One in three chance of a further crash
August 31st, 2010 at 8:12 am by David FarrarThe Herald reports:
There is still a one-in-three chance of another crash, says Standard and Poor’s global chief economist David Wyss.
“The recession is over but it is a half-speed recovery,” he told a Breakfast With the Economists gathering in Auckland yesterday.
“We have now had four quarters of growth in all the major economies but we are crawling out of recession. And a slow recovery is a fragile recovery.”
Among the risks was the perennial one of another oil shock emanating from the Middle East.
“Another is the financial markets. Europe seems to be settling down but there is still a lot of debt in what we are now supposed to call the ‘olive belt.”‘
I’m surprised he only rates it one in three. I reckon it might even be one in two when you look at how weak the US recovery is also. The saving grace may be Asia.
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August 31st, 2010 at 8:30 am
The chance is one in one. It is just the timing of the international banksters that we don’t know about.
Vote:August 31st, 2010 at 8:37 am
I agree with Ross.
This is the ‘prep’ before the chop.
There has to be a ‘full adjustment’ and it is not going to be pretty.
Round one is the credit effect on residential land and property holdings in the First World.
Everything else will stream from that.
Don’t know about anyone else. I actually have everything that I need, and apart from water, food and power/fuel.
I can avoid consumerism for say 20 years.
The job will be sorted in under 5 years.
Vote:August 31st, 2010 at 9:07 am
Standards & Poors making predictions on the global financial crisis? Kind of ironic isn’t it.
Vote:August 31st, 2010 at 9:23 am
The US is bankrupt and trying to trade it’s way out of it without selling off assets and clearing their debt, plus cutting their expenditure.
It will fail sometime, then we sneeze!
Is Key telling the truth to the populace?
Vote:NO.
August 31st, 2010 at 9:27 am
no, we cannot be in recession, the reserve bank has already put interest rates up several times , indicating we are in boom times.
Vote:August 31st, 2010 at 9:27 am
@Guy Fawkes. Better hope you’ve packed a surgeon and dentist in your survival bunker, along with a supply of medicines…
@DPF – Asia will save us until it crashes.. hopefully we’re back on our feet before then, otherwise it’s lights out for all (until growth resumes – assuming it can).
Vote:August 31st, 2010 at 9:31 am
I think that the possibility of a “double-dip” recession in the short-term is far less important than what is coming down the pike over the next 5-10 years. Some samples:
1. Sovereign defaults: a question of When, Not If
2. Unfunded Pension Funds – and they’re not talking of Social Security.
and where this always leads – refer back to 1 for what this will mean nationally for the US and those other countries.
3. Being broke costs Illinois extra $550m
Vote:August 31st, 2010 at 9:33 am
The other dire prospect for the world economy is a “lost decade” of dismal growth, as occurred in Japan: http://www.policyprogress.org.nz/2010/08/outlook-a-lost-decade/
Vote:August 31st, 2010 at 10:42 am
Thanks for this Tom.
Loved the 2nd one on Unfunded Pension funds.
Why Key won’t bite the bullet and set a 20 or 40yr walkin period to shutting down our current acct super.
All workers should have super or kiwisaver in place right now as well as look for other investments down the road.
We as a country will benefit and become richly stable as a result.
Does Key have the balls to do what is necessary?
Vote:This is mission critical stuff for us as a nation.
August 31st, 2010 at 10:54 am
Have a [preview] read of this: The Great Depression Ahead. Harry Dent, a macro economist, has been pretty much on the button calling crises as far back as the Japanese economic woes of the 80′s, and right up to the sub-prime meltdown.. while most other economists were predicting a rosy future.
Vote:August 31st, 2010 at 11:16 am
No. But then nobody else does either. The really amazing thing about the pension nuke is the degree to which people will not face up to it even as the disaster can clearly be seen and threatens to overwhelm everything else. The best example of that attitude was this section in the second article:
In the late 1990′s an old varsity friend, who had helped build up a stock-broking firm in Wellington, was talking to me about the lead-up to the ’87 crash. He talked of how they tried to persuade many of their clients (and they had almost exclusively high-value clients) to change their investing strategies and get the hell out of stocks in general and NZ stocks specifically. He talked about the questions they would fire back at the executives that were designed to at least get them to question what they were doing.
