Recession predictions

riddles · 19-07-2020 12:26am

https://www.breakingnews.ie/ireland/ireland-makes-60bn-in-interest-payments-on-national-debt-in-last-decade-934715.html

Geuze · 19-07-2020 12:32am

https://www.cso.ie/en/releasesandpublications/er/gfsa/governmentfinancestatisticsapril2020/

See table 1.

Thankfully, interest costs have fallen.

2014 = 7.589 bn

2019 = 4.458 bn

The average interest rate is falling, so these figure should continue to fall.

KyussB · 19-07-2020 1:57am

Geuze wrote: »

The first diagram, posted by me, is of stocks of wealth.

The second diagram shows flows, i.e. additions to wealth.

The issue of the distribution of wealth is interesting, yes.

Very high rents are hurting people.

Ah, good point, yes

don't want to mix up stocks and flows.

Wanderer78 · 19-07-2020 7:14am

Geuze wrote:

Very high rents are hurting people.

Its killing younger generations, many are getting trapped in the rental sector, this isn't good for many reasons, including for the financial sector

combat14 · 21-07-2020 7:50pm

what do ppl think of the eu 750 bn rescue fund and 1 trillion budget.. will it be enough to keep europe out of deep recession... ?

any thoughts on allocation of fund, all I have heard on allocation so far is:

210 bn - italy
140 bn - spain
72 bn - Greece
40 bn - france
.
.
2 bn (maybe) - ireland
& possibly a portion of 5 bn allocated for Brexit next year

sounds like eu will borrow for this 750 billion fund of Grant's and loans with timeline for repayment by approx. 2058

repayment to be made by new eu taxes perhaps on digital sales .... not great for ireland .... and possible increased fututre eu member contributions to eu federal budget ...

will 2-4 bn from europe (ignoring irelands contribution to eu budget over next 7 years - some say 15bn) be enough to help us stay afloat??

brisan · 21-07-2020 8:55pm

combat14 wrote: »

what do ppl think of the eu 750 bn rescue fund and 1 trillion budget.. will it be enough to keep europe out of deep recession... ?

any thoughts on allocation of fund, all I have heard on allocation so far is:

210 bn - italy
140 bn - spain
72 bn - Greece
40 bn - france
.
.
2 bn (maybe) - ireland
& possibly a portion of 5 bn allocated for Brexit next year

sounds like eu will borrow for this 750 billion fund of Grant's and loans with timeline for repayment by approx. 2058

repayment to be made by new eu taxes perhaps on digital sales .... not great for ireland .... and possible increased fututre eu member contributions to eu federal budget ...

will 2-4 bn from europe (ignoring irelands contribution to eu budget over next 7 years - some say 15bn) be enough to help us stay afloat??

A drop in the ocean compared to what is needed
The tourism industry will need twice that.
God knows what the aviation industry will need to survive .

KyussB · 21-07-2020 9:30pm

It's the typical EU thing of announcing a big number and not announcing that it is spread over a large number of years - coupled with infighting over how many sisyphean conditions to attach to the aid, without any contemplation over whether onerous conditions do more harm than good in the first place.

So we have an ineffective 'recovery' fund, with a lot of talk about strings/conditions/reforms attached - and zero information yet about what those reforms are - which is worrying as that's the most important thing about the entire fund.

lsjmhar · 21-07-2020 10:32pm

We is all in big twouble this time!!!!

brisan · 22-07-2020 7:53am

lsjmhar wrote: »

We is all in big twouble this time!!!!

Head over to the property section where an awful lot of people think house prices will either stay the same ,rise slightly or fall very slightly.

Geuze · 22-07-2020 11:55pm

«Central Banks have Become Irrelevant»
The Scottish market strategist Russell Napier warns that investors should prepare for inflation rates of 4% and more by next year. The main reason: Governments have taken control of the money supply.

https://themarket.ch/interview/russell-napier-central-banks-have-become-irrelevant-ld.2323

I have never heard of this lad before.

