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Economic "Doom" Mega thread

dans

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I don't know that it'll end well but I support Trump in saying 'enough is enough.'
Seriously? The Chinese will take that as weakness just like North Vietnam. Iran thinks they have the upper hand in that arena. Russia has proven they have some influence (although limited). Going that route would not end well for anyone.
 

peterk123

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Dow down almost 1000 points.

China says, "no cheap shit for you"!
I've said it before and I still believe it today. Bring it on. I am happy for some short term pain for long term gain. I see no downside to bringing manufacturing back to this country. Will stuff cost more? You bet. But wages should increase over time and employment opportunities should expand. All foundations for a better life. Wage increases on a national level are stuck. The average person is not keeping up with inflation over their lifetime. That is a big problem and I think largely due to cheap crap being manufactured... not here.

I think Trump has the right idea. Our economy has been humming in high gear, the stock market is way up and unemployment at all time lows. Plus we seem to be better off than the other countries. Now is the time to play hard because we have some staying power. That is why he has been so vocal about reducing rates. I think it is is a risky move because we lose our wiggle room if the economy loses a wheel, but I understand the rationale. He needs the time to out last China. It is a game of chicken for sure.
 

Varmint

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Seriously? The Chinese will take that as weakness just like North Vietnam. Iran thinks they have the upper hand in that arena. Russia has proven they have some influence (although limited). Going that route would not end well for anyone.
Think you misinterpreted my post. I meant Trump is doing the right thing playing hardball, even if it doesn't go well.
 
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Varmint

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I've said it before and I still believe it today. Bring it on. I am happy for some short term pain for long term gain. I see no downside to bringing manufacturing back to this country. Will stuff cost more? You bet. But wages should increase over time and employment opportunities should expand. All foundations for a better life. Wage increases on a national level are stuck. The average person is not keeping up with inflation over their lifetime. That is a big problem and I think largely due to cheap crap being manufactured... not here.

I think Trump has the right idea. Our economy has been humming in high gear, the stock market is way up and unemployment at all time lows. Plus we seem to be better off than the other countries. Now is the time to play hard because we have some staying power. That is why he has been so vocal about reducing rates. I think it is is a risky move because we lose our wiggle room if the economy loses a wheel, but I understand the rationale. He needs the time to out last China. It is a game of chicken for sure.
To see things clearly you can't believe the hype. The latest Chicago PMI was the worst in 10 years. The economy is kept afloat by trillions in cheap Fed money. trump knows this which is why he's screaming for more QE and rate cuts.

But you're right about the rest of the world, they're worse off and on more fragile ground, so it's the right time to come down on China.
 

Waher

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Trump had China designated a currency manipulator at the IMF.

Just belted them across the face with a glove. He's going to force them into a position other than trying to wait out the next election. I don't think they are going to be able to handle the labor unrest. Xi very well could get sacrificed by the party in order to buy time with the populace. But if the party were to try to do that, Xi would retaliate. Trump very well could be engineering infighting within the Chinese government like what happened in the USSR towards the end. This could either work or set off WW3.
 

Varmint

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What would collapse? Banking like last time? Or just a slowdown of the economy? Or both?
Just the stock market first. There's so much debt out there this time that any significant strain could start a domino effect. Probably would start overseas. Deutsche Bank, large Chinese banks, record corporate debt, then there's the $14 trillion in negative yielding government debt. A stock market crash would trigger a lot of implosions, so they won't allow that.

Back in December the PPT held a meeting the day the market was down 20%, and the next day stocks began a huge rally to new all time highs.

Explainer: 'Plunge Protection Team' to convene amid Wall Street rout - Reuters
 

Reptile

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When You Get An Email Like This From The Fed, It May Be Time To Panic
Yesterday, in a lengthy article referencing the escalating dollar and funding liquidity shortage as a result of the aggressive rebuild of the Treasury's cash balance from $133BN to $350BN in the aftermath of the debt ceiling deal, we said "Forget China, The Fed Has A Much Bigger Problem On Its Hands."



As we explained in detail, the main reason why the Fed should be concerned, is that according to a research report from BofA's Marc Cabana which we used extensively in the report, the Fed may be forced to launch Quantitative Easing as soon as Q4 to provide the market with the much needed liquidity, or else suffer the consequences of a major liquidity shortage. To wit, in describing the various steps the Fed can engage in, this is what the BofA strategist said:

Outright QE: after OMO dealer capacity is exhausted the Fed may need to start permanently expanding its balance sheet. The Fed would likely describe this as offsetting "bank reserve demand and growth in other non-reserve liabilities". Regardless, it would represent the Fed permanently buying USTs outright to maintain control of funding markets well above the ZLB.

Edward Quince) seeks the full Cabana report whose gist, as noted above, is that the Fed will have to launch QE4 in very short notice to offset the upcoming liquidity drain.



Incidentally, this was our conclusion to our Tuesday article (which for those who missed it can be found here):

For what it's worth, Bank of America believes "the Fed will need to step in to offset these funding market pressures through outright balance-sheet expansion or QE, potentially in 4Q." And while the Fed could get ahead of these issues by laying out a framework around money market control before greater criticisms and questions emerge about the independence of monetary/fiscal policies or the path to MMT, it won't do that, and instead it will wait for another, even greater "Lehman-like" crash to float the idea of imminent QE... which is precisely what Nomura warned about earlier in the day..

Based on the Fed's email, we wonder if it means the Fed is now seriously contemplating following through on Cabana's recommendation, and if so, does the market crash first, or is it about to price in QE4 and soar. We expect to find out very soon.

