Recession predictions

KyussB · 14-10-2020 5:27pm

From this (back to 2017) it'd seem Private Debt was 172% of GNI* - household 77% (P10), local corporate 95% (P17):
https://assets.gov.ie/7079/dc2b93dbcf1d40af9e01c2920c90acd3.pdf

It'd be smaller than that now - but unlikely by 70%-80%.

Timing belt · 14-10-2020 5:53pm

KyussB wrote: »

From this (back to 2017) it'd seem Private Debt was 172% of GNI* - household 77% (P10), local corporate 95% (P17):
https://assets.gov.ie/7079/dc2b93dbcf1d40af9e01c2920c90acd3.pdf

It'd be smaller than that now - but unlikely by 70%-80%.

"Table A.14 Credit Advanced to Irish Resident Private-Sector Enterprises" published by the CBI shows private debt falling year by year
Dec 2012 199,251
Dec 2013 178,708
Dec 2014 135,173
Dec 2015 110,199
Dec 2016 98,847
Dec 2017 90,268
Dec 2018 82,952
Dec 2019 74,243
Jun 2020 74,974

The point that I was highlighting was that it is not increasing year and year and in fact has decreased by a significant amount.

Wanderer78 · 14-10-2020 6:25pm

Timing belt wrote:

On a Global scale there is massive fall out... All the emerging markets are in big trouble and we are already seeing countries starting to default on gov debt. But on the main economies of USA & Europe we are not seeing this because of the government intervention. Instead what we are seeing is an economic situation that will be stagnant for the next ten years due to the increase in public debt. The only thing that will break this deadlock is when they pass negative rates onto retail customers and then we will see inflation. I predict that this will come Q1/Q2 next year and that inflation will overshoot targets because once it starts moving the price of Oil will recover and this will increase the cost of everything.

I truly believe we ve very little to be worrying about over public debt, the problems truly still are with private debt, globally. Again, I also truly can't see this miraculous recovery via increased consumption

Timing belt · 14-10-2020 6:48pm

Wanderer78 wrote: »

I truly believe we ve very little to be worrying about over public debt, the problems truly still are with private debt, globally. Again, I also truly can't see this miraculous recovery via increased consumption

It depends on what public debt is spent on. If it improves efficiency such as motorways ports Education housing etc then there is a tangible benefit in the future. The one thing we do know is that the more debt Public or private equals slower economic output if not spent correctly

Wanderer78 · 15-10-2020 6:44am

Timing belt wrote:

It depends on what public debt is spent on. If it improves efficiency such as motorways ports Education housing etc then there is a tangible benefit in the future. The one thing we do know is that the more debt Public or private equals slower economic output if not spent correctly

Absolutely, but I think it's also important to realise, inefficiencies exist in both sectors, some debt will be wasted, and we may never experience 100% efficency, in either sectors. human behaviour is simply irrational and unpredictable at times, which can lead to inefficiencies, a more mature path is to accept that both sectors have inefficiencies, but we should always work on reducing these as much as possible, and accept the relationship between both sectors, is in fact symbiotic, but sadly, this reality is potentially further from acceptance than ever before.

Timing belt · 17-10-2020 4:10pm

Arjen_Robben wrote: »

There is a limit to how much debt a country accrue, eventually bond markets will stop lending or demand huge interest rates.

Yes you are right but you need to consider that the ECB and other central banks are the one's lending via QE which is pushing yields down and allowing investors to make money via appreciation of the Bond. The question is how long can QE continue and what happens when it slows/stops.

