by avl999 on 5/25/22, 1:13 AM with 184 comments
I am no economist but it is esp concerning to me that with particular recession due to inflation there don't seem to be any "easy" option like Quantitative Easing available to get out of it fast so I fear that this might a painful one which is adding to my anxiety. How worried are you and what are you doing to handle it? Is there a chance it could be as bad as 2008 or worse 2000? (I was not in the professional job market during those years so I have no idea how bad they were other than knowing they were real bad).
by mikercampbell on 5/25/22, 1:43 AM
I'm tired of the world insisting that every company must be growing in order to be valuable, and then when growth stagnates, people ditch it to cause massive losses.
Can we not just have moderate success? Can we create a system that doesn't self implode every so often? Can we create a system where making money at all costs (including the decimation of the planet, the wage-slave workforce, and the engorging and toppling of governments through cronyism) isn't the the default?
I have to remember that people are _generally_ good. I have faith in the next generation of leaders, thinkers, and doers. What will happen will happen, but I have hope that the youth who have seen wave after wave of "being at the brink" might be able to create a system where this isn't the norm.
That's a ramble, sorry. But it's just what I'm feeling. I have to ride this wave, take care of my partner and children, do what I can for others, and hope it ends soon.
by rubicon33 on 5/25/22, 2:28 AM
I guess I could worry, but having been through enough of these "sky is falling" events I've mostly decided to just tune out. I think it was covid, or more specifically the wildfires during covid, that finally just broke me down into a "i no longer give a fuck" mindset.
Bad shit happens. I'll continue to be kind to others, and try to treat people the way I would want to be treated. Life will do what life is going to do.
by gregjor on 5/25/22, 2:08 AM
I lived through recessions since the ‘60s. The 2008 bust almost wiped me out but at least I stayed employed.
I worry about my kids, though.
by invalidname on 5/25/22, 2:36 AM
by ernirulez on 5/25/22, 10:57 AM
So it´s like living in the Titanic. Everybody knows it´s sinking and the government is just stealing from us (the passengers) in order to buy nicer lifeboats just for them, and paying the musicians (media, labor unions, allied parties...) to keep citizens still and quiet.
We are under an autocracy disguised as a "people´s party" that is bleeding us dry while many families are just drowning because of the high cost of living and unemployment.
by rawgabbit on 5/25/22, 2:13 AM
by swat535 on 5/25/22, 3:44 AM
I'm perhaps one of the odd HN users. I'm religious and don't really have too much attachment to material wealth.
I make decent money right now but there has been times in my life when I have been poor. I was born in a third world country and know what it's like to survive on little (it sucks but not as much as you think).
If I lose my entire fortune and life savings tomorrow, I'll be fine. I'll flip burgers, deliver pizza or wash cars if I have to (though I doubt the west will have such a massive crash, but who knows?).
My happiness doesn't derive from my comfortable clothes; it comes from being with my loved ones, especially my fiance.
I go to Mass regularly and volunteer at Church with her often. One thing that's been very important for us spiritually is willing the good of others (this is what love means in a Christian sense) and when you do this often enough, you stop putting so much emphasis on your salary, your iPhones and Macbooks.
I'm not saying this to come off as "morally superior" , au contraire, it's to simply share my experience; If it comes off that way, I apologize.
Finally, allow me to leave you with one of my favorite poems by Charles Bukowski.
"don't forget
there is always somebody or something
waiting for you,
something stronger, more intelligent,
more evil, more kind, more durable,
something bigger, something better,
something worse, something with
eyes like the tiger, jaws like the shark,
something crazier than crazy,
saner than sane,
there is always something or somebody
waiting for you
as you put on your shoes
or as you sleep
or as you empty a garbage can
or pet your cat
or brush your teeth
or celebrate a holiday
there is always somebody or something
waiting for you.
keep this fully in mind
so that when it happens
you will be as ready as possible.
meanwhile, a good day to
you
if you are still there.
I think that I am---
I just burnt my fingers on
this
cigarette."
by artificialLimbs on 5/25/22, 2:16 AM
by fallingfrog on 5/25/22, 7:26 PM
-When profits started to decline in the 70's, they decided to let manufacturing go overseas and to jack up interest rates in order to suppress wages and fight inflation.
