Tuesday, January 21, 2020

👉Recession 2020 -- 13 Signs That Recession will be Global and Worse than 1929 !!

Today, the US debt is over $23 trillion and growing. There’s a very real possibility that a byproduct of any slowdown in the economy could lead to debt default, the interest on the debt costing over $500 billion each year. With the reduced federal revenues that a recession would cause, the odds of the deficits increasing each year will grow until eventually it will be nearly impossible to service the debt without cutting expenses to the bone - including defense, btw - to forestall default. It is a dire situation being made even worse by the Trump administrations racking up over $1 trillion deficits, still counting, and growing. The predictions are now coming in thick and fast. It appears that there is a foregone conclusion that 2020 is the date that crash 2.0 will wreak havoc once again. The next global financial crisis will strike in 2020, warns investment bank JPMorgan – sparked by automated trading systems. The global cycle has weathered a number of cycle-threatening events, including the debt ceiling issue in the US and the European sovereign debt crisis in 2011, the taper tantrum in 2013, the sharp fall in commodity prices in 2014 and China’s slowdown in 2015. True, global growth has been subpar until the synchronous recovery took hold from 2017 to 2018. But we have been lucky enough to avoid dipping back into recession. The global economy is heading into a recession. At least that is the fear after months of warning signs from the engine of global trade, which has spluttered this year. Here we examine 13 clues that the trend, after ten years of expansion, could be backward. Welcome to The Atlantis Report. Over the last few months, there have been some startling leading indicators that we might witness a global recession sometime soon. An unlikely culmination of multiple factors is leading to this. US-China trade war. India's GDP slowdown. The Brexit turmoil. Major economies worldwide have shown signs of economic slowdown or even contraction in Q2 2019. A quick look at the largest economies confirms the apprehensions. US economy grew by 2.1% (annualized) in Q2 2019, down from 3.1% in Q1 and the slowest since Q1 2017. China, the behemoth fueling a large chunk of global growth, witnessed a paltry 6.2% GDP growth, the lowest in 27 years, and even below the 6.4% recorded during the 2009 Financial crisis. Japan beat GDP growth estimates in Q1 2019, but Q2 was a little slower. Germany is the largest economy to actually shrink (by 0.1%) in Q2 (QoQ, compared to Q1 2019), reversing a decade long trend of growth. As did the UK, for the first time in 7 years, shrinking by 0.2%, compared to 0.5% growth in Q1. France also slowed down to 0.2%. Finally, the second-largest Asian economy, India, is also slowing down, having recorded sub 6% GDP growth in Q1 2019. Also, both the real estate and the automobile industries are facing a slump. Over the last six months, major stock market indices have barely budged, and in some cases like the Nikkei 225 has actually shrunk. #1. The escalation in the US-China tariff war. Eighteen months ago, Donald Trump began his “America First” campaign with a fight over steel dumping. The US president imposed 25% import tariffs on steel against China, the EU, India, Canada, and Mexico. Since then, the focus has all been on China. Trump blamed Beijing for undercutting US goods with undervalued currency. As a punishment, he imposed import tariffs on a wide range of Chinese goods and has threatened to expand the scope to include computer games consoles, mobile phones, and laptops. It’s difficult to measure the impact, but most countries report a downturn in the trade since the tariffs began to bite. #2. Slowing US growth. Trump inherited a buoyant economy and then gave it a sugar rush of income tax cuts and corporate giveaways. Stellar growth last year prompted the US central bank, the Federal Reserve, to increase interest rates to calm things down. A combination of those higher borrowing costs, the end of the sugar rush, and the tariff war with China, which has increased import costs, has hit US industrial production. Figures last week showed the US manufacturing sector in decline for the first time in a decade. Trump, fearing the economic slowdown will damage his re-election hopes, has berated the Fed for being slow to cut rates again. US Steel, which the president believed would prosper once it was protected from cheap Asian and European imports, said business was so bad it would be laying off workers. And its stock value slumped back to where it was before Trump’s election victory. #3. Long recession in Germany. Angela Merkel’s finance minister, Olaf Scholz, has raised expectations of a €50bn boost to the German economy to head off an imminent recession. The economy contracted by a small margin in the second quarter – 0.1% – but is expected to suffer a second and larger drop in the third quarter. Most analysts expect Scholz’s extra cash will be too little too late to prevent two consecutive quarters of negative growth, which is the technical definition of a recession. A turnaround next year largely depends on a recovery in China, where Germany now sells much of its machine tools, industrial equipment, and cars. #4. Chinese debt crisis. China, more than the US, has been the extra gear for the global economy since the 2008 financial crash, but the country is in the throes of a full-blown debt crisis. State industries have borrowed heavily, and so have consumers. Banks are weighed down by loans that will never be repaid. Each time Beijing has attempted to rein in excessive consumer and corporate lending, the global economy has wobbled, forcing China’s policymakers to loosen credit again. Meanwhile, industrial production growth is at a 30-year low at 4.8%. Beijing wants the economy to become more self-contained with a shift from manufacturing to services, but it’s a long haul. #5. Brexit. The uncertainty surrounding Britain’s future and whether it remains inside the world’s largest trading bloc or swims alone has already damaged investment and GDP growth. If the UK leaves the EU without a deal, most economists believe the damage will be severe. The IMF, OECD, and World Bank have also warned that leaving without a deal will knock global growth, given the UK is the world’s sixth-largest economy after France. #6. Argentina, Iran, South Africa, Turkey, and Venezuela. A string of countries are currently in a recession or have recently suffered a contraction. Iran faces a blockade by the US and is unable to sell its oil or access the financial markets easily. Argentina is weighed down by enormous debts, and Venezuela, despite holding the world’s largest oil reserves, is in political and economic crisis. International investors don’t worry much about these countries, which have, over the years, been financially ring-fenced, but South Africa and Turkey pose a greater problem. They are more integrated into regional and international markets, which means a debt default would have a far greater impact. All the above are tell-tale signs of a looming recession — growth slump, contracting economies, slowing trade, and overall bearing market sentiments. And the straw to break the bull’s back is the latest development on both sides of the Atlantic, the sure-shot harbinger of impending economic doom. #7. The famous yield curve inversion. The yield curve is inverted. Here's what that means, and what the implications are for the economy. It is a sign of investors unwilling to put their money into longer-term bonds and flocking to shorter-term bonds (thus causing the inversion). This, in itself, is a sign about the uncertain future that the market is expecting in the shorter term. #8. Signs of fiscal stimulus in major world economies. 