Wanderer78 · 17-10-2020 4:11pm

Arjen_Robben wrote: »

There is a limit to how much debt a country accrue, eventually bond markets will stop lending or demand huge interest rates.

yes and no, central banks can never run out of money, but a country can technically run out of capacity to service its debts, but i wouldnt be overly worry about that, theres virtually no supply issues and there probably is enough demand out there, all thats needed is the money, and debt is the only way to be doing that, plough on with the public debt, be grand

Timing belt · 17-10-2020 4:24pm

Wanderer78 wrote: »

yes and no, central banks can never run out of money, but a country can technically run out of capacity to service its debts, but i wouldnt be overly worry about that, theres virtually no supply issues and there probably is enough demand out there, all thats needed is the money, and debt is the only way to be doing that, plough on with the public debt, be grand

There is a limit as the more QE that is undertaken the more the value of the currency drops which in turn leads to imported inflation which is different to inflation due to GDP growth.

At the moment all countries are stepping up QE at the same time so we are not seeing the currency drop but weaker countries especially in the emerging markets will hit there limit soon which will lead to imported inflation and bond yields increasing making it more expensive for countries to service there debt and risks a potential sovereign crisis.

Wanderer78 · 17-10-2020 4:29pm

Timing belt wrote: »

There is a limit as the more QE that is undertaken the more the value of the currency drops which in turn leads to imported inflation which is different to inflation due to GDP growth.

At the moment all countries are stepping up QE at the same time so we are not seeing the currency drop but weaker countries especially in the emerging markets will hit there limit soon which will lead to imported inflation and bond yields increasing making it more expensive for countries to service there debt and risks a potential sovereign crisis.

where is this magical inflation, particularly from previous qe?

Timing belt · 17-10-2020 4:37pm

Wanderer78 wrote: »

where is this magical inflation, particularly from previous qe?

It is hidden due to the deflation in the wider economy and by the drop in oil prices.

Also We are also not seeing it as all countries are undertaking QE so currency value not dropping but once one stops or slows down then we see it.

The emerging markets will be the first countries to stop/slow down and we rely heavily on these countries for commodities.

Remember I am talking about imported inflation.

Wanderer78 · 17-10-2020 5:02pm

Arjen_Robben wrote:

Eventually you get hyperinflation, you can't just print your problems away indefinitely.

Highly unlikely, baring in mind previous hyperinflation events were not exclusively due to excess money creation, but included other economic factors, in particular serious supply side issues, we currently do not have such issues, in fact deflation is more or a concern

Timing belt wrote:

It is hidden due to the deflation in the wider economy and by the drop in oil prices.

I'd say it's because most of the money created is flooding straight into asset markets, rising deficits is the only game in town now, and it ll probably be grand, it ll more than likely be safer there than coming from the private sector to

Timing belt · 17-10-2020 5:18pm

Wanderer78 wrote: »

Highly unlikely, baring in mind previous hyperinflation events were not exclusively due to excess money creation, but included other economic factors, in particular serious supply side issues, we currently do not have such issues, in fact deflation is more or a concern

I'd say it's because most of the money created is flooding straight into asset markets, rising deficits is the only game in town now, and it ll probably be grand, it ll more than likely be safer there than coming from the private sector to

If what you are saying the money is ending up in asset markets then by default it is leading to higher private debt. Putting this argument aside there is still a limit to the amount of public debt that can be issued for the reasons I mentioned earlier. My prediction is that countries will struggle to service their debt in years to come due to increased imported inflation and it will lead to a sovereign debt crisis which in turn will lead to tax rises and cuts in expenditure. The only way this will be avoided is if there is a vaccine and a very strong economic recovery. The longer it goes on the greater the risk.

Wanderer78 · 17-10-2020 5:36pm

Timing belt wrote:

If what you are saying the money is ending up in asset markets then by default it is leading to higher private debt. Putting this argument aside there is still a limit to the amount of public debt that can be issued for the reasons I mentioned earlier. My prediction is that countries will struggle to service their debt in years to come due to increased imported inflation and it will lead to a sovereign debt crisis which in turn will lead to tax rises and cuts in expenditure. The only way this will be avoided is if there is a vaccine and a very strong economic recovery. The longer it goes on the greater the risk.

