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CNN just posted a report stating that members of both Democrats and Republicans agree the market is going down in the next two years. Nothing to indicate a recession approaching the same intensity as 2008, but the US is probably due for a slowdown. Here's the link: https://www.cnn.com/2018/11/15/investing/stocks-bull-market/index.html Can we discuss strategies to deal with an impending down market and potential recession? I've been working to pay off my debts as quickly as possible, but that's not the only issue. Businesses have gotten drunk on cheap money that they will have to account for eventually. This often happens through layoffs, which means a rising unemployment rate. Not that this guaranteed, but I think this is a common response. What can be done to prepare for or ameliorate this on an individual level? What is worth keeping an eye on for opportunities or obstacles?

I don't understand how a 21 trillion debt doesn't make the bearing country instantly bankrupt it is simply not possible for USA to repay this amount ever

>>10947 as long as theres positive GDP growth(or it looks likely there will be positive GDP growth in the future) it doesn't matter, the country can just keep amassing debt and have practically infinite credit. once that stops though, the government will be totally bankrupt, will default on all its loans, and the global economy will probably fall apart

>>10947 At the level of nations there are always ways to offliad debt. The USA can make deals, institute favors that result in debt forgiveness, etc. As a last result there is always war, a tactic that has shown up throughout history. A more humane and long-term method would be investing in education and training. This wouldn't pay off the debt immediately, of course, but the potential innovations and productivity that result could eat but the debt a bit at a time. That all said, it's the job of the government to ensure a soft recession where pain is felt as little as possible. I would expect this to involve more borrowing in the current environment. The tax package was supposed to inspire businesses to give more to workers, but instead businesses used the money to buy back stocks and engage in other financial instruments. It will be interesting to see how the results get explained away.

I'm curious if there's a way to to research historical precedent. This curent economic environment can't be that unusual. There must be a way to look up similar past events and what led up to and resulted from them. Obviously a library would be a place to find the books, but presumably there's some resource that would indicate where to start amidst the sea of information.

Comments so far seem to be focusing on US sovereign debt, but my money is on the Chinese internal debt crisis (which has steadily been mounting over the last ~10 years) as the proximate cause of the next crisis. Unlike sovereign debt (which, as others have said, can be dealt with in a number of ways) this is debt held by municipal governments and state institutions; it's much less easily secured and the national government can't realistically vouch for even a fraction of it. I hope to god we've learned that austerity is not the answer. In my opinion, we need a Global New Deal for the 21st century — infrastructure, education, urban development. Forget UBI, you could employ the world, and pay them pretty well, just fixing the problems right in front of our faces. >>10956 Actually in some ways the current situation is without precedent. I'm specifically thinking of the fact that the next crisis will occur on the so-called Zero Lower Bound. Basically, in response to the last crisis, governments and central banks all over the world decreased interest rates almost to zero, to keep money flowing. Hitherto, it had been possible for authorities to stimulate the economy by lowering interest rates (ie, by making it cheap to borrow and therefore invest in the economy). As the economy improved, they could slowly raise them again. (Sometimes I think of it like a spell with slowly-regenerating manna points.) Problem is: it didn't really work this time. They lowered the rates, but recovery was sclerotic, so they printed more money (Quantitative Easing), yet still no substantive recovery. The MP bar was staying at the "zero lower bound" and that was the only serious spell in our book. What this means is that when the next crisis hits (seems it will be in the next year or so) the authorities don't have anything to combat it. This is a genuinely novel problem, and economists are freaking out. The US Fed has been slowly trying to bring interest rates up, to get itself ready, but ... the fact is, we're nowhere near ready for the next crisis.

CNN is trying desperately to downplay the severity of this market correction. What we're about to see is the delayed onset of the fundamental effects of the 2008 recession which still haven't been solved, and this time the Federal Reserve has no more ammo left to stop it. The fact that they spent a decade drawing this out is going to make it absolutely apocalyptic. It's probably going to start sometime during the next year, and liberals want to crash the economy during Trump's term so they can blame him for it. He deserves plenty of blame for plenty of things, but no president has the power to stop a crisis like this. >>10957 >Comments so far seem to be focusing on US sovereign debt, but my money is on the Chinese internal debt crisis (which has steadily been mounting over the last ~10 years) as the proximate cause of the next crisis. >Problem is: it didn't really work this time. They lowered the rates, but recovery was sclerotic, so they printed more money (Quantitative Easing), yet still no substantive recovery. The MP bar was staying at the "zero lower bound" and that was the only serious spell in our book. Now this guy gets it. Chinese debt tends to get overlooked as a cause of a new global financial meltdown, but the Fed lacking any tools to deal with this crisis is the real problem.