Interesting.

KyussB · 23-07-2020 2:42am

Straight away he kind of misses the point: If, as he claims, governments have control over the money supply, then they don't need to be concerned about interest rates on debt, nor be motivated to seek inflation to erode debt levels - as they no longer need to use debt for funding.

Not sure why he's so fixated on commercial loans. You can't push on a string, the demand for loans will be limited and based on conditions in the real economy (commercial loans still have to perform) - demand for such loans is determined endogenously (by conditions within the real economy), not exogenously (by governments or others exercising control outside of the real economy).

Absent gigantic levels of government spending, way beyond what we're seeing even in response to the coronavirus, he's mad to be expecting any level of high inflation.

tonysopprano · 23-07-2020 2:55am

combat14 wrote: »

what do ppl think of the eu 750 bn rescue fund and 1 trillion budget.. will it be enough to keep europe out of deep recession... ?

any thoughts on allocation of fund, all I have heard on allocation so far is:

210 bn - italy
140 bn - spain
72 bn - Greece
40 bn - france
.
.
2 bn (maybe) - ireland
& possibly a portion of 5 bn allocated for Brexit next year

sounds like eu will borrow for this 750 billion fund of Grant's and loans with timeline for repayment by approx. 2058

repayment to be made by new eu taxes perhaps on digital sales .... not great for ireland .... and possible increased fututre eu member contributions to eu federal budget ...

will 2-4 bn from europe (ignoring irelands contribution to eu budget over next 7 years - some say 15bn) be enough to help us stay afloat??

Budget is €1.9tn

Ireland's contribution over the next 7 years will consist of 15.7bn for the rescue fund, 4-7bn per year interest on 2008 bailout and 4bn per year membership fees

anything from €71.7bn to €93.7bn depending on interest rates over the next 7 years, and we still owe over €220bn in capital repayments.

Where do you think this money will come from

Wanderer78 · 23-07-2020 6:18am

Geuze wrote:

Â«Central Banks have Become IrrelevantÂ» The Scottish market strategist Russell Napier warns that investors should prepare for inflation rates of 4% and more by next year. The main reason: Governments have taken control of the money supply.

We lost democratic control of the majority of the money supply long ago, handing it over to private sector financial institutions, there's a reason why we experienced a 'credit crisis' not too long ago!

tonysopprano wrote:

Where do you think this money will come from

I think I agree with economist Michael hudson on this one, 'debts that cant be repaid, won't be, we just have to figure out how they won't be', that won't be easy!

Roger the cabin boy · 23-07-2020 8:38am

Wanderer78 wrote: »

We lost democratic control of the majority of the money supply long ago, handing it over to private sector financial institutions, there's a reason why we experienced a 'credit crisis' not too long ago!

I think I agree with economist Michael hudson on this one, 'debts that cant be repaid, won't be, we just have to figure out how they won't be', that won't be easy!

Normally its war

Wanderer78 · 23-07-2020 8:42am

Roger the cabin boy wrote: »

Normally its war

unfortunately history does indeed show us this, hopefully we ve matured as a species to prevent that, but maturity does seem to be in short supply at the moment

Snow Garden · 23-07-2020 12:06pm

brisan wrote: »

Head over to the property section where an awful lot of people think house prices will either stay the same ,rise slightly or fall very slightly.

I think a lot of those posters in the property threads have hidden agendas. I would advise avoiding those threads to be honest. I believe 2020 is a write off in terms of assessing the real impact to house prices because there are too many distortions (e.g. govt paying wages) but I forecast major house price falls in 2021 and 2022 as the economic impact hits home.