Nothing worked and it was quite a lesson for him even after years of studying and graduating in economics and business, with all the theories, whether “classical” economics, rationality or the modish theories of sociology applied to economics. He said in a wry manner that, I’ve concluded that people only change their behaviour when the blowtorch is applied to the goolies!
That’s the situation here. I’m a very optimistic guy in general, and I’m even optimistic that things will work out pension-wise – but not until the current systems literally run out of money. We are going to have to crash and burn first.
Vote:August 31st, 2010 at 11:26 am
MikeNZ you lot have made a right mess of the USA but you want us kiwis to take your advice.
Vote:Nope, I would far rather follow the German socialistic model which believes it should take care of all the people not just the extremely wealthy.
August 31st, 2010 at 11:55 am
“German socialist model which believes it should take care of all the people not just the extremely wealthy”, what a fucking load of socialist tosh. Fine words grumpy but that is all they are. Germany has not become wealthy through socialism, far from it, you might wish to ask yourself who financed the rebuilding of Germany and what financial and political system was responsible for it’s success. Socialism will screw Germany just like it has every other country stupid enough to follow its path. Isn’t NZ a roaring success, just ask yourself.
Vote:August 31st, 2010 at 2:49 pm
It seems most of you here are very well informed and are preparing for the worst. The residential property market peaked in the USA in 2005 and is still sliding. It is a good sign of what is coming here, which means deflation for most Western economies. Major banks around the World and some countries will not be able to hang on. Is Dr. Bollard and the Reserve Bank up with the play? This is not looking good.
Vote:August 31st, 2010 at 3:12 pm
Tom
I’ve concluded that people only change their behaviour when the blowtorch is applied to the goolies!
That is the human condition sadly, for too many only when the pain is so great will they change their behaviour.
That is the problem with societies, they are treated like teens and everything is done for them and they don’t have to take responsibility for their lives.
That’s why we need compulsory Kwiwsaver NOW and an end date for super 20-40yrs out from here.
Vote:We’re all basically lazy and prideful as a default.
August 31st, 2010 at 3:17 pm
Tom
Vote:A family member worked for Lehman in NY and now Barclays, spends part of week in NY and London.
They say America has been stuffed for decade but only since OB1 has he moved them right up to the tipping point.
It’s all borrowed time, they recommend to us to buy land ( free and clear) & gold.
We don’t use jets as trains like they do or have their acumen.
August 31st, 2010 at 6:12 pm
Seems a bloody steep price to pay to see the back of socialism.
Vote:August 31st, 2010 at 8:00 pm
Maybe we can finally stamp the dirt back on Keynesian economics.
DenseOldFuckwit, you dumb twat, Germany instituted a tough programme of tax cuts and fiscal reduction while Barky and his gang of loons applied SPEND SPEND SPEND. Guess what? Unprecedented growth for Germany, stagnation for the US. Guess which path works. Go on.
Here, have some more gubmint money, now off you go to Liquorland.
Vote:August 31st, 2010 at 10:58 pm
I quite agree. The cost could be a lot less steep if the supporters of the great god “Public” would listen and try to modify the beast so that it does not spin out of control. There have actually been some steps in that direction here in NZ with things like Kiwisaver, flawed as it is.
But in the US and many other Western countries the negative feedbacks are not being dealt to but positively encouraged. Recently I read comments by one of Obama’s former “Green” advisors, Van Jones, to the effect that all this was just scare talk and that there was plenty of money out in society. All one had to do was grab it.
With idiocies like that still being believed (see GOH above) I’m afraid that the steep price will have to be paid – and unlike the pension and health train wreck the payment will be up front.
Vote: