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Did the Financial Crisis of 2024 just begin?

dann

Penultimate Amazing
Joined
Feb 2, 2004
Messages
21,100
dann said:
This is one of those things that I fear might get Trump reelected.

Why? The extent of his financial acumen is to not pay his bills and beg for money from his witless followers.
 
I don't suggest that people's motivation for voting for Trump will be based on their objective assessment of his accomplishments. That also wasn't the case the first time he got elected.
Here’s the problem: Even a strong economy by U.S. standards is pretty weak for millions of people. About 13 percent of Americans (44 million) live in households that struggle to afford food, nearly 12 percent of Americans (38 million) are in poverty, and 8 percent (26 million) don’t have health insurance. Homelessness and evictions are on the rise. The 43 million Americans with college debt owe on average about $40,000.
Opinion Democrats keep bragging about the economy. But here’s the problem. (WaPo, Feb 20, 2024)


Here's the problem, indeed!
And now they probably won't even have that ****** argument, which will play into Trump's tiny hands.

ETA: And a recession at this point will play into the hands of the fascists currently rioting in Britain, too.
But that wasn't really my point. The point was the question: Is this the beginning of a recession - like the one in 2008?
 
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Why would it be?


Don't yesterday's headlines in the OP look like it?
Global stock rout hits NZ, Nikkei and ASX as recession fears grow (NZ Herald, Aug 5, 2024)

What we covered here
Wall Street took a beating Monday as all three major indexes plunged on fears the US economy is slowing faster than expected.
Traders upped their bets for a September rate cut from the Federal Reserve, with some demanding an emergency cut outside of the Fed’s regular eight-week meeting cycle.
Concern mounted that last week’s dismal jobs report was another sign that the central bank has failed to manage the US economy, and that a significant slowdown is ahead.
Tech stocks led the selloff, crypto dropped, oil fell and Treasury yields plunged to some of their lowest levels this year.
The global gutpunch for markets began when Japanese stocks suffered their biggest loss in 37 years, with the Nikkei 225 index plunging by more than 12%.
Losses continued on US exchanges, with the Nasdaq Composite falling more than 6% at one point. The S&P plunged by 4.25%. The Dow also stumbled, dropping by more than 1,000 points on several occasions during the day’s trading.
Global stock markets end the day sharply lower (CNN, Aug 5, 2024Global stock markets end the day sharply lower)


This is also not unusual at the beginning of a recession:
Headline from front page:
Japanese shares soar in early trading Tuesday, clawing back some of their record losses from the worst round in history (CNN, Aug 5, 2024)
The headline of the article itself, which appears to be the original, is less realistic:
Japanese shares soared in early trading on Tuesday, clawing back most of their record losses from the previous day and underpinning a regional rally.
The Nikkei 225 last traded about 10% higher, while South Korea’s Kospi rebounded by about 3%. Hong Kong’s Hang Seng Index rose 1%, and Taiwan stocks regained 4%. They all suffered major losses during the previous trading session.
The bounce in Japan is “typical after a market crash,” Neil Newman, head of strategy at Astris Advisory in Tokyo, told CNN. “Importantly: Fundamentals are sound, the economy is doing fine, there is no evidence of abandoning Japanese equities.”
One of the top gainers on Tuesday was soy sauce maker Kikkoman Corporation which was trading about 21% higher after losing nearly 17% the previous day.
Japan stocks rebound sharply after worst rout in history as other Asia markets also rally (CNN, Aug 5, 2024)


I doubt that Kikkoman is a major player of the tech industry, but it's not something I know about. And why not mention how much was 'clawed back'? It would be more interesting to know than Kikkoman's numbers.

Stock markets are reeling, but economists say: Don’t panic yet (WaPo, Aug 5, 2024)
Yet?! "Monday’s slide might reflect overvalued equities more than worries about fundamentals."
This sounds much like 1987's Black Monday (Wikipedia).
Fortune thinks so, too:
Today’s financial panic looks like the stock crash in 1987—when the economy avoided a recession, market veteran says (Fortune, Aug 5, 2024)

Some economies didn't avoid a recession. This is from the Wiki article, which I found when I searched for "1987 recession":
New Zealand
The crash of the New Zealand stock market was notably long and deep, continuing its decline for an extended period after other global markets had recovered. Unlike other nations, moreover, for New Zealand the effects of the October 1987 crash spilled over into its real economy, contributing to a prolonged recession.
Black Monday (1987): International: New Zealand (Wikipedia)


This was the effect on the UK:
United Kingdom
On Friday, October 16, all the markets in London were unexpectedly closed due to the Great Storm of 1987. After they re-opened, the speed of the crash accelerated. By midday, the Financial Times Stock Exchange 100 Index (FTSE 100) had fallen 296 points, a 14 percent drop. It was down 23 percent in two days, roughly the same percentage that the NYSE dropped on the day of the crash. Stocks then continued to fall, albeit at a less precipitous rate, until reaching a trough in mid-November at 36 percent below its pre-crash peak. Stocks did not begin to recover until 1989.
 
