Aftermath of the next recession 2018

by Trivirus

I made a prediction a month ago that we will see the beginnings of a recession and stock market crash sometime around early 2018 – likely Feb, March, or April. In my thread, I explained the reason why we should brace for the worst – an environment where stocks no longer return 7, 10, or 15% a year, but less than 5% in the long run.
Here are some other predictions I have deduced and their reasons.
1) The next recession will be severe, and there will be no powerful bounceback a la 2009 style. It will be painful and long.
DEFLATION and debt will weigh down on government spending, cutting interest rates will have a muted effect as they are already extremely low, and the bondholders on Wall Street will not permit governments to spend their way out. Austerity (cuts in public spending, government layoffs) will be the law of the land, and the United States will likely receive the Spain/Greece treatment, where some public property is auctioned off to the highest bidder.
2) Already struggling sectors will witness a surge in bankruptcies, unless the government bails the companies out. That is unlikely to happen, as bailouts are prohibitively expensive.
The telecommunications and materials sectors in particular are struggling to tread water in this already low interest rate environment. Despite the so-called recovery, their outdated business models have failed to materialize profits and the companies are neck-deep in debt (look at the balance sheets of Verizon, AT&T, etc.)
3) Investors will rush to 10 and 20 year Treasuries, despite their already low yields.
Simply put, every time a major crisis hits, retail and institutional investors rush to buy Treasury bonds. They are one of the safest havens and yield more than your 0.25% APY interest from banks.
If you are sitting on too much cash, buy Treasury bonds! 2-3% is better than 0% (or -40% from stocks)!
4) Gold’s price will either remain stable or fall slightly.
The only way gold skyrockets 10x, 20x, or 50x its current price is if all fiat currencies fail. While almost all countries have been engaging in QE of some sort, most of the prominent currencies are still stable and are not at risk of failure. Do you still use dollars/Euros to buy your goods? Do you think simply because a severe recession happens, people will start trading in gold/silver?
Don’t listen to the gold hype – back in 2009, the gold bugs predicted “hyperinflation,” which never materialized. The price of gold has been falling since 2013. What makes you think in a DEFLATIONARY environment, the price of gold would increase? Ridiculous.
5) Most cryptocurrencies will cease to exist.
The cryptocurrency market is highly reminiscent of the 1990 dot-coms. Now is the worst time to buy into this field. Bitcoin is the largest player and thus is the most likely to survive, but expect a severe correction.
6) The possibility of a universal basic income.
If governments are prevented from spending money for fear of debt increase by bondholders, and the Federal Reserve’s power to correct the business cycle suppressed, then the only option left to combat the downturn is…yes, you guessed it, giving money to the poor, unemployed, homeless, and the people whose marginal propensities to spend (en.wikipedia.org/wiki/Marginal_propensity_to_consume) are far greater than those of multimillionaires or billionaires who stash their money in the Cayman islands. Many Silicon Valley plutocrats have already entertained this idea, and the UBI certainly satisfies their self interest for two reasons:
1) A population that doesn’t go hungry is less likely to stage open revolt
2) Spending money stimulates the economy
In other words, the UBI kills 3 birds with one stone for the rich and powerful – no debt increase, economic stimulus, placating the masses.
I want to warn the readers of this sub: Don’t expect any miraculous or radical changes from implementation of the UBI – the system will, by and large, remain at it is. High inequality, manipulated markets, etc.

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