Wanderer78 · 23-07-2020 12:53pm

Snow Garden wrote: »

I think a lot of those posters in the property threads have hidden agendas. I would advise avoiding those threads to be honest. I believe 2020 is a write off in terms of assessing the real impact to house prices because there are too many distortions (e.g. govt paying wages) but I forecast major house price falls in 2021 and 2022 as the economic impact hits home.

ah yea, mostly property owners by the looks of it, so slightly biased, and somewhat fanciful thinking

theguzman · 23-07-2020 3:20pm

Wanderer78 wrote: »

unfortunately history does indeed show us this, hopefully we ve matured as a species to prevent that, but maturity does seem to be in short supply at the moment

War is inevitable and we are headed for a Sino-Western conflict. A full scale invasion of mainland China will be launched from the Philippines in response to a Chinese annexation of Taiwan. The US and China are on a collision course for almost a decade now and if the Democratic warmongers get the White House then it will happen faster than you can say Benghazi.

Wanderer78 · 23-07-2020 3:23pm

theguzman wrote:

War is inevitable and we are headed for a Sino-Western conflict. A full scale invasion of mainland China will be launched from the Philippines in response to a Chinese annexation of Taiwan. The US and China are on a collision course for almost a decade now and if the Democratic warmongers get the White House then it will happen faster than you can say Benghazi.

Maybe, but who knows

brisan · 23-07-2020 4:29pm

tonysopprano wrote: »

Budget is €1.9tn

Ireland's contribution over the next 7 years will consist of 15.7bn for the rescue fund, 4-7bn per year interest on 2008 bailout and 4bn per year membership fees

anything from €71.7bn to €93.7bn depending on interest rates over the next 7 years, and we still owe over €220bn in capital repayments.

Where do you think this money will come from

One of two places
The magic money tree
Higher taxes
I (just being an ordinary joe soap ) reckon it'll be the tax option

brisan · 23-07-2020 4:33pm

Snow Garden wrote: »

I think a lot of those posters in the property threads have hidden agendas. I would advise avoiding those threads to be honest. I believe 2020 is a write off in terms of assessing the real impact to house prices because there are too many distortions (e.g. govt paying wages) but I forecast major house price falls in 2021 and 2022 as the economic impact hits home.

Silly question as I know it has never happened before but is there any set of circumstances in which property prices would not fall during a recession
EG Government buying up housing stock for social housing
Oh I have no skin in the game
At this stage I only own my home and my 3 kids are well settled with good jobs and comfortable mortgages

Wanderer78 · 23-07-2020 4:42pm

brisan wrote:

One of two places The magic money tree Higher taxes I (just being an ordinary joe soap ) reckon it'll be the tax option

Money creation is already magical, it doesn't need to be reinvented, our politicians and their advisers just need to walk away from their neoclassical roots to figure it out, but I suspect this will probably never happen, leading them to the default position, you!

brisan wrote:

Silly question as I know it has never happened before but is there any set of circumstances in which property prices would not fall during a recession EG Government buying up housing stock for social housing Oh I have no skin in the game At this stage I only own my home and my 3 kids are well settled with good jobs and comfortable mortgages

The availability of credit, or lack of, generally has a much bigger effect on house prices, neoclassical wont tell you this though, government interaction with the market doesn't generally cause all that much effect with prices, but I'm sure that's debatable, Id imagine it does have some effect.

brisan · 23-07-2020 4:47pm

Wanderer78 wrote: »

Money creation is already magical, it doesn't need to be reinvented, our politicians and their advisers just need to walk away from their neoclassical roots to figure it out, but I suspect this will probably never happen, leading them to the default position, you!

The availability of credit, or lack of, generally has a much bigger effect on house prices, neoclassical wont tell you this though, government interaction with the market doesn't generally cause all that much effect with prices, but I'm sure that's debatable, Id imagine it does have some effect.