I appreciate your opioion and knowledge, but as you said, if we don't take some of the debt onto the public balance sheet, it ll just push the need to increase the money supply out into the private sector, and with confidence collapsing in this sector, the demand for this credit will more than likely remain reletively low for some time. So its either expand the deficit or potentially face an overall contraction of the economy. You could very well be right about a sovereign debt crisis in the future, but it's something I'm not concerned about at all, these debts can be rolled over, almost indefinitely, without any major issues, just as long as the debts are regularly serviced, it should be fine. As 08 showed us, having more debt on the public books is far safer than having the bulk in the private sector, although not problem free, as you've explained very well

KyussB · 17-10-2020 5:37pm

Timing belt wrote: »

There is a limit as the more QE that is undertaken the more the value of the currency drops which in turn leads to imported inflation which is different to inflation due to GDP growth.

At the moment all countries are stepping up QE at the same time so we are not seeing the currency drop but weaker countries especially in the emerging markets will hit there limit soon which will lead to imported inflation and bond yields increasing making it more expensive for countries to service there debt and risks a potential sovereign crisis.

QE doesn't have a direct effect on currency valuation. Its effects on foreign demand for a currency are limited to the financial sector, not trade.

KyussB · 17-10-2020 5:40pm

Timing belt wrote: »

If what you are saying the money is ending up in asset markets then by default it is leading to higher private debt. Putting this argument aside there is still a limit to the amount of public debt that can be issued for the reasons I mentioned earlier. My prediction is that countries will struggle to service their debt in years to come due to increased imported inflation and it will lead to a sovereign debt crisis which in turn will lead to tax rises and cuts in expenditure. The only way this will be avoided is if there is a vaccine and a very strong economic recovery. The longer it goes on the greater the risk.

There are no more sovereign debt crises, with central banks undertaking 'whatever it takes' QE policies that guarantee debt sustainabiity.

Timing belt · 17-10-2020 5:46pm

KyussB wrote: »

QE doesn't have a direct effect on currency valuation. Its effects on foreign demand for a currency are limited to the financial sector, not trade.

Yes it does and is the main channel for generating economic growth as the more QE you do the currency devalues and makes exports cheaper.

Just read any of the ECB reports on QE and it tells you this.

Timing belt · 17-10-2020 5:56pm

Wanderer78 wrote: »

I appreciate your opioion and knowledge, but as you said, if we don't take some of the debt onto the public balance sheet, it ll just push the need to increase the money supply out into the private sector, and with confidence collapsing in this sector, the demand for this credit will more than likely remain reletively low for some time. So its either expand the deficit or potentially face an overall contraction of the economy. You could very well be right about a sovereign debt crisis in the future, but it's something I'm not concerned about at all, these debts can be rolled over, almost indefinitely, without any major issues, just as long as the debts are regularly serviced, it should be fine. As 08 showed us, having more debt on the public books is far safer than having the bulk in the private sector, although not problem free, as you've explained very well

I agree that it is the right course of action what I am trying to point out it is not risk free and there is a limit to public debt.

Wanderer78 · 17-10-2020 5:58pm

Timing belt wrote: »

I agree that it is the right course of action what I am trying to point out it is not risk free and there is a limit to public debt.

oh i do also agree, there are risks and limits involved, but generally, its safer to keep the bulk of the debt on the public balance sheet, particularly right now, again, im not concerned about the deficit at all, but it does need to be put to good use

KyussB · 17-10-2020 6:00pm

Timing belt wrote: »

Yes it does and is the main channel for generating economic growth as the more QE you do the currency devalues and makes exports cheaper.

Just read any of the ECB reports on QE and it tells you this.

There is no flow for QE to reach foreign exchange markets in any significant amounts - the money is going into Euro economies, not into external/foreign economies - so there is no/little drop in foreign demand for Euro's, in any significant amounts - which is what is required to affect exchange rates.

The money is going into 'domestic' i.e. Euro area assets - not into foreign exchange.