>>10958 >Chinese debt tends to get overlooked as a cause of a new global financial meltdown, but the Fed lacking any tools to deal with this crisis is the real problem. The problem stems from a multinational series of agreements with one another to begin with, sino-american debt relationships to a great extent run the worlds financial systems, and their mechanics could greatly affect each other just as much as the world. If you want to invest wisely, and you absolutely knew something was coming, options would be invest in low risk markets, or pull out all together and buy up when the markets do go south. from a practical standpoint, make sure you don't owe people money, and at the very worst make sure you are capable of defending yourself against looters/rioters/etc.

>>10956 the only purely financial global depression(which is what you can expect the next crisis to look like) in history was the Great Depression, and it developed differently from the one we're brewing right now. So, no, there would be no historical precedent, which is why market instability right now is so fuarrrking scary

>>10961 well, that's not totally true, the 2008 recession was also purely financial, but there were also options to prevent that from becoming a nation-destroying depression/famine. Now there aren't really options.

>>10943 This isn't how the market works. Politicians don't control it. Furthermore, there's never a crash when everyone is predicting it. Markets crash when everyone gets greedy and throws caution to the wind. The end is near when you hear the endless drumbeat telling normals to "get in before it goes up even higher!" That's when the smart money is dashing for the door. >>10947 Dude, it's not the USAs fault. Countries are working themselves to death like slaves to send us stuff we can't afford. They take the little green IOUs tho so it's all good. >>10953 Or just print it. It's backed by nothing. Well, nothing but a fleet of carriers... Congress considered minting Trillion dollar platinum coins recently, remember? https://en.wikipedia.org/wiki/Trillion_dollar_coin

>>10957 Interesting points on China. I had heard that China was not receiving new investment from outside the country and therefore was relying on its own internal steam. Also, they were clamping down hard on anything that could enable wealthy citizens to move money out of the country. At the same time, though, China has a bunch of US debt. As I understand it, China basically funded US wars from 9/11 onwards. The news was reporting a slowdown in the economy, but nothing that made it sound like some sort of financial crash. Maybe something like a graph gradually approaching zero over time, but not like a sharp angle downwards. I figured if China had problems, it could use the US debt it holds to either leverage a soft landing or reverse the downward slide entirely. It appears what is being said in this thread is that China could be trying to hide the fact that it is on the verge of a serious crash. Would that be accurate?

>>10959 For the average citizen just trying to keep afloat, is this really the answer? Try to remove as much debt as possible and hope it doesn't get worse than can be handled? There's no way to ameliorate any impending damage?

>>10958 Why would CNN deliberately underplay the severity of the current economic conditions? It seems like they would get more views to the site if they could credibly trumpet news on a financial apocalypse.

>>10968 Because CNN's big bank owners have a lot to lose if the economy completely unravels. The economy is a psychological construct as much as it is a physical one. Their idea is that they can limit the damage by making the situation out to be less severe than it is.

Just to add to the discussion, I was talking with a friend the other day about the economy and his talking points were basically a word salad that came out something like this: >Economy never recovered after 2008 >European interest rates are in the negative, but banks will raise interest rates eventually >The real problem is globalization thanks to Bill Clinton (!) and the rise of technology >Agenda 21, a non-binding UN resolution has something to do with this (a cursory read on Wikipedia doesn't bring up anything really bad to me. It discusses coordination on labor, tech and the environment for human rights purposes) >He recommends racking up debt and going bankrupt like everyone else when the time comes. Picking up more skills to be attractive to the labor force, etc. Can't quite tell what is paranoia and what is reasonable, although the bankruptcy argument doesn't quite track. I cleared out a lot of debts before the 2008 recession and came out of it with a great credit score when everyone else was crushed. Also, on a cursory reading, Agenda 21 doesn't seem that bad to me and it's non-binding besides. I wish I was more versed in economics to be able to be authoritative on the rest.

>>10971 >Economy never recovered after 2008 this part is true >The real problem is globalization thanks to Bill Clinton (!) and the rise of technology ehh... partly true. this is based on my own biased economic philosophy but basically I think our economy is facing two major problems: (1) lack of well-rated government investment since the 1980s, meaning little competition in the job market and growing income inequality (2) well, this is really 1.1; the lack of competition in the job market does stem from technology, but this is because investors don't see as many profits from starting new businesses anymore because the price of fixed capital (ie machinery, factories, farms, servers) is becoming so advanced to the point where they cost more money than they make. the low profits are also partially because of declining wages. I think this explains things like 2008 pretty well, where you could say investors had to synthesize CDO ratings in order to sustain investment.

>>10967 >There's no way to ameliorate any impending damage? Pretty much, yeah. Bad times ahead. Stock up and don't trust things to stay the same. >>10965 >Or just print it. that would just devalue the currency. Nobody would recognize it as legal tender. >>10966 China is currently restructuring its economy to be more consumer-based like the US's. They have a substantial middle class now. Smart move on their part, they've been as reliant on the US for buying their crap as the US has been for producing their crap(and credit), now if something happens that breaks the fragile bond they'll probably be fine. China will probably take back its historical place as the most stable global superpower again soon.