-However, this left a problem where American consumers no longer had enough spending power to buy the products they were making. They dealt with this problem by printing money and using it to finance debt and then exporting the extra dollars overseas. They were able to do this because the US dollar is the world reserve currency and is in demand everywhere.
-However, this created a series of debt bubbles in the united states. Each one was dealt with by printing ever increasing amounts of money, kicking the can down the line until the next recession. Interest rates steadily fell and fell until they hit zero.
-When interest rates hit zero, they had to switch to quantitative easing. This was accompanied by a speculative "everything bubble". But now, with the amount of debt continuing to increase, the value of the US dollar started to slide, manifesting in inflation again.
-The fed will have to raise interest rates a lot to fight the problem. But this will cause a massive deleveraging as debt cannot be rolled over anymore, plus the interest on the federal deficit will be enormous.
-It is politically impossible to raise taxes to deal with the shortfall, so deficits will grow even larger, and to get people to buy the debt, interest rates will have to go up even further.
-This will eventually culminate in a loss of confidence in the US dollar. Prices of imports will skyrocket and the economy will crash. The united states will ultimately have to default on its debt.
-The resulting political instability will likely result in an autocratic government. The formal structures of congress and the senate will continue to exist but actual rule will be by presidential decree.
Fascist governments or Bonaparte-like leaders can only maintain power by promising greatness and a return to traditional values (The traditional values part comes from the fact that some reason must be found for the country's problems, the explanation given tends to be that we have offended god in some way)- this usually results in war.
That's the nightmare scenario.
by b1n on 5/25/22, 2:01 AM
Policy makers (and voters) have kept the zombies alive, pumped assets and introduced exciting new complexity.
This is the big one.
by enchiridion on 5/25/22, 11:26 PM
Seems like the markets are bad for reasons that are hard to understand, so people are creating stories by combining the other ambient bad things at the moment.
No real point or argument to what I’m saying, just an observation.
by nzealand on 5/25/22, 7:38 AM
The second edition in 2006 warned of a housing market bubble.
The third edition in 2015 warned of a bubble in almost everything.
So I've been concerned since 2015 about the next recession.
It does look increasingly likely to happen in the next 1-2 years.
Damodaran has some interesting analysis on what might happen to different market sectors.
https://aswathdamodaran.blogspot.com/
All the best.
by nickysielicki on 5/25/22, 2:04 AM
Start at part 1 if you have time.
by refurb on 5/25/22, 6:31 AM
by jdhn on 5/25/22, 2:53 AM
by brailsafe on 5/25/22, 4:24 AM
by yopawngungmstyl on 5/25/22, 2:22 AM
Maybe in a decade or so, property ownership will be within the reach of middle-class families again.
by ethn on 5/25/22, 3:28 AM
by donsupreme on 5/25/22, 1:25 AM
The Fed has no way to fix the current supply chain shortage issue, which is half the equation in the rising inflation, their only tool in the box is aggressive rate hike to dampen demand. Essentially Fed wants demand to go way down, we don't feel the impact yet because the stock market isn't cracked yet. Fed wants it cracked.
by ilrwbwrkhv on 5/25/22, 2:06 AM
by TradingPlaces on 5/25/22, 12:20 PM
by mouzogu on 5/25/22, 10:10 AM
that what caused the problem in the first place. and it was only "easy" for the bankers.
banks got away with murder in 2008 and got bailed out. we had over decade of "austerity", social benefits cut, disabled and mentally ill forced to work, zero hour contracts and exploitation. destabilising the middle east causing waves of immigration and societal pressures.
the baby boomers have created a mess, and now their next act the great reset is coming.
by ianai on 5/25/22, 3:21 AM
My suggestion stays https://en.m.wikipedia.org/wiki/The_Great_Crash,_1929
“The lesson of 1929 was that laissez faire economics and political economy concentrates market power and the market downturns don’t always right themselves” (paraphrasing)
There was a ton of stuff put in place after the Great Depression which was then undone through decades of corporate “influence.”