My thinking too from a laymans point of view.
With Mortgage approvals at a record low for April and May and banks refusing approval for those on PUP and TWSS I cannot see the situation improving

Wanderer78 · 23-07-2020 5:11pm

brisan wrote: »

My thinking too from a laymans point of view.
With Mortgage approvals at a record low for April and May and banks refusing approval for those on PUP and TWSS I cannot see the situation improving

housing is a completely disaster, im not sure if anyone really knows what to do about it, i think our politicians and their advisers are lost on it, which is kinna disturbing

Roger the cabin boy · 23-07-2020 5:48pm

Wanderer78 wrote: »

housing is a completely disaster, im not sure if anyone really knows what to do about it, i think our politicians and their advisers are lost on it, which is kinna disturbing

Just keep chucking money it at.. WCGW?

Wanderer78 · 23-07-2020 6:04pm

Roger the cabin boy wrote: »

Just keep chucking money it at.. WCGW?

yup thats where we re at, we need to put the magical money creators(banks), back into the box

Tea drinker · 23-07-2020 9:15pm

theguzman wrote: »

War is inevitable and we are headed for a Sino-Western conflict. A full scale invasion of mainland China will be launched from the Philippines in response to a Chinese annexation of Taiwan. The US and China are on a collision course for almost a decade now and if the Democratic warmongers get the White House then it will happen faster than you can say Benghazi.

US is almost as likely to implode into Yugoslav style civil war with the level of hysteria and lies being peddled. Chinese influence in US universities is being curbed but hard to know how successful or even useful this will be. There is a small swathe of politicians and officials who believe in order to defeat china, the US must become China. Mad stuff......or is it ;-)
CIA had a prediction for civil war by 2000... never happened.

Snow Garden · 24-07-2020 12:21pm

brisan wrote: »

Silly question as I know it has never happened before but is there any set of circumstances in which property prices would not fall during a recession
EG Government buying up housing stock for social housing

In a major recession, No. This recession will be severe.

House prices will fall in 2021 and 2022. The question is by how much. I personally think 15-20% by the end of 2021 (18 months from now). 2022 could be similar.

It will depend on lots of factors e.g. govt wage scheme, budget deficits, borrowing rates, mortgage holidays/defaults, bank credit availability and lending rules, external markets, unemployment rates etc but there are very few upsides in the short term (2-3 years).
.

Geuze · 25-07-2020 12:34am

Snow Garden wrote: »

In a major recession, No. This recession will be severe.
.

You use the verb "will".

We are in the recession now.

It started in March 2020.

It should end by Aug/Sep 2020.

We will see two quarters of sharp, very sharp falls in GDP/GNP/GNI/GNI*.

Then, after that, growth.

Using the definition of recession = falling income, this is a very, very sharp, recession, followed by a period of recovery.

Geuze · 25-07-2020 12:38am

Snow Garden wrote: »

In a major recession, No. This recession will be severe.

House prices will fall in 2021 and 2022. The question is by how much. I personally think 15-20% by the end of 2021 (18 months from now). 2022 could be similar.

It will depend on lots of factors e.g. govt wage scheme, budget deficits, borrowing rates, mortgage holidays/defaults, bank credit availability and lending rules, external markets, unemployment rates etc but there are very few upsides in the short term (2-3 years).
.

I don't like making forecasts, but let me make one now.

House prices will not fall 15-20% by the end of 2021.

There simply isn't a surplus of houses like 2008.

Potential buyers now are saving more due to COVID.

I spoke to somebody with AIP today, their monthly saving has doubled.

Many of the workers affected are not house buyers.

I suggest the following:

weakness / caution in the housing market
softness in prices
stricter lending
maybe a 5% fall

Wanderer78 · 25-07-2020 5:28am

Geuze wrote:

Many of the workers affected are not house buyers.

Is this because they simply haven't been able to get access to the market for a long time, or ever? Housing and accommodation demand is more or less always there, as we haven't figured out how to stop the aging process, and obviously people are also living longer. Our accommodation needs have never been fulfilled in recent times, particularly since the last crash. it was noted that we needed to continue building, particularly in the Dublin region, but this didn't occur, and is only coming on stream now. We need to stop using metrics such as price as an indicator of demand.

