Great Recession of 2020

[Lexicus]

Sure handy to know that the Executive now controls the purse strings

I'm not totally sure what the logic sequence there is. The President will veto any bill and Congress can't muster up the necessary majority to override his veto? Republicans don't dare go against Trump on anything?

 

[El_Machinae]

He's telling them to not negotiate, which is fine if he will veto anything. But it's also telling them that they shouldn't look for a 60% compromise. And Congress doesn't think they can get 60%, no matter what they do

 

[Socrates99]

I'm not totally sure what the logic sequence there is. The President will veto any bill and Congress can't muster up the necessary majority to override his veto? Republicans don't dare go against Trump on anything?

Its kind of like when he decided to say "it's my shutdown" to Pelosi and Schumer and they were shocked at the gift he gave them. The guy's an idiot. He's doing the absolute wrong thing politically and handing a gift wrapped present to the dems. Now they can kick back and watch Trump and the Republicans flounder guilt free. They get the aesthetic of being faultless. Cripes, he's dumb. Just wow. I'd blame lack of oxygen and steroids but this is just him really.

 

[Estebonrober]

Its kind of like when he decided to say "it's my shutdown" to Pelosi and Schumer and they were shocked at the gift he gave them. The guy's an idiot. He's doing the absolute wrong thing politically and handing a gift wrapped present to the dems. Now they can kick back and watch Trump and the Republicans flounder guilt free. They get the aesthetic of being faultless. Cripes, he's dumb. Just wow. I'd blame lack of oxygen and steroids but this is just him really.

Yea I agree this is not even out of character for him. Remember this is the same guy who'd call journalists and pretend to be another person so he could talk himself up in the NY tabloids. He's jsut a fudging idiot.

 

[Hrothbern]

The IMF produced its October outlook for 2020 and 2021
It is slightly better than the June IMF FC
Crunched the national statistics data in their models and added some flavor
Could be again a little bit pessimistic.
I see some countries that have national made forecasts differing from the IMF, but it is anyway a crystal ball and also without a serious second wave.
https://www.imf.org/en/Publications/WEO/Issues/2020/09/30/world-economic-outlook-october-2020

 

[innonimatu]

Why do they bother? They can't make accurate predictions any more than they could on February 1st. The pandemic, which they didn't see spreading back in February, has not ceased. The future political consequences and responses cannot be guessed. Why play this numbers game that always turns out wrong? So that some economists and number crunchers at the IMF can claim their highly overinflated pay? I'd take them seriously only if they admitted to uncertainty now.

 

[Lexicus]

I am curious to see on what assumptions the 3.3% growth figure for the US in 2021 is based.

 

[Birdjaguar]

I am curious to see on what assumptions the 3.3% growth figure for the US in 2021 is based.

North America is 3.3 and the US is 3.1 if I read the chart correctly. I'm guessing the 2012 growth is tied to the lower base we have in 2020 and represents a return of service sector and travel spending. The 3.1 increase doesn't put us back to 2019 level that lost 4.3% in 2020.

 

[Lexicus]

North America is 3.3 and the US is 3.1 if I read the chart correctly. I'm guessing the 2012 growth is tied to the lower base we have in 2020 and represents a return of service sector and travel spending. The 3.1 increase doesn't put us back to 2019 level that lost 4.3% in 2020.

Oh yeah got the wrong row. Same question but with 3.1

 

[stinkubus]

Why do they bother? They can't make accurate predictions any more than they could on February 1st. The pandemic, which they didn't see spreading back in February, has not ceased. The future political consequences and responses cannot be guessed. Why play this numbers game that always turns out wrong? So that some economists and number crunchers at the IMF can claim their highly overinflated pay? I'd take them seriously only if they admitted to uncertainty now.

The purpose of the IMF is to control growth rates in "developing" (an Orwellian euphemism for underdeveloped) nations to suit the interests of super wealthy international bourgeoise. These sorts of documents are every bit as much guidance to financial institutions, especially those heavily involved in FOREX since currency speculation is the main vehicle which accomplishes that goal.

If the IMF "predicts" low growth somewhere and its high instead a currency attack is likely imminent if a coup or war is not possible. Low growth will be imposed.

 

[Hrothbern]

I think the first priority of the IMF for now is that they massage governments in preventing them to apply austerity (to soon) because of the high amount of debt growing from financial supports of their economies.
And yes that keeps the stocks up as well etc etc
But just preventing austerity from kneejerk reflexes the coming years is important enough to me

Here a recent comment on that:

IMF: austerity is not inevitable
The IMF has also rubbished the idea that governments should be imposing austerity soon, to pay the cost of Covid-19.

Instead, the Fund argues that austerity is not inevitable, and that countries who can borrow freely can stabilise debt without fiscal adjustment.

That’s because borrowing cost are at such record lows - meaning record debt levels are cheaper to service (the UK, for example, can borrow at around 0.2% per year for a decade).