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I can see why you aren't happy with it and would like to make it seem as if it's just a "correction of overheated stock markets."
However, when you also call it minor, it becomes obvious that you are deliberately trying to minimize what is going on. Even the crash in 1929 began as a "correction of overheated stock markets."
Do you have more than a claim that this is just a minor correction?
 
I can see why you aren't happy with it and would like to make it seem as if it's just a "correction of overheated stock markets."
However, when you also call it minor, it becomes obvious that you are deliberately trying to minimize what is going on. Even the crash in 1929 began as a "correction of overheated stock markets."
Do you have more than a claim that this is just a minor correction?

Have a look at Dow Jones over the past decade. Here it is for you:

https://www.macrotrends.net/1358/dow-jones-industrial-average-last-10-years

Covid caused a big dip, which was over in very short order. Since then, onward and upward. No reason at all to think this won’t bounce back given the strength of the US economy.

But keep up with your Chicken Little spiel.
 
Unlike you, I don't have any spiel going. "Onward and upward" is what usually precedes a recession. It's not a very convincing argument for the claim that upward and onward is how it will continue to go.
 
Unlike you, I don't have any spiel going. "Onward and upward" is what usually precedes a recession. It's not a very convincing argument for the claim that upward and onward is how it will continue to go.

So you have nothing. The best predictor of future performance is past performance, and that sound past performance is coupled with far better understanding of how international finance works. Is that foolproof? No. But it’s far better than an idea that a bad day means the sky is falling.
 
Don't yesterday's headlines in the OP look like it?
Not so far. Let's see what what happens over the next few weeks.

Some economies didn't avoid a recession. This is from the Wiki article, which I found when I searched for "1987 recession":
New Zealand
The crash of the New Zealand stock market was notably long and deep, continuing its decline for an extended period after other global markets had recovered. Unlike other nations, moreover, for New Zealand the effects of the October 1987 crash spilled over into its real economy, contributing to a prolonged recession.
Black Monday (1987): International: New Zealand
Yes, I know - I was there. But the actual effect wasn't as bad as is suggested. Furthermore we all knew it was coming, and those 'high flying' speculators deserved to lose their shirts.

Anyway, here's what the NZ share market looks like today:-

picture.php


Interesting to note that it bounced back rapidly after eliminating Covid in 2020, but dropped in 2022 after Covid restrictions were removed and the virus infected half the country - and has stayed depressed and volatile since then. These days a 10% drop would not be at all unusual.
 
Japan, where its stock market fell by 12% on Monday, it rose by 10% on Tuesday. The sky is not falling.
 
So you have nothing. The best predictor of future performance is past performance, and that sound past performance is coupled with far better understanding of how international finance works. Is that foolproof? No. But it’s far better than an idea that a bad day means the sky is falling.


I guess it's possible that it was just a "bad day".
But maybe it wasn't:
“Not everybody will have a margin call at once, but the riskiest people might, and then they start to liquidate,” Sedunov said. “And then that creates losses for people down the chain, and then they have to sell things, and then it’s just this kind of spiral.”
On Monday, the Japanese stock market fell 12.4%, triggering a global rout. On Tuesday, Japan’s stocks clawed back some of their losses. US markets also rebounded. But the relief may be temporary.
“We are not done by any stretch,” Arindam Sandilya, co-head of global FX strategy for JPMorgan Chase, said on Bloomberg TV. “The carry trade unwind… is somewhere between 50%-60% complete.”
In other words: Buckle up, and don’t panic.
A popular trading strategy just blew up in investors’ faces (CNN, Aug 7, 2024)


https://www.investing.com/indices/japan-ni225
 
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I don't have a crystal ball, but my guess is that this isn't the beginning of a financial crisis.

You would need some major financial institution teetering on the verge of bankruptcy for that.

I see it as more of a "correction".
 
I don't have a crystal ball, but my guess is that this isn't the beginning of a financial crisis.

You would need some major financial institution teetering on the verge of bankruptcy for that.

I see it as more of a "correction".

Given the US rebound today, correct,
 
The wider economy worldwide is about as strong as any period after the 2008 crash (which still hasn't been properly dealt with). What's happening now is more likely simply a correction in a stock market whose valuations have lost all relationship with reality.
 
The wider economy worldwide is about as strong as any period after the 2008 crash (which still hasn't been properly dealt with). What's happening now is more likely simply a correction in a stock market whose valuations have lost all relationship with reality.

Want to buy my chatbot? I can let you have it for a mere trillion.
 
Notice how the final crisis of Capitalism seems always to be very near, but never actually happens?
 
Notice how the final crisis of Capitalism seems always to be very near, but never actually happens?

Yeah, this place is getting dull; it used to be you could count on a lot of "This is inevitable in late-stage capitalism," posts.
 
Notice how the final crisis of Capitalism seems always to be very near, but never actually happens?


Tell us more about that "final crisis of Capitalism."
It's not something I've heard about, but it sounds interesting.
 
The wider economy worldwide is about as strong as any period after the 2008 crash (which still hasn't been properly dealt with). What's happening now is more likely simply a correction in a stock market whose valuations have lost all relationship with reality.


I think that when a stock market's "valuations have lost all relationship with reality," that's usually the time when a crisis sets in.
Some people disagree with the idea that the "wider economy worldwide is about as strong as any period after the 2008 crash.":
* The recent sell-off in stocks could be a warning sign for what's coming for the economy, Mark Mobius said.
* The billionaire investor flagged the risk of recession in an interview with the Economic Times.
* Mobius said it was a good time for investors to hold around 20% of their portfoliosin cash.
(...)
"It was not technical in nature," Mobius said of Monday's sell-off, pointing to rising geopolitical tensions around the world, as well as the upcoming US presidential election. "All of these put together create a great deal of uncertainty. And then the situation in Japan set off a chain reaction, and, of course, the US market came down."
Stocks could have more downside on the way, Mobius suggested. The carry trade upwind - which emerged as a culprit of the sell-off this week - likely has more room to run, he predicted, echoing other Wall Street strategists.
Meanwhile, the economy looks like it could have "more problems going forward." Recession fears spiked this week after the job market slowed more than expected in July.
The latest stock market crash wasn't a fluke, and it signals more trouble coming for the economy, investor Mark Morbius says (BusinessInsider, Aug 10, 2024)
 
Anyway, here's what the NZ share market looks like today:-

[qimg]https://www.internationalskeptics.com/forums/picture.php?albumid=1476&pictureid=14095[/qimg]


I notice that it still hasn't quite recovered from the post-vax switch to 'living with the virus' instead of keeping it out. It was doing much better during ZeroCovid.
 
This is one of those things that I fear might get Trump reelected.


If the market crashes in the next couple of months, I hope that this way of predicting the outcome of elections is wrong:
The key stretch [i.e. the three-month window before election day] officially began this week on Monday.
"Since 1928, whenever the S&P 500 was positive during the three months leading up to an election, the incumbent party remained in control of the White Hours 80% of the time," Turnquist said.
For example, in the three months heading into the 2008 election, the S&P 500 dropped 24.8%. The Democrats ultimately won, with President Barack Obama ending Republican control of the White House after eight years.
On the flip side, when the stock market printed a negative return in the three months leading up to the election, the incumbent party lost the election 89% of the time.
How the stock market can predict the outcome of the presidential election (BusinessInsider, Aug 8, 2024)
 
Where do I say that "the financial crash has happened"?
I assume it's supposed to be somewhere in this thread, but I can't find it.
My allegedly "usual (!) act" where I allegedly "say “but it will happen……sometime….”" must be almost everywhere, so could you perhaps link to a post or three where I said something like that?
 
I notice that it still hasn't quite recovered from the post-vax switch to 'living with the virus' instead of keeping it out. It was doing much better during ZeroCovid.
Yes. But we couldn't remain a hermit kingdom forever. The virus mutated to a form that was 100 time more infectious - impossible to hold back. But by that time over 80% of the population was vaccinated, so we did what was always planned - we let it rip. Everybody got sick and productivity declined. However it wasn't that bad. The death toll per capita was 5 times lower than the US, and our run-down health system handled it.

Now that we have opened up to the World again we are not insulated from its economic affects. But it hasn't been as bad as I was expecting. We had a period of 'high' inflation in 2022, but in 2023 it dropped down again and is now back to pre-covid levels (sad that the National party campaigned and won on the premise that the government wasn't getting inflation under control, when it was).

NZ Inflation 2020-2024.png

The bigger problem for many people here is the effects of global warming. Cyclone Gabrielle caused NZ$2 billion (US$1.25 billion) of damage in my district alone, pushing rates and insurances up much more than inflation - and global warming isn't getting any better so they will continue to rise. Rates and house insurance account for 44% of my likely expenditure this year, and I live in a small flat that's not in a rich area of town. In the future they may rise to 50% or more of my net income. I'm not complaining though - some farmers here lost everything and won't even be allowed to rebuild.

In a few years from now Covid is going to look like a mere blip compared to the storm that's coming.
 
We had a period of 'high' inflation in 2022, but in 2023 it dropped down again and is now back to pre-covid levels (sad that the National party campaigned and won on the premise that the government wasn't getting inflation under control, when it was).
I think it takes a long time for people to readjust their sense of what "normal" prices are. More than a few years probably.
Japan recently had a shortage of rice. For a while you couldn't find bags of rice, which typically came in bags of either 5 kg or 10 kg at the supermarket. That was for several months over the summer. When it finally reappeared on store shelves, it was only the 5 kg bags, and they cost about as much as the 10 kg bags used to cost. I should have expected it, but when 10 kg bags of rice finally returned to my supermarket, they were about twice as much as they had been just a year or two ago. Even if it now stays at the current level without rising further, I expect it to take me a few years to get used to paying 7,000 yen for a (10 kg) bag of rice (about 77 NZ dollars).
 
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