Timing belt · 17-10-2020 6:08pm

KyussB wrote: »

There is no flow for QE to reach foreign exchange markets in any significant amounts - the money is going into Euro economies, not into external/foreign economies - so there is no/little drop in foreign demand for Euro's, in any significant amounts - which is what is required to affect exchange rates.

The money is going into 'domestic' i.e. Euro area assets - not into foreign exchange.

Yes I agree that at the moment it is not devaluing the euro because all countries are undertaking QE. But if one country stops or slows It will create a devaluation.

KyussB · 17-10-2020 7:02pm

There is no flow for QE to reach foreign exchange markets in any significant amounts...which is required for QE to affect foreign exchange - which determines currency valuation - which is where devaluation would have to occur...

Timing belt · 17-10-2020 7:17pm

KyussB wrote: »

There is no flow for QE to reach foreign exchange markets in any significant amounts...which is required for QE to affect foreign exchange - which determines currency valuation - which is where devaluation would have to occur...

You have already said that and as I have said we are not seeing it because all countries are undertaking QE at the same time.

Just look at the impact on the FX market when yields started to rise in USD debt in March/April. Once there is a slow down in QE by one country then there will be an impact on the FX markets.

https://www.managementstudyguide.com/quantitative-easing-and-forex-market.htm

.

KyussB · 17-10-2020 8:16pm

Through what exact mechanism are you claiming QE affects the foreign exchange markets? All countries undertaking QE at the same time, is irrelevant if QE does not reach foreign exchange markets in significant amounts.

Timing belt · 17-10-2020 8:31pm

KyussB wrote: »

Through what exact mechanism are you claiming QE affects the foreign exchange markets? All countries undertaking QE at the same time, is irrelevant if QE does not reach foreign exchange markets in significant amounts.

Lets try a different approach where is the flaw in the this article:

https://www.managementstudyguide.com/quantitative-easing-and-forex-market.htm

KyussB · 17-10-2020 8:42pm

The source you're usng thinks we are in a fractional reserve banking system where money creation works based on a money multiplier, when that is not how banking money creation works - it's not a usable source of economic information. I'm not just going to rebut random articles thrown at me - if you want to use the argument from an article, at least put it in your own words.

Timing belt · 17-10-2020 8:50pm

KyussB wrote: »

The source you're usng thinks we are in a fractional reserve banking system where money creation works based on a money multiplier, when that is not how banking money creation works - it's not a usable source of economic information. I'm not just going to rebut random articles thrown at me - if you want to use the argument from an article, at least put it in your own words.

Ok lets use an example:

Say the EU stops undertaking QE and USA continue with QE.

Yields rise on Euro Debt

Yields stay low on USA Debt

US investors chase yield and therefore buy EU Debt creating a movement in FX rates.

Wanderer78 · 17-10-2020 9:10pm

KyussB wrote:

The source you're usng thinks we are in a fractional reserve banking system where money creation works based on a money multiplier, when that is not how banking money creation works - it's not a usable source of economic information. I'm not just going to rebut random articles thrown at me - if you want to use the argument from an article, at least put it in your own words.

Jesus, neoclassical sources are just disturbing at this stage

Timing belt · 17-10-2020 10:14pm

Wanderer78 wrote: »

Jesus, neoclassical sources are just disturbing at this stage

Wander78 explain to me what your economic theory on money supply? Explain to me how the example I gave does not impact the FX market.

KyussB · 17-10-2020 11:05pm

Timing belt wrote: »

Ok lets use an example:

Say the EU stops undertaking QE and USA continue with QE.

Yields rise on Euro Debt

Yields stay low on USA Debt

US investors chase yield and therefore buy EU Debt creating a movement in FX rates.

Ok - that's just an interest rate change on bonds, not a devaluation - and its effects are mostly limited to the finance sector, not having any fundamental change on trade.

I did a bit more reading, and this old document from Michael Hudson on US QE, gives a good overview of how it can affect the foreign sector and currency valuation:
http://gesd.free.fr/hudsonqi.pdf

The different potential flows of money for QE are complicated - but the key point is this: QE will go on for as long as the economy is below full potential, as long as inflation is below target.

So if QE money is directed into the domestic economy (such as, by governments issuing enough bonds, to fund enough spending to bring back Full Output and Full Employment) until the Private Sector recovers fully - then QE will not lead to significant flows of money into the 'foreign sector', and foreign exchange, which could push down currency valuation.

If however, governments choose to stay in a prolonged state of economic downturn (which they have and do), then that can lead to recipients of QE money seeking assets - both domestic and foreign - in search of yield, as you say.

The ability (or not) to pour QE money into foreign assets (and thus push down currency valuation) is extremely complicated - because other countries do not want their currency to appreciate, they may hold a lot of the depreciating currency, among many other issues etc. (Hudson goes into the issues well).
So it's just not as simple as one country stopping QE while others don't, thus allowing wide variations in currency value - that's going to be resisted heavily, and countries have more weapons in their arsenal for resisting that, than just reciprocating with their own QE.

So ya, TLDR: Whether QE money can flow into the foreign sector is a policy choice of governments, since they can direct QE money into domestic economies. QE is not as simple as devaluation due to this, and due to QE money being heavily resisted in complex ways by foreign countries, in its ability to flow into foreign assets.

Timing belt · 17-10-2020 11:14pm

KyussB wrote: »

Ok - that's just an interest rate change on bonds, not a devaluation - and its effects are mostly limited to the finance sector, not having any fundamental change on trade.

I did a bit more reading, and this old document from Michael Hudson on US QE, gives a good overview of how it can affect the foreign sector and currency valuation:
http://gesd.free.fr/hudsonqi.pdf

The different potential flows of money for QE are complicated - but the key point is this: QE will go on for as long as the economy is below full potential, as long as inflation is below target.

So if QE money is directed into the domestic economy (such as, by governments issuing enough bonds, to fund enough spending to bring back Full Output and Full Employment) until the Private Sector recovers fully - then QE will not lead to significant flows of money into the 'foreign sector', and foreign exchange, which could push down currency valuation.

If however, governments choose to stay in a prolonged state of economic downturn (which they have and do), then that can lead to recipients of QE money seeking assets - both domestic and foreign - in search of yield, as you say.

The ability (or not) to pour QE money into foreign assets (and thus push down currency valuation) is extremely complicated - because other countries do not want their currency to appreciate, they may hold a lot of the depreciating currency, among many other issues etc. (Hudson goes into the issues well).
So it's just not as simple as one country stopping QE while others don't, thus allowing wide variations in currency value - that's going to be resisted heavily, and countries have more weapons in their arsenal for resisting that, than just reciprocating with their own QE.

So ya, TLDR: Whether QE money can flow into the foreign sector is a policy choice of governments, since they can direct QE money into domestic economies. QE is not as simple as devaluation due to this, and due to QE money being heavily resisted in complex ways by foreign countries, in its ability to flow into foreign assets.

As you said a while ago I'm not going to comment on some article... Go back to my simple example and explain how it will not impact FX rates.

KyussB · 17-10-2020 11:18pm

I did, I linked the article as it was interesting, but gave examples in my own words derived from it, which do not depend on the article.

The article partially moves my position closer to agreeing with you - but I make my own point independent of the article, about governments being able to direct QE money to the domestic economy, instead of that money potentially being directed into the foreign sector - thus giving governments control on whether or not it affects currency valuation.

Timing belt · 17-10-2020 11:34pm

KyussB wrote: »

I did, I linked the article as it was interesting, but gave examples in my own words derived from it, which do not depend on the article.

