests were conducted using different economic forecasts, possibly not as severe as this down turn could be, and it's important to realise, most economic advisor's are still from the neoclassical school of thought, and its prediction models are notoriously poor at predicting. Hopefully I'm completely wrong, as we do not need another financial crisis, it could be completely devastating, globally, it's also extremely important to realise, our own banks maybe sufficiently funded, but international banks may not be. Some commentators believing, some major international banks, could effectively fall over with even a slight gust. I'm not convinced anyone truly knows what could or couldn't happen, we simply don't know for sure, such is the complexity of these systems and processes, they only thing I'm sure of is, our track record of such predictions, particularly from mainstream, is beyond woeful. there's something seriously wrong with neoclassical and it's models, yet we still persist with this school of thought, it has not accepted it's failures from the past, and we largely have not accepted it's failures, this could be disastrous for us all
    Yes they will feel it and it will hurt but none will go under because of it.

    We simply don't know this, nobody knows for sure, nobody seen lehmans coming, but some realised something major was coming, but they were ignored and even ridiculed, they still are largely ignored....
    Banking regulation have taken big steps forward since the 2008 banking crisis one example would be the majority of banks issuing "Bail in" Bonds that investors have bought that would convert to Equity and recapitalise the bank in the event of a situation where it goes under.

    I'd have to disagree here, regulations didn't go far enough, regulations such as the reinstatement of the Glass–Steagall act should have also been done, to increase the safety of our global financial systems. The world of neoclassical still also doesn't accept critical facts such as bank creation of money in the form of credit, which played a critical role in the last crash. It's also important to realise, some commentators believe that depositors are now less protected under new bail in rules, which in the event of a banking crash, there's an increased chance of deposits being bailed in, in order to save the bank, we simply don't know until this occurs, if it even does.

    Yes there will be a big recession and we have not seen any real impact as it time to flow through the pipes. My prediction is that we will start to see the real impact come dec/Jan/Feb.


    I'd have to agree with this though unfortunately.

    Great addition on funds though, that's really interesting


  • Registered Users Posts: 2,081 ✭✭✭theguzman


    Anybody who thinks the banks are fine this time around are absolutely kidding themselves. We have seen nothing yet of what is to come.


  • Registered Users Posts: 3,402 ✭✭✭Timing belt


    Wanderer78 wrote: »
    I'm not convinced this will be the case, I suspect the stress tests were conducted using different economic forecasts, possibly not as severe as this down turn could be, and it's important to realise, most economic advisor's are still from the neoclassical school of thought, and its prediction models are notoriously poor at predicting. Hopefully I'm completely wrong, as we do not need another financial crisis, it could be completely devastating, globally, it's also extremely important to realise, our own banks maybe sufficiently funded, but international banks may not be. Some commentators believing, some major international banks, could effectively fall over with even a slight gust. I'm not convinced anyone truly knows what could or couldn't happen, we simply don't know for sure, such is the complexity of these systems and processes, they only thing I'm sure of is, our track record of such predictions, particularly from mainstream, is beyond woeful. there's something seriously wrong with neoclassical and it's models, yet we still persist with this school of thought, it has not accepted it's failures from the past, and we largely have not accepted it's failures, this could be disastrous for us all



    We simply don't know this, nobody knows for sure, nobody seen lehmans coming, but some realised something major was coming, but they were ignored and even ridiculed, they still are largely ignored....

    Yes I agree, if the stress test models predictions are flawed and don't take into account such a severe stress then banks will be under capitalised and will be in trouble. That all comes down to how good the regulator is and how strong the stress tests are. If we are to believe that banks are stress tested appropriately then things should be ok as the banks should have sufficient capital and liquidity buffers in place to deal with the stress.

    Things are different this time around as to when lehmans went under as back then it was a liquidity crisis where banks stopped lending to each other on the inter-bank market. Now days there is a limited inter-bank market as the central banks have stepped in and replaced much of this and will inject the necessary liquidity into the market to keep the cogs turning. (This may have other impacts on the currency, sovereign debts markets) In addition to this banks now have got liquidity asset buffers that they didn't have in place back then so I see it as a very different situation.

