Wednesday, February 6, 2019

Recession Watch 2/6/2019


Here we see former Congressman and President Reagan 's budget director talking about the current state of U.S. economics in late January 2019.  The world economy is largely slowing down, China is slowing down (though still growing fast), and we have absurd amounts of government, corporate, and private debt.  For the decade since The Great Recession of 2007-2009, student loan debt has been bought out, repackaged, and sold to investors in a nearly identical way to how the sub-prime mortgage loans were before the Great Recession.  Those investments were a major trigger for that recession.

Last week, Jay Powell, Chairman of the Fed (Federal Reserve), caved to pressure, and didn't raise interest rates.  Raising rates gives him more ways to fight the next recession when it does actually happen.  He was doing the right thing last year by raising interest rates from the massively low levels they've been at for a decade, and not much better before that.  Super low interest rates allow Wall Street financiers, major corporations, and super rich individuals to borrow money REALLY easy, which makes it really easy to invest that money in sketchy ideas, or to flat out gamble on stupid shit.  It's the last one where Wall Street goes nuts and really sends things over the edge. Then we get some little straw that breaks the back of the financial bubble's camel, and we get the inevitable collapse.

Ten years ago, we never really paid the price for that recession, we've been in a rolling bailout, called "Quantitative Easing" to confuse all of you, and to keep the U.S. from the massive restructuring we really needed to go through.  Yet, hundreds of rural areas and small and mid-sized towns and cities never really came out of the last recession.  They're still struggling, as a handful of tech hub cities (San Francisco Bay Area, Seattle, Boston, NYC, D.C., Austin, etc.) go crazy with tech and financial market money.

There are all kinds of different factors already in place to toss us into the next recession. Combined, they make it look like the Next Great Recession will be worse than 2008.  That sucks overall.  But recessions also open up huge opportunities for the people who see it coming, and get in position to make the most of it. Entrepreneur Gary Vaynerchuk, in the video below, is one of those people, and is talking about this coming recession more and more lately, in his content.

A recession is when the whole country (or world) goes on sale, and almost nobody wants to buy.

We should have slipped into a traditional recession back in about 2016 or 2017.  But the financial world is completely manipulated these days, and the inevitable collapse has been postponed bit by bit.  But the longer it gets postponed, the worse it will be when it does happen, because the debt for government, corporations, students, and other individuals keep soaring.  So things are going to look kinda decent for another month, maybe two or more.  Then Powell will have to decide if The Fed tries this again.  But the financial house of cards is teetering more than ever, and that can't last indefinitely.  

By not raising interest rates last week, Fed chairman Powell  gave Wall Street and corporate America the crack pipe back, cause they were bitching like crazy about going to rehab, metaphorically speaking.  By doing this, Powell postponed the coming recession for a couple more months, and made it worse by doing that.

So what can an average person do?  You can reduce bills, pay off debt, buy gold or silver (which generally hold their value better than cash and other investments in a downturn), and you can look for side gigs or other ways to earn extra money when things finally do get tough.

Gary Vaynerchuk has built a $200 million digital agency (aka advertising agency) in the last decade.  Here's Gary Vee's take on other aspects of this next collapse:

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