>>10973 Wouldn't a more consumer-based economy cause problems for China? As I understand it, China has been struggling to get investment from other global players. Also the extreme lengths the Chinese government goes through to monitor and control the population speaks more to a command economy than the more free-flowing consumer economy I am envisioning. President Xi has been leading such a hard clamp-down that I can't see the flexibility needed to handle serious economic events. I do admit I've been hearing talk of China as the next superpower for a while now, but it seems like they're struggling for the last piece of the puzzle.

>>10969 this >please dont stop investing gaise!!!! no seriously, its just a little downturn, keep investing now before the markets go back up

>>10971 not entirely paranoia, but globalism started way before clinton. In fact the basis for most current global systems were established uponthe foundations of the superpowers in a post ww2 reconstruction. The whole cold war was a global show of who had the biggest global reach (without saying that most power was a product of debt because of overreaching global goals). The rules and laws themselves are imo not as important as the psychology. markets are more affected by peoples perception of the markets, than the money itself. The whole idea of stocks is as shady as cryptocurrency, as the system of value is literally magic-ed up, and market shares are vastly overvalued. The only people who win are the brokers, companies are destined to fail because they are burning through resources at an absurd and unsustainable rate just to make profit.

>>10978 a consumer-based internal economy means that China will not be reliant on other countries buying their soykaf, instead their own people will buy their soykaf. >Also the extreme lengths the Chinese government goes through to monitor and control the population speaks more to a command economy than the more free-flowing consumer economy I am envisioning. it is a command economy and a consumer economy. There is no contradiction between those terms. A consumer economy just means that a significant portion of the GDP is retail.

I've come to realize how ridiculous it is that I live in a capitalist society and I have no real knowledge of how to read the markets. I've always had the idea in the back of my head, but now with a recession looming it seems more pertinent. I don't want to become a trader or broker or anything like that, but being able to generally understand the flow of the financial system seems a valuable skill these days. I recently picked up the book "Day Trading" by Justin Kuepper. It seemed like a good "basic knowledge" book. If anyone else has any recommendations I would appreciate the input.

>>10992 >I've come to realize how ridiculous it is that I live in a capitalist society and I have no real knowledge of how to read the markets. investment advisors literally have the accuracy of throwing darts at a board, there are some patterns that can be used to predict what may happen if, but volatility is inherently part of it. a lot of focus on metadata analysis is centered around identifying patterns, but in the end you are literally speculating about how people are going to speculate (not actually speculating about the markets)

In case anyone is interested I did some cursory research and put together a document more or less compiling it all together. It was written quickly, so lots of misspellings and grammar errors, but should more or less be informative (assuming the information is accurate)

If you recall pre-2008 you would remember that the same news stations downplayed the severity of the crisis up until the breaking point. Lehman brothers was the spotlight of the issue for many people of the public but i doubt many are aware the role AIG was playing at the time. I also doubt that many realized the US federal reserve bailed out banks around the world at a stunning $16 trillion amount. And that was under-reported! I sure dont recall the federal reserve being the piggy bank of the world. But it should be obvious to anyone with an ounce of sense that the worlds financial system at the time was so fragile that these drastic measures had to be taken. 2008 is often compared to a plane landing and kinda spinning out of control and bursting into flames but everyone lived (maybe some economy passengers died). The next one will be the same but there will be a lot more death in the plane this time.

>>11165 Hey man, thanks for putting this together. I'll take a look!

>>11165 you need a better bibliography. Journalists and Youtubers aren't economists.

>>11267 That's an excellent point. The only thing I can say in my defense is that I only had time to put it together over the Thanksgiving break. Then I wrote it up the weekend before going back to work, so there's a ton of proofreading errors. Also, I'm not much of an economist myself and don't know any. Part of the reason for the document is so that someone with more insight can tell me where I went wrong.

>>11272 Not an economist either, but Steve Keen has written a lot of articles about the nature of our economy leading up to 2008 and afterwards. I recommend him.

>>11273 You know, it's interesting that you mention Steve Keen. I found an interview with him on YouTube where he discussed how to resolve a financial crisis. He said that in the last one (2008), the US should have just given all the money to the poorest 60% and let them spend it. He also suggested that the government should also spend money making the poorest 60% investors. That way, they learn how to work with the financial system and profit off of it and at the same time become voting shareholders, which will democratize businesses. I thought it was a good idea, but I didn't include it in the document because the document was really meant more to warn people than prescribe solutions. I also didn't have enough background to know if the guy was a crank or not. Your recommendation helps me justify keeping an eye on him, though.