12 Big Economies Failing In Budget Spending For Growth. Unlike the last recession, which was like a snowball effect with US caving in first, this time it is different. Due to ultra-low interest rates and cheap money that has flooded the world over after the last recession, there is very little leg room that they have now to revive their economies. All the major economies in the world are staring at providing a lifeline to their economies via fiscal stimulus. Fiscal stimulus is great for a recovering economy, not the one that is going down the gutter. It is like a morphine shot to a dead man. No offense, but this is how I see the current state to be. #9. Zero or negative interest rates all over the world. The Only Way Is Down for Central Bankers Already at Peak Rates. Major central banks are either decreasing interest ranges or leaving them unchanged. We are already into negative interest rates territory in JAPAN and in the EUROZONE. Interest rates do not come down when all is well with the economy. They come down when the central banks sense that there is no other way to revive the staggering economies. Interest rates are likely to stay low for the foreseeable future. #10. Smart Money flock to precious metals. Gold rises as growth concerns resurface; palladium surges. Anticipating a volatile market in the upcoming future, fund managers are also scampering for cover into the safe-haven markets. The YTD return on Gold stands at 16%. The same is the case with Palladium, Titanium, and so on. #11. Falling Retail sales in America. Dollar Eases as Retail Sales Weaker Than Expected. Going into the festive season, the September retail sales in the US have shown some weakening month on month. Falling sales are usually the start of weakening consumer confidence in the economy and tighter spending. #12. Housing bubble ready to burst in major cities around the world. London, Amsterdam, Vancouver, Toronto, Munich, Hong Kong, Paris, Melbourne. These are not the list of tourist places that I would like to visit. Its the list of major cities prime for a housing bubble. This is going to be like the subprime crisis of 2008 on steroids! What caused it? Well, the ultra-low interest rates have increased the property rates so high so fast that they are no longer in line with income growth. Not to sound like a buzzkill, but I feel that the Wall Street party is coming to a close real soon. Maybe there will be one last push to the upside (due to QE4) and then a series of deep corrections. #13. Thousands of jobs cut worldwide. Massive Layoffs: Banks Cutting Nearly 60,000 Jobs Worldwide. Nissan to cut 12,500 jobs worldwide. Automotive companies, banks, unicorn startups are all throwing in the towel. These may be the signs of things to come in the near future. I will stop my pessimistic rant now. Regarding the probability of an upcoming recession. Its no longer a matter of if, its a matter of when. The Recession will be global because the national economies are interlinked. Let me tell you what is happening beneath the spend spend spend ideology our multinationals and governments encourage us to live by. For the last 20 years, central banks have created an artificial framework whereby their credibility depends on prices increasing every year between 2% and 3%. They push interest-rates down, to keep inflation up. The trouble is, this has stopped working. Back in February 1999, the Bank of Japan cut its official interest rate to 0% (yes, zero), to revive the economy. Today, the rate is , less than zero: -0.1%. Pretty much like Japan’s growth forecast for the year. In America, Europe, or even Australia, interest-rates have gone down , like the prices. Prices are dropping because production costs are dropping—due to automation and the use by rich countries of the poorer countries’ labor force. Prices are also dropping because wages are stagnating, so people spend less, relatively. Apart from the fact that, once you have multiple gadgets, how many more can you possibly cope with. The central banks, whose prime concern is to avoid a recession—not for you or me, but because they do not want their private wealth evaporating into nothingness—have recently created more than $US15 trillion in new money. They don’t print it, of course, they just fiddle the figures on the digital ledgers. They have bought stocks and bonds to press interest-rates even further down. They hoped the regular Joes (that’s us) would borrow more, to spend more, to buy more, to keep the factories humming, and prices rising. But, oh dear, inflation was a mere 0.6 % in the US across the year. Meanwhile, house and share prices have shot up, making the rich richer. Which means, if you need to buy a dwelling, you now have even more debt, which means, even less money to spend, which means, if those factories stop humming and people lose their jobs—foreigners first, to be sure, but then—us, they cannot repay their debts, even ones at 0% interest (or even -0.1%, though a bank would never give you a rate like that. And then it is a horrible spiral downwards, as happened in 1929. Not that I want to scare you or anything. But I reckon you should get rid of all the debt you can because the balmy spendy happy days of conspicuous consumption are drawing to a close. What you should understand is the politics behind the need for crisis or recession. Crisis doesn't happen. It is created by the private sector for the need for higher profits, lesser taxes, higher inflation, and definitely not higher wages. And weeding out or laying off politically targetted victims or exchanging between companies. China, Europe US, and many other countries have appreciated their currency and avoided inflation. It is high time that a country finds its level and consolidates and normalizes to an optimistic exchange rate. We may already be in a recession. But are just waiting for the lagging economic indicators to catch up. This was The Atlantis Report. Please Like. Share. And Subscribe. Thank You.

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