This significant drop in demand for credit could have serious repercussions for the financial sector, as we learned from the previous crash, when demand for credit falls sharply, the whole financial sector becomes unstable. I'm aware conditions are different now compared to the previous crash, but I am expecting issues to arrive soon from the financial sector, here's looking at you Italy.

brisan · 27-07-2020 9:45am

Wanderer78 wrote: »

Is this because they simply haven't been able to get access to the market for a long time, or ever? Housing and accommodation demand is more or less always there, as we haven't figured out how to stop the aging process, and obviously people are also living longer. Our accommodation needs have never been fulfilled in recent times, particularly since the last crash. it was noted that we needed to continue building, particularly in the Dublin region, but this didn't occur, and is only coming on stream now. We need to stop using metrics such as price as an indicator of demand.

This significant drop in demand for credit could have serious repercussions for the financial sector, as we learned from the previous crash, when demand for credit falls sharply, the whole financial sector becomes unstable. I'm aware conditions are different now compared to the previous crash, but I am expecting issues to arrive soon from the financial sector, here's looking at you Italy.

The demand is there for credit but the CB rules and the banks reluctance (rightly so in my opinion ) to lend to those on PUP and TWSS will stifle the amount of credit made available

Wanderer78 · 27-07-2020 9:51am

brisan wrote: »

The demand is there for credit but the CB rules and the banks reluctance (rightly so in my opinion ) to lend to those on PUP and TWSS will stifle the amount of credit made available

yea i understand that alright, but as you said, the rules were put into place for a reason, its a very complicated mess, we re currently stuck and theres a strong possibility many will get stuck in the rental sector long term, some possibly indefinitely. we have to work on increasing our public housing stock

Geuze · 01-08-2020 1:05am

Flash estimates of Q2 2020 out now:

https://ec.europa.eu/eurostat/documents/2995521/11156775/2-31072020-BP-EN.pdf/cbe7522c-ebfa-ef08-be60-b1c9d1bd385b

Geuze · 01-08-2020 1:07am

Although earlier I may have said that this recession will be very sharp, but last maybe six months max, note that the level of output will be lower than the potential output for several years:

http://econbrowser.com/archives/2020/07/guest-contribution-lasting-damage-of-the-pandemic

Wanderer78 · 01-08-2020 9:05am

Geuze wrote:

Although earlier I may have said that this recession will be very sharp, but last maybe six months max, note that the level of output will be lower than the potential output for several years:

Thank you for your predictions, but I believe all predictions will turn out to be wrong, some very wrong, particularly if they are neoclassically based, equilibrium based models are notoriously inaccurate, as they lack that all important element, human behaviour, growth will return when the humans become confident once again

Roger the cabin boy · 01-08-2020 11:44am

It isn't traditional demand destruction that's going to be the big hit here, it's the societal and structural changes to what and how we do work which Covid has accelerated by perhaps a generation which is going to cause the most pain.

The traditional office commute work model is dead.

wassie · 01-08-2020 5:45pm

Another big effect is how the post covid will be supply chains and how the world trades with each other.

Supply chains, particularly for certain industries will no doubt be shortened to lower risks associated with similar global events that disrupt trade. This comes at a cost.

Also I think we are starting to see the world divide between US & China when comes to technology. Some commentators are calling this the start of a new information technology cold war with larger economies may be forced in time to choose sides. This could have big implications for capital flows.

saabsaab · 01-08-2020 6:16pm

wassie wrote: »

Another big effect is how the post covid will be supply chains and how the world trades with each other.

Supply chains, particularly for certain industries will no doubt be shortened to lower risks associated with similar global events that disrupt trade. This comes at a cost.

Also I think we are starting to see the world divide between US & China when comes to technology. Some commentators are calling this the start of a new information technology cold war with larger economies may be forced in time to choose sides. This could have big implications for capital flows.

A great post. You are onto something.

theguzman · 01-08-2020 11:32pm

Made in India and Made in Nigeria will be where our tat comes from by mid-decade, alot of corporation will never again centralise manufacturing in China, and will rather establish multiple manufacturing sites globally so that if something happened in India the factory in Lagos can take up the slack.

Roger the cabin boy · 05-08-2020 11:40am

Redundancies now ticking up in the UK.....

Wanderer78 · 05-08-2020 11:41am

Roger the cabin boy wrote: »

Redundancies now ticking up in the UK.....

yea this is a fcuking disaster

combat14 · 05-08-2020 11:53am

Bank of Ireland said on Wednesday it will cut 1,400 jobs in the coming years to rein in costs as the lender posted a loss for the first half of the year after taking a €937 million charge to cover an expected spike in bad debts resulting from the coronavirus crisis

Group warns full-year loan-loss charge is expected to fall between €1.1bn and €1.3bn

https://www.irishtimes.com/business/financial-services/bank-of-ireland-to-cut-1-400-jobs-as-covid-19-drives-937m-loans-charge-1.4322469?mode=amp

looks like the banks are starting to look a bit wobbly already and we are only barely 6 months into this

Wanderer78 · 05-08-2020 12:15pm

combat14 wrote: »

Bank of Ireland said on Wednesday it will cut 1,400 jobs in the coming years to rein in costs as the lender posted a loss for the first half of the year after taking a €937 million charge to cover an expected spike in bad debts resulting from the coronavirus crisis

Group warns full-year loan-loss charge is expected to fall between €1.1bn and €1.3bn

https://www.irishtimes.com/business/financial-services/bank-of-ireland-to-cut-1-400-jobs-as-covid-19-drives-937m-loans-charge-1.4322469?mode=amp

looks like the banks are starting to look a bit wobbly already and we are only barely 6 months into this

unfortunately it nearly always comes back around to the banks, its an incredibly fragile sector

lsjmhar · 06-08-2020 4:00pm

Felipe Ashy Signboard wrote:

If Arsenal are looking for 55 redundancies after winning a cup + qualifying for Europe it doesn't look good for all those underneath.

if they got rid of the players and put the staff on the pitch, tgey might improve. lol!!

antimatterx · 06-08-2020 4:51pm

My company is threading very carefully. They're keeping recently hired staff, or staff they would have let have been let go otherwise on 2 month fixed term contracts. Not ideal, but if nothing else it's some more work until the uncertainty is figured out.

brisan · 06-08-2020 4:58pm

antimatterx wrote: »

My company is threading very carefully. They're keeping recently hired staff, or staff they would have let have been let go otherwise on 2 month fixed term contracts. Not ideal, but if nothing else it's some more work until the uncertainty is figured out.

I think a lot of companies are treading warily
Certain sectors are doing well but a lot are facing an uncertain future.
I had to drive to Fairview at 9 am today.
I was shocked at how light the traffic was
City centre was very quiet
There again the Yacht pub in Clontarf was very busy at lunchtime
Who knows what way it will pan out,
Even if the economy recovers there will be a lot of economic scarring

i_surge · 06-08-2020 5:59pm

Wanderer78 wrote: »

Thank you for your predictions, but I believe all predictions will turn out to be wrong, some very wrong, particularly if they are neoclassically based, equilibrium based models are notoriously inaccurate, as they lack that all important element, human behaviour, growth will return when the humans become confident once again

Reflexivity is where it is at. Self sustaining processes driving cyclicality.

Wanderer78 · 06-08-2020 6:00pm

i_surge wrote: »

Reflexivity is where it is at. Self sustaining processes driving cyclicality.

'in the words of the virgin mary, come again'?

i_surge · 06-08-2020 6:11pm

Wanderer78 wrote: »

'in the words of the virgin mary, come again'?

It is a philosophy about the driving forces for recursive processes such as credit contraction or expansion.

All summed up in the most pretentious way possible in a book called the Alchemy of Finance.

Recession predictions

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