How concerned are you about the economy?

Outside of following politics most of the rest of my free time is spent following the Market and economic issues. It seems like more and more people I hear seem to believe there will be a recession and this author also believes that there will be an additional 15% drop on the S&P:

What are your thoughts?

Yes on both counts. The market will drop another 15% and there will be a recession.

I have a history of predicting shallow recessions will be deep ones (call me “Spinach junior”) so I am not going hazard a guess how severe the recession will be, but yeah, it’s coming.

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Should’ve put America First. :wink:


A wise man (an old biker dude who hung out at the AA coffeeshop) once told me the key to life was simple - the serenity to accept the things outside of your control, the courage to change things within your control - and the wisdom to tell which is which.

The economy is outside of my control.

I do know the actual words of the Serenity Prayer. I am using poetic license in this post.

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Look familiar?
It is a Federal Reserve chart of home prices.

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Our company is thriving right now, but it can turn on a dime for us. So we are trying to grab as much business as we can now, and lock in work for 12+ months so if it hits the fan we don’t have to lay anyone off for a year.

2008 bubble was caused by under regulated sub prime mortgages fueled by bundling MBS devices.

Not to say we’re not in a bubble now, but it’s not at all similar.

Also, adjust your graph for inflation…

Oh yeah sub primes $1.3 Trillion worth of subprimes . . . some of which went bad.
Screenshot 2022-05-12 8.45.01 PM

How should I compare $1.3 Trillion worth of sub primes . . . some of which went bad to $1.7 Trillion in crypto wealth already disappeared? . . . . so far.

Screenshot 2022-05-16 9.29.39 PM

How many sub primes do we have now? How much in MBS?

I honestly don’t know.

Again, not saying there isn’t a bubble. Just suggesting, it’s not the same.

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That’s true. Subprime mortgages had collateral (the underlying houses).
So the wealth sadly transferred from the homeowner to the bank to the new homeowner.

Sucks to be the original borrower but the wealth did not disappear from the economy. It just transferred from one party to another to another.

It does not work that way when crypto disappears.

yeah, but it did when the MBS’s blew up. they were every bit as make believe as crypto and of course had major, major players leveraged to the hilt on them.

There is no comparison between the crypto market at MBS and all their derivatives.

And there is no link between crypto and real estate, which was a huge part of the 08 crash.

the issue was the underlaying securities were fraudulently valued. so the full value didn’t transfer. compounding things.

I can accept that 2008 was made a lot worse because it caused the private market to stop trusting the whole mortgage banking process and nothing like THAT will happen with the crypto crash.

The crypto crash is bigger in total dollars (bigger than a sub portion of $1.3 Trillion) but big or small it will not have the same echo effect that the housing bubble did. . . . of course Fed Data suggests we might also be in a housing bubble.

MBS were spun off into so many derivatives that were in many ways just like crypto - make believe gambling tools.

I would have to check the values, but they were staggering.

Crypto is an isolation gambling instrument. It is not heavily invested in by major banks nor is it securitized by an asset.

If crypto blows up a billion small investors lose some money.

in 08 a handful of institutions vital to our economy lost more than they could repay in a century.

The integration is different.

Yes, we are likely in a housing bubble. But we haven’t spent ten years inventing derivatives and fraudulently rating the underlying securities and convincing the 20 banks that run our economy to invent 70% of their earnings potential in them.

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Well yes about crypto having a smaller echo effect, BUT, when a bad mortgage collapses the money did not disappear. The collateral is still there.

So the housing bust was caused when

  • a portion of $1.3T in loans went bad , , ,
  • but the $$ did not disappear. There was collateral.

So far the crypto collapse has caused

  • $1.7 worth of crypto investments to go bad
  • and the $$ really did disappear.

When “my” mortgage goes bad, you get the house. No wealth disappeared from the economy. It just changes from my name to yours.
Very different when crypto disappears. With crypto it can be worse. With cypto wealth really does go to money heaven.

Do you know who Cathie Wood is? (Head of ARK investments? Laughing stock of Wall st.?)

I’m not terribly worried about a recession. I don’t care for it but won’t impact me much. I do worry for my kids…. But everything I own is paid for and my daughter just finished college so she’s off the payroll :))

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I bought into the hype and had some ARKX stock before I sold a few weeks ago.

That’s a mistake I won’t repeat again.

This is the key here. It is not any combination of banks. It is the banking cartel, which is essentially a single super institution, coordinated by the Federal Reserve. And behind that, the government that drives the banking cartel.

When the Federal Reserve inflates, it tosses extra credit and money into the economy. Extra money and credit chasing the relatively static number of residences in the United States. The source of all bubbles and every bubble in the economy.

All the regulation in the world will not stop price bubbles, if driven by inflation.

And the Federal Reserve has been busy in that department recently.

The only way to keep monetary inflation under control is to reign in government spending, which creates government debt which in turn is monetized by the Federal Reserve as monetary inflation.

I have been around a long time. The individual details may defer from year to year. The underlying cause does not.