The Financial Times has the details:

By 2025, most advanced countries would “have a higher cyclically-adjusted primary deficit, but that is to a very large extent compensated for by lower interest payments”, Mr Gaspar said.

As a result, there is no need for budgetary consolidation in countries able to borrow freely from financial markets, he added.

“The [public debt] ratio in our projections stabilises and even declines slightly towards the end of our projections which shows that Covid-19 is a one-off jump up in debt and with low interest rates, the debt dynamics stabilise.”

And here the 10 year bond yield showing how cheap they are currently for many countries

 

[Birdjaguar]

Low yields certainly benefit government borrowing by keeping interest rates they pay low and help keep deficits under control. At the same time those low rates screw all of the people who rely on government bonds as a secure source of income. Very low rates on government bonds is forcing pension plans and 401K plans to invest in riskier places to keep up with inflation or make any kind of a return at all.

 

[Hrothbern]

Low yields certainly benefit government borrowing by keeping interest rates they pay low and help keep deficits under control. At the same time those low rates screw all of the people who rely on government bonds as a secure source of income. Very low rates on government bonds is forcing pension plans and 401K plans to invest in riskier places to keep up with inflation or make any kind of a return at all.

oh yes
That low rate does not come for free
Our Pension Funds are complaining but should be expertised enough to find investment portfolios that do cover good enough the balance of yield, risk and liquidity needs (bonds). Much of those portfolios could also be in green energy and housing (which I personally see rather owned by governments).

In fact I do really see benefits of a government charging wealth for the guaranteed liquidity of a safe place to store some money.

Just Demand & Supply.
With the the private wealth in Demand of seeking a place to store liquidity money and government having on trade, as Supply, the guarantee and liquidity. That's worth a yield for the one supplying... that government.
When that government debt becomes too big the guaranteed liquidity is no longer there ofc.
When the Demand for guaranteed liquidity is already fulfilled there is less need for Supply ofc and the interest will then go up.

Demand & Supply goes both ways.

 

[Hrothbern]

Talking about landscape changes with Covid.

One landscape change already started pre-Covid with Electrical Vehicles.
Here an investment flowchart company capital source and company capital destination sorted over countries (from Reuter early 2019)
Covid will take some effect ofc. but I have no updated overview.
One of those effects that China is getting from Covid over 2020-2021 a 2-3 years interim growth spurt for GDP compared to other countries if I use 2019 as base for comparison.
(China did outgrow in 2019 for example the US with 4% and will over 2020-2021 have outgrown the US with another 11% if I use IMF data)

You can see that there will only a few countries in the world left where EV will be a significant sector in the economy.
You can also see that Germany did put so far a lot of eggs in the basket of trade with China.

https://graphics.reuters.com/AUTOS-INVESTMENT-ELECTRIC/010081ZB3HD/index.html

 

[Hygro]

Oh yeah got the wrong row. Same question but with 3.1

Recovering less than was lost in 2020, so it’s not that high a number.

Just a reminder that you need a 25% gain to recover a 20% loss.

 

[El_Machinae]

Entitlement is interesting, eh? Retirees have saved money, but they want an income on their saved money. But they want it to be risk-free. How is it 'investment' if it carries no risk? If there's no risk, then it's just rent-seeking. But, they feel ripped off if there's no guaranteed income, instead of being grateful for secure returns.

 

[Hygro]

It’s almost like we should use pensions instead..

 

[Birdjaguar]

Entitlement is interesting, eh? Retirees have saved money, but they want an income on their saved money. But they want it to be risk-free. How is it 'investment' if it carries no risk? If there's no risk, then it's just rent-seeking. But, they feel ripped off if there's no guaranteed income, instead of being grateful for secure returns.

There is always risk; it is just that risk can vary both over time and situation. In the recent past US government CDs, Treasuries, and other bonds were mostly safe and would produce a modest 3-5% return over time without risk to the capital. Investing in the US government was safe and at a 4% interest rate could extend a bond portfolio's value over many years. Currently the Fed has declared that for the next 2-4 years investing in the government will reduce your savings once inflation is taken into account. We are now seeing the risk of relying on the Fed for stable rates. Capital is still protected but not inflation proof. In the past investing in government bonds may not have had capital risk, still doesn't, but it did have opportunity costs of not being in the market.

Banks are doing quite well now. They use other peoples' money, including the government's, and earn a return. The Fed works very hard to make sure banks do earn a return.

 

[Lexicus]

Recovering less than was lost in 2020, so it’s not that high a number.

Just a reminder that you need a 25% gain to recover a 20% loss.

Sure, but I'm more questioning why anyone thinks the economy won't just keep contracting next year.

 

[Birdjaguar]

Sure, but I'm more questioning why anyone thinks the economy won't just keep contracting next year.

We will get used to things and find work arounds. The biggest sectors that will slow are travel and tourism; local retail will change and figure things out.