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Recession & consequences

Lot of talk at moment about looming recession, with movement from equity to bonds in US causing bond rates to tumble, UK 30 year gilts at under 1%, German economy contracting which risks new eurozone crisis.

Anyway fuck knows, I'm not Kabbes, but if we did have a global recession what do you reckon would be the response?

More/deeper austerity or would we see a different response from capital, eg more protectionist in line with trends from US, if former or latter what space would that open up - coming a decade after last big crisis and the resultant loss of trust, with ongoing and not yet fully realised political consequences, has to be opportunity at least for a more mainstream nihilism towards political status quo
 

kabbes

"A top 400 poster"
I find myself wondering what recession even means now. Whose recession? Do we have sufficient shared interests across a society to even understand what the concept means any more?

A recession is two consecutive quarters of negative GDP growth and I sure as shit don’t have any faith in GDP to tell me anything about actual social well-being.

And even if we’re looking just at the capital part only, which strata of capital are we looking at? The FTSE 100, who are all based on owning shit worldwide? The FTSE 250, who are based on exploiting the shit out of the population of the U.K.? Or the AIM, who are a mishmash of interests? Or are we looking at industry segments and does the banking sector share interests with the manufacturing base at all any more?

I think the reason it all seems so chaotic is the it IS chaotic. Pinning down shared interests is increasingly hard
 

Wolveryeti

Young Lethargio
if we did have a global recession what do you reckon would be the response?
In my more fanciful moods, a debt jubilee like wot the Babylonians did, or at least a massive gilts-funded programme of public works to bring jobs and sort out our infrastructure / housing stock.

In reality I suspect we would get a tokenistic investment programme, and more unorthodox monetary policy (negative nominal rates, perhaps QE but for buying equities not bonds... that kind of thing).
 
In my more fanciful moods, a debt jubilee like wot the Babylonians did, or at least a massive gilts-funded programme of public works to bring jobs and sort out our infrastructure / housing stock.

In reality I suspect we would get a tokenistic investment programme, and more unorthodox monetary policy (negative nominal rates, perhaps QE but for buying equities not bonds... that kind of thing).
Yeah think QE (perhaps in different form) is a fixture now. How would it work for equity direct? A bit more of a direct RBS scenario so instead of buying gilts for QE cash deposited with RBS they'd just do a more direct shit nationalisation of RBS by buying its shares?
 

mauvais

change has become unavoidable
German economy contracting which risks new eurozone crisis.
Maybe a eurozone crisis, but the eurozone crisis wasn't recession driven as such. That is, things like the collapse of debt markets are independent from traditional recession consequences, thus you can have a crisis without a recession and vice versa.

Or you can have both. And it's a bit academic explaining this as we probably will have both.
 

kabbes

"A top 400 poster"
The thing that tends to get a bit lost in the gamification of finance is this: I’m pretty sure HSBC will continue to make money, Rio Tinto will continue to make money, Shell will continue to make money, AstraZeneca will continue to make money. As will Google and Microsoft. When people talk about shares going up and down, they’re talking about pieces of ownership in these companies. But if those companies continue to make money, those shares still fundamentally have worth. For example, AstraZeneca’s dividend payouts are about 3% of its current share price. That’s pretty good value for an asset that will no doubt keep pace with inflation. Certainly better than achieving negative bond rates. It puts a floor on how much it can realistically drop. If that share price halves in value, who’s not going to want an asset paying out a 6% index linked return?
 
Yeah of course. For clarity, what I'm interested in is whether we'd see a different response from capital to recession and/or crisis than ten years ago
 

kabbes

"A top 400 poster"
Yeah of course. For clarity, what I'm interested in is whether we'd see a different response from capital to recession and/or crisis than ten years ago
Ownership of capital is certainly more concentrated even than ten years ago. And more global. That’s why I raise the question above by what recession even means any more? If consumer confidence drops and the man on the street in the U.K. constricts purchasing, does that actually affect these superpowers? They have a regional business that drops slightly but across the globe? I think it takes something 2008-style to create the systemic pressures to see real problems (and then when it breaks it REALLY breaks)
 

Wolveryeti

Young Lethargio
Yeah think QE (perhaps in different form) is a fixture now. How would it work for equity direct? A bit more of a direct RBS scenario so instead of buying gilts for QE cash deposited with RBS they'd just do a more direct shit nationalisation of RBS by buying its shares?
The BofE would create QE money and use it to buy shares directly instead of buying gilts and other high quality debt. It might even make a profit (unlikely with vanilla QE, as point is to buy gilts high and sell low)...
 

Idaho

blah blah blah
I didn't realize the last recession had stopped :(
For the majority it hasn't. QE has been the most regressive policy in living memory. Large institutions and the ultra rich given free/cheap money with which to acquire hard assets. Normally huge increases in the money supply create inflation. But in the last 10 years that increased money has only gone into the pockets of a limited stratum. So big inflation in equities, land, real estate, commodities - while real wages have declined across mature markets.
 

maomao

四月她爹
I didn't realize the last recession had stopped :(
I remember reading that in China at least anything under 7% growth was effectively a recession for most people because the top 1% was efficiently hoovering up that 7% and growth would only count for everyone else if it was higher than that. So it's easy to see how the measly 1 or 2% growth we manage over here sometimes is really an economic contraction for almost everyone.
 

Yuwipi Woman

Whack-A-Mole Queen
No more permanent revolution but permanent recession
I saw some stats that said that the top 5% will own all wealth by 2050 if things continue as they are. Of course, that can't happen. There will be a tipping point somewhere and there will be a revolution--probably a bloody one. It will be interesting (in the Chinese Curse sense of the word) to see what percentage of wealth this will be. Personally, I don't think we'll make it past the year 2030 before we see a drastic change of some sort. We're going to see food shortages and price rises due to climate change, and along with food shortages come revolutions.
 
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8ball

Hetero Sapiens
They said this in 2008 and didn't really happen though, don't even get that any more
I had something a bit more severe in mind, but fair point.

edit: well, maybe more '80s style' than severe as such. An important difference this time was that unemployment was distributed very differently.
 

TomUS

non-resident
I saw some stats that said that the top 5% will own all wealth by 2050 if things continue as they are. Of course, that can't happen. There will be a tipping point somewhere and there will be a revolution--probably a bloody one. It will be interesting (in the Chinese Curse sense of the word) to see what percentage of wealth this will be. Personally, I don't think we'll make it past the year 2030 before we see a drastic change of some sort. We're going to see food shortages and price rises due to climate change, and along with food shortages come revolutions.
I can't see any revolution in the US. I don't think average people will want that and the police are so militarized they will crush anything even remotely violent.
 

Yuwipi Woman

Whack-A-Mole Queen
I can't see any revolution in the US. I don't think average people will want that and the police are so militarized they will crush anything even remotely violent.
It depends on how hungry people get. A lot of people I know are keen for a revolution, but most of them are right wingers. We'll probably continue on our current course for a while, but it'll get interesting at some point. Hungry people are not patient people.
 

Cloo

Surfeit of lampreys
I agree Recession means a whole lot of different things to different people. The 2008 crash didn't really hit us (though you might say it lead to my redundancy 4 years later when cuts to education meant a shrinking of the market we published for) - we were financially hit hard by having had a baby that year, but the actual economy issues didn't hit us at all I'd say.
 

Pickman's model

every man and every woman is a star
It depends on how hungry people get. A lot of people I know are keen for a revolution, but most of them are right wingers. We'll probably continue on our current course for a while, but it'll get interesting at some point. Hungry people are not patient people.
revolution actually more likely when the economy is growing when there's dissatisfaction with the way wealth's distributed.
 
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