BlackRock says get ready for a recession unlike any other
markets.businessinsider.com
markets.businessinsider.com
The truth being that Central Banks can dynamically adjust rates. That's actually expected.
The other thing is that just taming inflation by rising rates is too crude. It's almost a kneejerk reaction.
The problem is that monetary mass tends to concentrate into pools. With time money circulation is hindered because rich people get richer faster than average/poor people.
Inflation is more of a concern for average/poor people however.
When the economic policies were loose, it was time to introduce structural policies that would bolster money circulation and offset inflation.
Now, part of these policies are being introduced as there is a shift toward national productions (globalization makes monetary mass control harder since capital is distributed worldwide but Central Banks, globally, have different mandates that can only directly effect their own respective jurisdictions)
In the end, it's a closed system. There is no true justification for a recession. It should balance out. Rich peeps just don't want to see their dollar numbers dwindle. In that case, they should be incentivized to invest in cash flow generating ventures rather than storing it as interest bearing debt.
Otherwise, of course, the economy is going to contract... Duh!
(Money attracts money so the rich always win I guess, still rising rates was never the true cure, it's just a way to cleanup misallocations a little perhaps)
Not sure I follow your argument. You seem to imply that there's never a justification for recessions, yet recessions do happen from time to time.
Basically, a recession occurs when money has been pulled back from the economy, whether by a Central Bank that would hike interest rates or, in a more adhoc fashion, by a given sector being hyped (via a technological breakthrough perhaps) or even a single commodity (people had weird fetishes around tulips at some point).
These are not cash-flow generating assets nor ventures or they create too few new jobs in the immediate term. Now since money does not flow back instantly (some kind of hysteresis)... A recession.
A multi-participant tug of war...
Yes, tech jobs were tough in 2000 but they came back pretty quickly. Sure my bank, Washington Mutual, went under in 2008, but FDIC, so shrug.
Clearly I have been lucky… wasn’t living month to month, didn’t buy a house in 06-07, my jobs continued on. My worst pain was having a company renege on the purchase of my business… but it worked out fine and I only ‘lost’ the feather in the cap.
Today, food, fuel and rent are all noticeably higher across the board. Everyone is seeing it wether they ‘feel it’ or not.
It is hard not the believe that Winter is coming…
But, is it that they have a lot of short positions and want to influence the markets?
It is hard to fathom they doing it out of anything but self-interest and stock price.
If they tell everybody to prepare for a 20 percent drop but the market falls 10 percent, then everybody feels good about themselves and Blackrock.
If they tell people to expect flat markets but instead get the same 10 percent drop, then people panic. They withdraw their money. Move to a new broker. Because obviously Blackrock wasn't prepared for this. Or stuff it in a mattress. Because obviously something unexpectedly bad is happening.
I've also noticed this dynamic in personal conversations related to anything financial, to the point where I've found it easier to simply excise this area of conversation from the smalltalk toolkit.
No money, no promises.