When You Get An Email Like This From The Fed, It May Be Time To Panic

I don't pretend to know what this means, but it does not look good.
 
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I think if the Fed has to email what is widely viewed as a "fringe doomsday" website to get info, that's a clear sign they are clueless.

I'm 90% sure that guy will be fired for providing written correspondence like that. Or find himself tallying office receipts for the rest if his life at the Fed.
 

Reptile

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ETF GOLD HOLDINGS HIT HIGHEST LEVEL SINCE 2013
Common ETFs don’t entitle actual gold ownership

Gold holdings in gold-backed ETFs globally surged to the highest level in over six years in July.

Gold-backed ETFs added 52 tons of gold last month, with net inflows totaling $2.6 billion, according to the latest data released by the World Gold Council. This follows on the heels of a June increase that totaled 127 tons.

Globally, gold-backed funds now hold 2,600 tons of gold. That’s the highest level since March 2013.

ETF Gold Holdings Hit Highest Level Since 2013
 

Varmint

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ETF GOLD HOLDINGS HIT HIGHEST LEVEL SINCE 2013
Common ETFs don’t entitle actual gold ownership

Gold holdings in gold-backed ETFs globally surged to the highest level in over six years in July.

Gold-backed ETFs added 52 tons of gold last month, with net inflows totaling $2.6 billion, according to the latest data released by the World Gold Council. This follows on the heels of a June increase that totaled 127 tons.

Globally, gold-backed funds now hold 2,600 tons of gold. That’s the highest level since March 2013.

ETF Gold Holdings Hit Highest Level Since 2013
Hmm, I wouldn't count on these ETFs actually having purchased that much physical gold. They're probably moving paper contracts around.
 
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Went to grocery store this morning. Lady in front of me had credit card denied twice, then a second card denied. This is pointing out how credit crunch is getting maxed out. Then it was my turn. It came to $29. I bought 4 pouches/cans of coffee ($5.99-$6.99 each), a loaf of bread, and a half gallon of milk. I commented how much it was for one bag of groceries, and it didn't even include meat. The guy behind me chimed in "I'll give you one reason why it is so expensive now.". I didn't ask him, as I figured he was going to blame Trump and the Chinese trade wars. That may be true, but I figure it is just the economy coming to its own truth, and China has been killing us with tariffs, and now that we impose tariffs on them, it is evening out. Sure, it hurts the consumer in the short term, but I think in the long term, it will help the country. I may be wrong.

The other thing is, if China stops purchasing all produce and foods, doesn't that hurt the Chinese people? Will they start going hungry? That surely won't help the political situation there.
 

ASHDUMP

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I keep hearing talk of a recession. Seems like there are bigger things coming (long term) but recession can mean so many things.... are we talking "recession" like we had in 2008/09 or just a contraction in economy which would level us out to normal?
 
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China just nationalized another bank. That's 3 this year. They are hurting and Trump is going to capitalize on it doubling down on tariffs until they squeal.

I don't agree with tariffs, but I see Trump basically using the Reagan plan for crippling US competition for supremacy. Bankrupt them. Only Reagan got the USSR to teardown the Berlin Wall. I don't think Trump will convince China to knock down the Great Wall. Lol
 

mibro

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China just nationalized another bank. That's 3 this year. They are hurting and Trump is going to capitalize on it doubling down on tariffs until they squeal.

I don't agree with tariffs, but I see Trump basically using the Reagan plan for crippling US competition for supremacy. Bankrupt them. Only Reagan got the USSR to teardown the Berlin Wall. I don't think Trump will convince China to knock down the Great Wall. Lol
I've always thought the US gave the rest of the world an easy ride with access to US markets sending millions of jobs overseas. I think President Trump intended to liberalize trade with China, to get China to further open their markets to US goods.

In hindsight it was fairly predictable the Chinese would dig their heels in and it would become a battle of egos. The outcome of the trade war gets more unpredictable by the day imho, could even take us into WW3 in my most pessimistic musings.
 
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Varmint

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China just nationalized another bank. That's 3 this year. They are hurting and Trump is going to capitalize on it doubling down on tariffs until they squeal.

I don't agree with tariffs, but I see Trump basically using the Reagan plan for crippling US competition for supremacy. Bankrupt them. Only Reagan got the USSR to teardown the Berlin Wall. I don't think Trump will convince China to knock down the Great Wall. Lol
I'm not sure Trump wants to take down China, but some of his advisors certainly do. I think he's hoping they will choose compromise over financial disaster. It's a gamble worth taking imo.

I do think a Chinese banking collapse will spread around the world, since China is so large and everything is interconnected. I'm sure nobody thought Lehman would cause Iceland to go bankrupt.
 

jct61765

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Reagan hated communists, that was his era. Trump is a business man. He doesn’t want to take down China. He wants compromise. He knows he won’t get everything he wants. China has been screwing with us for years. It’s about time a president has stood up to them. I’ll pay extra for some things and do without on other things. It’s time we stopped being pussies. Oh, and I’m all for pulling out of Germany.
 

richc

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To be sure China would love nothing better than to replace the dollar as the world's reserve currency. But they also know taking down the dollar and the US in a big way could crush their own economy.

I think Trump's advisors have helped him understand the importance of knocking threats to the petrodollar down a notch or two. Other recent presidents didn't have the balls to take on such a formidable task...


I'm not sure Trump wants to take down China, but some of his advisors certainly do. I think he's hoping they will choose compromise over financial disaster. It's a gamble worth taking imo.

I do think a Chinese banking collapse will spread around the world, since China is so large and everything is interconnected. I'm sure nobody thought Lehman would cause Iceland to go bankrupt.
 
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