    Yes people were "ignored and even ridiculed" and that will happen again as people always think they know better than everyone else and unfortunately it is not possible to predict the future accurately so there will always be areas that have been over looked. The funds industry is one where I think there is a risk of this happening as there is light regulation and most of the risks are managed via in-house risk models where there is a high chance that certain risks have been over-looked or played down. The Banking Sector has had a lot of focus on it and hopefully have done enough to protect the banks from another crisis. But then again saying all that you need to look and see who has lent to the funds industry!!!
    Wanderer78 wrote: »
    I'd have to disagree here, regulations didn't go far enough, regulations such as the reinstatement of the Glass–Steagall act should have also been done, to increase the safety of our global financial systems. The world of neoclassical still also doesn't accept critical facts such as bank creation of money in the form of credit, which played a critical role in the last crash. It's also important to realise, some commentators believe that depositors are now less protected under new bail in rules, which in the event of a banking crash, there's an increased chance of deposits being bailed in, in order to save the bank, we simply don't know until this occurs, if it even does.

    Yes more could have been done on the regulation front and yes you are right that they should have reinstated the Glass-Steagall act. If you look at the UK they introduced some similar along the lines of ring-fenced banks which is similar to the Glass-Steagall act bu not all countries have done so and because of this we have a situation where normal customer depsoits are providing the underlying capital to fund the debt issued to more risk sectors. If you look at my example of the funds industry you will more than likely find that any lending to these institutions will be funded via normal retail customer deposits and therefore there is a risk that exists that would not have had the Glass-Steagall act been adopted everywhere.

    As for your point about Deposit guarantee schemes these are only as good as the paper they are written on and there existence is only there to provide a consumer confidence to prevent a run on the banks. I think most of these schemes will have serious flaws in them if a situation ever arose where they were enacted. It is all about consumer confidence similar to why people are happy to rely on Coins and Notes.

    It is highly unlikely that customer funds would be bailed in to rescue a bank as new regulation has resulted in a increase in banks issuance of AT1(CoCo) bonds that will convert to equity if capital triggers are met. And in the event of a resolution of a bank there will be "Bail in" bonds that will convert to equity in the event of the resolution of a bank and as such provides protection to customer deposits.

    I'm not saying that it is not possible for a bank to go under but I believe that a lot has been done on the regulatory front to make it a controlled explosion this time around and therefore it is a different situation to the 2008 financial crisis.


  • Registered Users Posts: 357 ✭✭Roger the cabin boy


    Stocks are trending down, redundancies are creeping up (see Premier inns reducing workforce by 20% today). Banks beginning to close (Ulster)

    Here we go?


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Stocks are trending down, redundancies are creeping up (see Premier inns reducing workforce by 20% today). Banks beginning to close (Ulster)

    Here we go?

    sadly, yup, this could be a scary one, batten down the hatches!


  • Registered Users Posts: 3,210 ✭✭✭wassie


    Stocks are trending down, redundancies are creeping up (see Premier inns reducing workforce by 20% today). Banks beginning to close (Ulster)

    Here we go?

    The stock market is not the economy and is not always a reliable indicator of such. I think the US market over last 6 months is evidence of this.

    Banks are not beginning to close. A commercial decision whether to wind down Ulster Bank is expected to be made at the end of next month. Not surprising given it has under performed since its was bailed out by RBS.

    Is the economy going to struggle - in certain sectors yes, but not for the reasons outlined above.


  • Registered Users Posts: 3,402 ✭✭✭Timing belt


    wassie wrote: »
    The stock market is not the economy and is not always a reliable indicator of such. I think the US market over last 6 months is evidence of this.

    Banks are not beginning to close. A commercial decision whether to wind down Ulster Bank is expected to be made at the end of next month. Not surprising given it has under performed since its was bailed out by RBS.

    Is the economy going to struggle - in certain sectors yes, but not for the reasons outlined above.

    Obviously the tourism/hospitality/airline industry are going to struggle but what other sectors do you see struggling?


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  • Registered Users Posts: 2,242 ✭✭✭brisan


    Obviously the tourism/hospitality/airline industry are going to struggle but what other sectors do you see struggling?

    Retail, Foreign language schools ,Transport (private mainly but public as well) ,commercial landlords to name a few


  • Registered Users Posts: 3,403 ✭✭✭CorkRed93


    Return of crowds to sporting events in UK put back. Now huge pressure on a lot of sports over there. Hoping we can somehow manage to keep sport going in a limited capacity at least.


  • Registered Users Posts: 357 ✭✭Roger the cabin boy


    wassie wrote: »
    The stock market is not the economy and is not always a reliable indicator of such. I think the US market over last 6 months is evidence of this.

    Banks are not beginning to close. A commercial decision whether to wind down Ulster Bank is expected to be made at the end of next month. Not surprising given it has under performed since its was bailed out by RBS.

    Is the economy going to struggle - in certain sectors yes, but not for the reasons outlined above.

    Deutsche Bank to close 20% of domestic branches


  • Registered Users Posts: 1,476 ✭✭✭coolshannagh28


    wassie wrote: »
    The stock market is not the economy and is not always a reliable indicator of such. I think the US market over last 6 months is evidence of this.

    Banks are not beginning to close. A commercial decision whether to wind down Ulster Bank is expected to be made at the end of next month. Not surprising given it has under performed since its was bailed out by RBS.

    Is the economy going to struggle - in certain sectors yes, but not for the reasons outlined above.

    Its hard to predict , our govt seems fairly confident that the MNC sector can compensate for the falls in more exposed sectors such as tourism and hospitality however there is a possibility that if the world economy drags due to covid that MNCs may begin to rationalise spelling trouble in this vital sector.


  • Registered Users Posts: 12,992 ✭✭✭✭Geuze


    theguzman wrote: »
    Anybody who thinks the banks are fine this time around are absolutely kidding themselves. We have seen nothing yet of what is to come.

    Do you expect GDP to fall in 2021?


    This is what the ECB expect for the EU:

    https://www.ecb.europa.eu/pub/projections/html/index.en.html

    2020 = -8%
    2021 = +5%


    This is what the OECD expect:

    http://www.oecd.org/economic-outlook/

    http://www.oecd.org/economic-outlook/#gdp-projections

    Euro area
    2020 = -7.9%
    2021 = +5.1%


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Its hard to predict , our govt seems fairly confident that the MNC sector can compensate for the falls in more exposed sectors such as tourism and hospitality however there is a possibility that if the world economy drags due to covid that MNCs may begin to rationalise spelling trouble in this vital sector.
    Geuze wrote:
    Do you expect GDP to fall in 2021?

    Yea I wouldn't be as confident, I certainly wouldn’t be trusting anything coming from an equilibrium based model anyway, we re absolutely in the unknown here, nobody knows, and relying on mnc's is lethal, they can easily pull back, and still survive, there's probably still plenty of scope for them in financial activities such as share buy backs


  • Registered Users Posts: 3,210 ✭✭✭wassie



    Yes - in Germany. Deutsche Bank dont offer retail services in Ireland.

    Do I see banks taking the opportunity to close branches - definitely. Banks are always looking for way to save costs and this will be the perfect cover to close down those branches that are/were considered uneconomic.

    But in terms of actual banks closing down that you inferred earlier (i.e. Ulster) - no.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    wassie wrote: »
    Yes - in Germany. Deutsche Bank dont offer retail services in Ireland.

    Do I see banks taking the opportunity to close branches - definitely. Banks are always looking for way to save costs and this will be the perfect cover to close down those branches that are/were considered uneconomic.

    But in terms of actual banks closing down that you inferred earlier (i.e. Ulster) - no.

    unfortunately im expecting a financial sector wobble very very soon, particularly globally, of which we re complexly intertwined with, a very similar set of circumstances is currently at play in the sector, compared to pre 07/08


  • Registered Users Posts: 3,402 ✭✭✭Timing belt



    I don’t think the closure of branches is due to covid. All banks want to close branches and get customers to use digital platforms. Covid may speed this process along.

    What will be interesting with the banks is whether we will see a credit risk appetite reduction in certain sectors once the increase in non performing loans start to eat into there capital reserves.

    If there is a credit squeeze it will slow down the overall economy so will be interesting to see if the action taken by ECB/countries to cut capital buffers is enough to prevent this.


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  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    I don’t think the closure of branches is due to covid. All banks want to close branches and get customers to use digital platforms. Covid may speed this process along.

    What will be interesting with the banks is whether we will see a credit risk appetite reduction in certain sectors once the increase in non performing loans start to eat into there capital reserves.

    If there is a credit squeeze it will slow down the overall economy so will be interesting to see if the action taken by ECB/countries to cut capital buffers is enough to prevent this.

    will they be willing to take the risk! i think it could be, i think it would be best to blow out deficits, and push it into the public domain, less risky


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