I don’t know that what we’re headed for will be 1929 level bad. I’m not suggesting that. But that’s a great book to start enlightening yourself. The highly complex mortgage backed securities that led to 2007/2008 were never undone. The ARM loans which ballooned and kicked off the fulcrum of defaults and thus collapse from suddenly worthless securities were never addressed. And this time the international situation is far more developed and intertwined.
There absolutely are things that can be done to relieve a lot of this though. Tariffs can be rolled back. That would lower many prices.
My big wish would be corporations to learn to not cut quite so many corners that they become fragile to supply shocks. For people to seek out energy sources without huge social and environmental externalities. For people to choose to buy local first/where possible. For people to be open to growing local production like manufacturing of physical goods. Etc.
Edit-and “buy local” includes hiring local labor. And paying local taxes-corporations benefit from things like road works and other local services.
by 8note on 5/25/22, 3:50 AM
There's still tons of things to automate, so I don't think there's going to be a lack of jobs, but the easy money won't be around for a while
by smitty1e on 5/25/22, 3:00 AM
OTOH, the reckoning has been pending for some time. How long depends upon whom you care to blame.
Let's get it over with, clear the decks of the deadwood leadership that have plagued us, and apply the good distributed sense toward a prosperous next several decades.
Until the cycle of "derpery" repeats.
by mikewarot on 5/27/22, 6:48 PM
Working class wages stopped growing at the end of the 1960s in real terms. The income inequality is approaching French Revolution levels. Media of all types is tuned for maximum "engagement" which externalizes it's costs as the destruction of the social fabric.
I'm really worried. I can't change the big picture, all I can do is to try to strengthen the bonds I have with friends and family, cut expenses, and stock up on food and supplies.
by giantg2 on 5/25/22, 1:40 AM
No idea if that will play out well. I'm not that worried though.
by pyuser583 on 5/25/22, 3:12 AM
by itake on 5/25/22, 2:21 AM
by Tigere on 5/28/22, 9:29 AM
by peter303 on 5/25/22, 4:43 AM
by sudden_dystopia on 5/25/22, 2:26 AM
by peter303 on 5/25/22, 4:47 AM
by MikeAshley178 on 5/25/22, 2:23 PM
by taylodl on 5/25/22, 2:51 PM
I'm a Gen Xer and this has been pretty much the state of things throughout all my life. Looking at American history this seems to be the status quo also. European history isn't much better - everything always in flux, everything always in crises.
That's what they mean by fighting to survive. The process of biological life is going against the grain. It's never easy.
I'm no economist but my career spans the "is this a depression?" recession of the early 1990's, the Y2K crash after 2000, the market collapse in 2008 and whatever the hell is coming up for us now. The 2000 crunch was the absolute worst - BY FAR. Between the Y2K work ending, the DotCom Bubble bursting, and the towers falling programmers were being let go by the tens of thousands all at once. The market was flooded with people looking for work. The 2008 recession and the recession in the early 1990's didn't have nearly that impact on developers.
So far I'm not seeing a reason to be overly concerned about this recession either. If anything, companies are going to be looking to improve efficiencies and they're going to be looking to technology to do it. As long as you're focused on saving hard dollars and you can quantify those results, then you should be fine.
What do I mean by "hard dollars"? That's actual savings, a reduction in accounts payable as a result of your work. For example, terms like "improved efficiency" are too vague - how about we improved efficiencies enough that we avoided having to hire X FTEs, or we were able to improve our sales by X% using the same staff resources, or we were able to take on X more clients as a result. Something measurable, impactful, and actual money being saved or being made. As long as you're always focused on the bottom line you should be okay.
In the past some people have responded to me by saying developers don't always get that information. That's true - but I've never worked for a company that would withhold that information when asked. Typically they're thrilled to have a developer who talks business and dollars and cents. They just assume you don't want to hear it. Ask. You should always know why you're doing what you're doing and saying that's what the BSA put into our requirements is not a good answer.
If your career has been focused on delivering cool, whiz-bang features or your revenue is largely derived from advertising - then all recessions are bad. Those developers are the first let go. Advertising slumps during recessions and companies tend to shift from whiz-bang features to belt-tightening and improving operational efficiencies.
Bottom line - companies are always interested in people who can make them or save them money. Understand your business value.
by easytiger on 5/27/22, 1:43 AM
by qiskit on 5/25/22, 5:36 PM
by athrowaway3z on 5/25/22, 10:47 PM
Every recession 'first hand experience', had as a backdrop a rising China and more valuable world population by the end simply by the relative size of the boomers.
China is facing serious challenges to the point that I'd stay clear of them, and the boomers are retiring. changes them from high spenders and risk takers into low spenders who don't want risk.
It's going to be a bumpy ride before the generational accounts balance out, and i fear we're going to have a shitload of grumpy old people waking up a lot poorer than they ever expected. A good recipe for even worse political decisions.
by JaneYe on 5/26/22, 7:32 AM
by anonymouswacker on 5/25/22, 5:23 PM
by streetcat1 on 5/25/22, 2:42 AM
Unemployment is 3.6%.
Nasdaq was overvalued - QQQ went from 100 in 2016 to 400 in 2021. No reason not to return to 150-200.
The only concerning events is that the capital that left the market would never return since it was the baby boomer last big capital injection before they retire en mass and remove thier 401K from stocks.
On the other hand, there is a lot of job openings due to this retirement.
High inflation is actually a good thing, as it is result from wage increases, which means that there are shortages in the job market.
Overall, this looks to me like the wage arbitrage is being removed from the market.
by robonerd on 5/25/22, 2:12 AM
by rwcarlsen on 5/25/22, 2:16 AM
by ergonaught on 5/25/22, 2:12 AM
by dqpb on 5/25/22, 2:49 AM
(Although one could make a queuing theory argument that a hiring freeze could reduce efficiency of existing engineers if it results in poor division of labor and too much context switching)
by don_neufeld on 5/25/22, 2:19 AM
by pyuser583 on 5/25/22, 3:22 AM
by lamontcg on 5/25/22, 4:20 PM
And that actually is a bit different.
As a result I think the Fed is going to slam on the brakes. They've already started to do that using 0.50 basis point hikes and signalling their intent to get to 2% by September. I still don't think that's enough to tank the economy into a recession, but they're indicating that they're willing to tank the economy very hard in order to create a glut of workers for the available jobs.
It is likely going to be worse than 2008. CMBS should pop at some point creating a financial crisis, and crypto will get stress tested and may entirely collapse (wiping out the "savings" of a lot of Millennials).
What I would be real worried about is that the Republicans are likely to take over congress this year and likely to take over the Presidency in 2024 one way or another. And the social unrest will be jacked up to 11 again and a good chunk of the Republicans are now people whose stated belief is in just letting the system collapse. Unlike 2008 they may sit on the sidelines and watch money market funds collapse, short term lending fail, payrolls fail and ATMs stop working (enough of them may realize this will tank their stock portfolios that they blink though, particularly if the Republicans are the party in power and it would fall on them).
I still continue to think that the economy is not right now in a recession and that the Fed is going to have to jack up funds higher than 2% to cause a recession (they were 2% in 2019 before the pandemic as well), but I think it is clearly coming by 2024.
They'll still panic though and drop the funds rate back down to zero and start doing QE. I don't know if it works yet again. The cycle does seem to be able to continue forever, but at some point we may reach the "pushing on a string" moment where faith in the US economy and dollar starts to evaporate, or where social unrest takes things to a whole new level.
by refurb on 5/25/22, 2:05 AM
It was bound to end some time and no doubt in 2-3 years people will look back and say "man, I wish it could be like that again".
by anm89 on 5/25/22, 1:43 AM
1) Things are about to get incredibly nasty over the next 3-6 months.
2) Things only stay bad until the Fed capitulates and decides to start rescuing things. In this case we will be choosing inflation over a recession. And I'm saying inflation as a long term trend, at least 5 years.
But basically the game is up. This all ends up in one of two ways
1) The fed defaults on the debt and tells the Boomers they were just joking about Social Security and Medicaid existing as interest expenses drastically increase while tax receipts drastically decrease from a baseline of 127% debt to GDP (this will NEVER happen. You don't default on your debt as the world's reserve currency. Why would you? This is the one thing the MMT crowd gets right)
2) We give up and take our inflation medicine to cure our sovereign debt issues.
It's going to be option 2 11 out of 10 times. History is pretty clear on this point.
To me, no one lays this case out better than Luke Gromen: