"The world economy has a high probability of slipping into recession once again within the next three years itself, according to Birla Sun Life Asset Management Company (BSLAMC)." They expect further rate cuts of 25-50 basis points in 2016 by the RBI. As far as base rates are concerned, there is a possibility of 50-75 bps cut in 2016, as the base rate has been cut only by 70 bps, as against a cut of 125 bps by RBI on repo rate. http://www.deccanherald.com/content/517734/world-economy-slipping-recession-again.html Honestly, I thought we never got out of recession. How accurate are these predictions?
I doubt it. Anything can happen, but there is no evidence to support that contention. Globally, the world isn't doing that badly. The US economy, or about 25% of the global economy is and has been steadily growing for nearly 7 years now. The US is raising interest rates rather than lowering them because its economy is becoming more robust. Europe which represents another 25% of the global economy and has suffered a prolonged recession is now following the US response to The Great Recession and is finally providing meaningful monetary stimulus. China is stimulating its economy with its vast cash reserves and that is about 13% of the global economy. That's sustainable for 4 to 9 years. But longer term China faces some very daunting economic issues. Whither China addresses those issues in any meaningful way is yet to be seen. Japan and India are also stimulating their economies with interest rate cuts. So the stage is set for a global economic expansion. However, there are some very troubled economies. Russia's economy is in decline and that will likely continue unless Russia finds a more stable less risk adverse dictator. But unless Putin has a fatal accident or develops some incurable disease, I don't see that happening anytime soon. Brazil appears to be in chaos and unable to carryout any meaningful reforms. But those are small economies and by virtue of that fact incapable of slowing global economic growth. Whither you got out of the recession depends upon where you are located.
It depends on two things - mainly; I realize there are a dozen secondary factors. 1. How many dominos? 2. How close together? There are always troubled economies; the global one can withstand a few collapses. Since we have never had a global economy before, we don't know (though experts may have a formula for predicting) how many constitute 'critical mass' or 'tipping point' or whatever the cliché is this month. There are always connections, so that one economy affects another. But we don't know (and it's probably a closely guarded secret) just how interconnected the critically ill economies are with how many of the economies that appear robust. I'm pretty sure there is more, worse news ahead.... but then, I was wrong about Y2K.
By definition, a "recession" is when the economy is contracting: we've been out of it for 5 years. And given that recessions tend to happen about every 5 years, that's not a very risky bet.
Yes the US has "bought" a modest reovery, but at the cost of several trillion in stimulus dollars (thin air money added to the money supply and national debt); However, the middle class is still shrinking and "gen X" income is less than their parent's was at same age (in purchasing power or "real dollars"). Both facts are bad news for an economy which is 75% based on consumers buying. There is more money being made (GDP change is positive if only increasing slowly) but it is ever more concentrated in the hands of the top 1%. They collect more than half of the entire incomes. Most of the rest of the developed world is in deeper economic trouble than the US is, and to larger extent for the same reason - purchasing power is in far too few hands. Our local Dr Pangloss, Joepistole sees things, at least in the US, differently thru his rose colored glasses.
You (and CNN a couple of days ago) say that as if it is a negative thing: but in net, it is a positive thing. It's also worth noting that that's just a mathematical categorization with no connection to standard of living and a misleading connection to income. Ie, you might conclude that those who moved down out of the middle class got financially worse off, but they didn't - the lines were just re-drawn around them. That's false too. Really, really false.
Prove that claim. Gen X is much worse off than their parents were. Here is proof you wrong: Below is graphical version of the proof you are wrong - Gen X is being screwed by modern US economy. They will live on charity when they can no longer work. Please Register or Log in to view the hidden image! Please expain why it is a good thing to have a shrinking middle class, especially as US is still a "consummer driven economy." Fewer able to enjoy the American way of life, is large part of why trillions of new national debt have been created to avoid economic collapse.
That wasn't your claim and since you made the initial claim, you must prove it. Yeah, I looked up the stats before posting - maybe you did now too and that's why you are trying to bait and switch it? You claimed their income was less. It isn't: it is much, much more. You can acknowledge you erred or show the income stats to prove your claim. The hidden assumption you are making is that those who are shrunk out are getting poorer. They aren't: most are going UP out of the middle class and even those going "down" out of the middle class are merely stagnating while the line is re-drawn around them.
the guy to lazy to fact check is no position to to comment on tint of anyone's glasses. i'm sorry but given your piss poor track record where do you get off denigrating modern economic thought? modern Keynesian with its stimuluses has been shown to been the right path time and time again.
Well, Goldman Sachs sees oil into the $20's and I think they aren't wrong. We are not far from it today. When Iran begins dumping oil, I think we can expect even lower oil prices.
It's not an easy stat to track down. If you go here - http://www.russellsage.org/sites/all/files/chartbook/Income and Earnings.pdf and scroll down a bit you will find a graph labeled Real Median Individual Income by Educational Attainment - People Age 25 and older, 1991- 2012 (Reported in 2012 $). It shows that for those 25 and over without advanced degrees - an official and completed degree beyond a 4 year bachelor's - median individual income in real dollars has dropped since 1991 (the last generation of "over 25", 25 years ago) in the US. And since we all know what has happened to the debt load of those obtaining graduate degrees recently, wiping out much of the income advantage graphed in the last ten years or so, and we know what has happened to the cost of medical insurance since 1991, and we know what has happened to the cost of housing in real dollars since 1991, we know that for all but a small minority of mostly rich people's children the actual disposable income of Gen Xrs is lower than that of their parents. That matches Billy's graph of savings rates.
Except that isn't true BillyT. The US stimulus package was far less than even a trillion dollars and the largest part of it consisted of tax cuts, nearly 300 billion dollars worth of tax cuts. I'm sure the people receiving the tax cuts didn't feel their paychecks were "thin air money".
I don't think it makes much difference, either to the stimulus effect or the growing national debt whether or not the government goes deeper into debt by QEs or tax cuts. The effect is clearly seen below. Note the last annual step up was more than 1.5 trillion dollars. Please Register or Log in to view the hidden image!Some think the "recovery" would stronger and much faster, like all prior ones have been, if the government had done nothing. Any any case, we* paid a hell of a price for piss poor results compared to past recoveries. * Correction: Our children will pay a hell of a price, with interest added as rates rise.
Well, as has been previously explained to you the above chart isn't inflation adjusted nor does it disclose growth in income. So that makes it very very misleading and dishonest.
It it were "inflation adjusted" would that reduce the one year step increase in US debt from "more than 1.5 Trillion dollars," to "only 1.5 trillion dollars"? - I doubt it. Implying that the debt step would be significantly less than 1.5 trillion dollars if adjuated is what is "very misleading and dishonest."
What we have discovered over recent years is that it is possible for the world to build up towering levels of debt without the towers tumbling down. That is because gravity is lower than we ever imagined it could be. For gravity, read interest rates. By chance, the shale oil revolution coincided with this towering indebtedness, and crashing energy prices interrupted the effects of price-inflation on gravity. Only in a largely inflation free world can one have near-zero gravity. Government manipulation of gravity can only be taken so far, I suspect. Those who take a complacently optimistic view of the world economy need to explain what will happen when interest rates climb back to more traditional levels, i.e. when the cost of servicing debt doubles and trebles. (Things will likely be different between one country and another, though the effects are likely to be contageous. And a financial cataclysm that rearranged the distribution of wealth would not necessarily be deflationary.) Surely few believe we can sustain the current historically anomalous situation indefinitely?