The article partially moves my position closer to agreeing with you - but I make my own point independent of the article, about governments being able to direct QE money to the domestic economy, instead of that money potentially being directed into the foreign sector - thus giving governments control on whether or not it affects currency valuation.

Yes I agree that Countries will defend there currency and have tools in their arsenal to do so.

Central banks have different mandates so if you look at the EU it is based purely on inflation and USA on full employment

What I am trying to say is that there is a limit to the amount of government debt that can be issued as the more debt will lead to increased refinancing costs when the debt rolls over. Granted if all countries undertake QE it has little impact but we know that emerging economies cannot do this without the markets turning on them and as they supply a lot of the commodities that we require it will lead to imported inflation which in turn will push up yields on EU government debt.

I suppose what I am trying to say is that there is a bottom to debt issuance by countries. Are we near that I don't know is the issuing of government debt the correct thing to do at them moment.... definitely yes.... But the longer this crisis continues the more likelihood that we will see sovereign debt crisis around the global greatly increase.

If a sovereign debt crisis hits it will lead to a increase in tax and a cut on government expenditure.

If a lack of confidence on government debt sets in then the financial markets collapse as this is what is used to provide collateral for the majority of trades.

Wanderer78 · 18-10-2020 4:53am

Timing belt wrote:

Wander78 explain to me what your economic theory on money supply? Explain to me how the example I gave does not impact the FX market.

Apologies, I simply can't, I donâ€™t have the deep understanding that KyussB has, but I do very roughly understand the process of money creation

KyussB wrote:

I did a bit more reading, and this old document from Michael Hudson on US QE, gives a good overview of how it can affect the foreign sector and currency valuation:

Been following hudsons work for some time now, he has an astonishing understanding of economics, fairly sure I came across him in my teens.

Wanderer78 · 18-10-2020 9:09am

https://www.youtube.com/watch?v=

kyuss, is this what you re trying to explain, particularly at the 1.30hr mark?

KyussB · 18-10-2020 10:55am

Timing belt wrote: »

Yes I agree that Countries will defend there currency and have tools in their arsenal to do so.

Central banks have different mandates so if you look at the EU it is based purely on inflation and USA on full employment

What I am trying to say is that there is a limit to the amount of government debt that can be issued as the more debt will lead to increased refinancing costs when the debt rolls over. Granted if all countries undertake QE it has little impact but we know that emerging economies cannot do this without the markets turning on them and as they supply a lot of the commodities that we require it will lead to imported inflation which in turn will push up yields on EU government debt.

I suppose what I am trying to say is that there is a bottom to debt issuance by countries. Are we near that I don't know is the issuing of government debt the correct thing to do at them moment.... definitely yes.... But the longer this crisis continues the more likelihood that we will see sovereign debt crisis around the global greatly increase.

If a sovereign debt crisis hits it will lead to a increase in tax and a cut on government expenditure.

If a lack of confidence on government debt sets in then the financial markets collapse as this is what is used to provide collateral for the majority of trades.

For a government in control of their own currency, there is no limit to government debt other than the inflation caused by the spending of it - those governments own the central bank, and can never involuntarily default on their debts.

For Euro countries, the dynamics of debt financing costs etc. don't impede spending to the point of Full Output and Full Employment, due to the ECB's 'whatever it takes' QE policies - which don't taper up until inflation is produced from Full Output/Employment anyway, which are the perfect conditions for debt sustainability - and which means QE comes back if there's ever a hint of soverign debt crises again, nullifying any risk of that (the Euro can not survive another debt crisis).

So there is a limit on government debt based spending, and that limit is inflation brought about through Full Output and Full Employment - not debt.

Timing belt · 18-10-2020 11:03am

KyussB wrote: »

For a government in control of their own currency, there is no limit to government debt other than the inflation caused by the spending of it - those governments own the central bank, and can never involuntarily default on their debts.

For Euro countries, the dynamics of debt financing costs etc. don't impede spending to the point of Full Output and Full Employment, due to the ECB's 'whatever it takes' QE policies - which don't taper up until inflation is produced from Full Output/Employment anyway, which are the perfect conditions for debt sustainability - and which means QE comes back if there's ever a hint of soverign debt crises again, nullifying any risk of that (the Euro can not survive another debt crisis).

So there is a limit on government debt based spending, and that limit is inflation brought about through Full Output and Full Employment - not debt.

Inflation can occur without full output and full Employment. Stagflation..

KyussB · 18-10-2020 11:52am

Wanderer78 wrote: »

kyuss, is this what you re trying to explain, particularly at the 1.30hr mark?

https://www.youtube.com/watch?v=mQbrahOLftw

Skimmed through it, but that's a good video! Didn't realize the economic fake-nobel laureate made such crazy climate change claims - Keen does a good job discrediting that, and highlighting what actual climate scientists say. Keen has done good work on macroeconomic models which properly take energy and climate limits into account - and has a simplified one in his Minsky modelling program, at 1:07.

The part you reference at 1:30 - that's an accurate way of describing how government finances for countries with their own currency work (not accurate for individual Euro nations though), and it's the way government finances generally should be discussed - but is only 'sort of' what I've been discussing here, because I'm making arguments in the out-of-date context of debt/bond market dynamics (kind of have to for Euro nations), to show that even in that outdated way of discussing government finances, current conditions mean that limits to spending are still based on Full Output/Employment i.e. inflation, not based on debt levels.

KyussB · 18-10-2020 12:03pm

Timing belt wrote: »

Inflation can occur without full output and full Employment. Stagflation..

Ya, that's why the ultimate limit to spending is inflation - when there is a supply shock like in stagflation, you can still recover Full Output and Full Employment, by shifting work to a different area of the economy that does not put pressure on the supply constraint (preferably, into work that substitutes that constrained supply with something else more readily available).

If the constraint is something critical to the whole economy like e.g. energy, your level of potential Full Output is likely going to be significantly lower for a long time, until you fully substitute that supply for something else (e.g. substitute fossil fuels if they are constrained, for locally generated renewables).

Timing belt · 18-10-2020 6:26pm

KyussB wrote: »

Ya, that's why the ultimate limit to spending is inflation - when there is a supply shock like in stagflation, you can still recover Full Output and Full Employment, by shifting work to a different area of the economy that does not put pressure on the supply constraint (preferably, into work that substitutes that constrained supply with something else more readily available).

If the constraint is something critical to the whole economy like e.g. energy, your level of potential Full Output is likely going to be significantly lower for a long time, until you fully substitute that supply for something else (e.g. substitute fossil fuels if they are constrained, for locally generated renewables).

I had a quick look today what effect the QE announcements have had on Euro FX rates over the past few years.

Back in march 2015 when the ECB started QE the Euro fell in value to most currencies.

In April 2016 when they increased the QE the Euro fell in value again.

In April 2017 when they reduced the QE the Euro got stronger.

What is interesting is when the ECB did there massive QE this time rather than seeing the value of the Euro drop it actually increased as people looked at as a safe haven with the ECB willing to do everything approach.

This shows that QE does impact the FX rate.

KyussB · 18-10-2020 7:17pm

It does impact the exchange rate, it just isn't devaluation. The effect it has is fairly indirect, and the last case there backs my point that when governments will be using the QE money, it's directed into the domestic economy rather than risking filtering into the foreign sector and foreign exchange market, with their being no mechanism for it to reduce currency valuation in that circumstance.

Timing belt · 18-10-2020 7:36pm

KyussB wrote: »

It does impact the exchange rate, it just isn't devaluation. The effect it has is fairly indirect, and the last case there backs my point that when governments will be using the QE money, it's directed into the domestic economy rather than risking filtering into the foreign sector and foreign exchange market, with their being no mechanism for it to reduce currency valuation in that circumstance.

I can see that as the Governments are spending it has boasted the EUR as the expectations of growth increase. However in the past when QE was undertaken without government sending it lead to a lower EUR.

Geuze · 20-10-2020 10:37pm

Impact of QE on the exchange rate:

https://www.ecb.europa.eu/pub/economic-research/resbull/2020/html/ecb.rb201020~85fb68a983.en.html

Geuze · 23-10-2020 12:49pm

The recovery is slowing down, I suppose due to this second wave of virus spread.

I see talk of a "double-dip" recession.

https://www.rte.ie/news/business/2020/1023/1173410-euro-zone-economic-activity/

Wanderer78 · 23-10-2020 1:25pm

Geuze wrote: »

The recovery is slowing down, I suppose due to this second wave of virus spread.

I see talk of a "double-dip" recession.

https://www.rte.ie/news/business/2020/1023/1173410-euro-zone-economic-activity/

inevitable unfortunately, before the budget, the government was defaulting, and put the cart before the horse as usual, by reducing covid payments, and trying to encourage people to spend their savings and to take on more debt, thankfully theyre starting to see sense

riddles · 25-10-2020 10:28am

A post Covid working from home world will surely hammer service industry jobs. A multi National I know of has begun the process of listing offices that will be closed permanently, some have 700 people plus. Same company spends a billion plus on travel a year. No way business travel will return to even close to where it was before Covid. This company is going from strength to strength and is taking this approach.

Wanderer78 · 25-10-2020 10:53am

riddles wrote: »

A post Covid working from home world will surely hammer service industry jobs. A multi National I know of has begun the process of listing offices that will be closed permanently, some have 700 people plus. Same company spends a billion plus on travel a year. No way business travel will return to even close to where it was before Covid. This company is going from strength to strength and is taking this approach.

fair play to them, assume they ll be providing their work at home workers with free electricity, broadband, heating etc etc?

snotboogie · 25-10-2020 12:18pm

riddles wrote: »

A post Covid working from home world will surely hammer service industry jobs. A multi National I know of has begun the process of listing offices that will be closed permanently, some have 700 people plus. Same company spends a billion plus on travel a year. No way business travel will return to even close to where it was before Covid. This company is going from strength to strength and is taking this approach.

If a company is closing huge amounts of office space, yet retaining all the staff from home, a lot of those staff are going to need to visit an opperational office a few times per year. A lot of the 700 staff from your example will have never traveled and while the top 50 going on 20-30 business trips per year will come to an end, you will see 400 - 600 of the 700 being required to visit the head office once or twice per year. I don't think business travel is over. It will just be different.

Wanderer78 · 25-10-2020 12:20pm

snotboogie wrote: »

If a company is closing huge amounts of office space, yet retaining all the staff from home, a lot of those staff are going to need to visit an opperational office a few times per year. A lot of the 700 staff from your example will have never traveled and while the top 50 going on 20-30 business trips per year will come to an end, you will see 400 - 600 of the 700 being required to visit the head office once or twice per year. I don't think business travel is over. It will just be different.

...so they ll also be compensated for needing to travel to these meetings, tis all looking good for these folks!

JJJackal · 25-10-2020 12:24pm

I heard that big companies are consolidating office space

For example a big multinational I heard off has 4 offices in Dublin

2 can accommodate 700 people
2 about 250

They are closing 250*2 office spaces. Now they have negotiated larger office spaces at lower rent with the landlords that are renting them the 2 offices for 700 people! will be far more efficient and more profit at lower rent

Wanderer78 · 25-10-2020 12:25pm

JJJackal wrote: »

I heard that big companies are consolidating office space

For example a big multinational I heard off has 4 offices in Dublin

2 can accommodate 700 people
2 about 250

They are closing 250*2 office spaces. Now they have negotiated larger office spaces at lower rent with the landlords that are renting them the 2 offices for 700 people! will be far more efficient and more profit at lower rent

...trickle down is just fantastic!

Recession predictions

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