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Old 11.02.2016, 15:21
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World economy - recession or business as usual?

Currently we are as in the Chinese curse "living in interesting times"

The central banks are in a race to have ever more negative interest rates
  • Sweden just cut their rate to -0.5%
  • Looks like the Bank of England will not increase rates until 2020
  • Rumours are the Fed will not increase rates this year as earlier stated; maybe even reverse the last increase
  • People are forecasting another decrease by the European Central Bank in March

Of course negative interest rates do hit profits in commercial banks who have huge assets parked by the central banks and some of them like Deutsche Bank are looking increasingly sick

The whole oil price business is hurting many countries;
  • Texas oil down to $26 per barrel today.
  • Saudi introducing cost reducing measures and talking about privatisations and bond selling
  • Russia talking about privatisations and having record levels of private debt; debt collection in Russia is very violent - story in Russian newspapers about someone who owed £35 being fire-bombed
  • Venezuela in deep trouble and claimed to be selling last of its gold reserves
  • Iran plan to enter the oil market in a big way now sanctions are gone which will likely hit prices

Stock markets worldwide hitting 2012 levels.

China spending $100Bn per month supporting its currency.

Myself I believe we are looking at a high risk of entering a new world wide recession!
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Old 11.02.2016, 15:24
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Re: World economy - recession or business as usual?

IMO. It is just a continuation of the 2008 crash. Rather than let things resolve themselves, huge amounts of money were thrown into the problem making it worse and delaying the day of reckoning.

Not surprisingly, investors are running for the exits:

http://www.ft.com/cms/s/3/8a99834c-c...#axzz3zreFftFh
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Old 11.02.2016, 15:31
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Re: World economy - recession or business as usual?

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IMO. It is just a continuation of the 2008 crash. Rather than let things resolve themselves, huge amounts of money were thrown into the problem making it worse and delaying the day of reckoning.

Not surprisingly, investors are running for the exits:

http://www.ft.com/cms/s/3/8a99834c-c...#axzz3zreFftFh
Wouldn't argue against that (link is behind a paywall btw).


Not convinced the oil price is a major issue for oil consuming countries apart from the short-term overall deflationary effect it is helping with. Might become more interesting in a couple of years however when demand again outstrips supply.
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Old 11.02.2016, 16:58
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Re: World economy - recession or business as usual?

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Wouldn't argue against that (link is behind a paywall btw).
Don't you know how to get around them?
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Old 11.02.2016, 17:21
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Re: World economy - recession or business as usual?

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Don't you know how to get around them?
apart from subscribing?
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Old 11.02.2016, 21:53
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Re: World economy - recession or business as usual?

Reason behind recent selloffs is probably the world's biggest sovereign funds selling their equities en masse to raise cash as their budgets have been blown out of proportion. Saudi Arabia, Canada, Norway are just some of them.
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Old 11.02.2016, 22:12
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Re: World economy - recession or business as usual?

I have lived with inflation for years, in the '70s we had over 20% inflation, but today it is different.

I read somewhere that negative interest is not a good thing. Companies cannot raise prices as customers will not pay the higher prices, and so a recession results.

I find it hard to see why we should have the need to keep on growing, if we have all the electronic gadgets that China can sell us? Do we really need another generation of mobile phones?

There are plenty of world problems to solve, without giving more high value to rich countries.
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Old 11.02.2016, 23:41
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Re: World economy - recession or business as usual?

Gold briefly touched $1263/oz today.
Incredible how volatile the prices of everything are and seemingly based on emotions rather than firm facts or changes in the market.

I have the feeling that everything is balanced on a very unstable basis and will jump off into some unplanned and negative direction.
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Old 12.02.2016, 00:28
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Re: World economy - recession or business as usual?

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Wouldn't argue against that (link is behind a paywall btw).


Not convinced the oil price is a major issue for oil consuming countries apart from the short-term overall deflationary effect it is helping with. Might become more interesting in a couple of years however when demand again outstrips supply.
"when demand again outstrips supply" Theoretically we should already be there with fighting in Iraq, Syria and Libya hitting production; but we are not!
Demand is falling in China although they like other countries have taken the opportunity of lower prices to build up their strategic reserves but soon, maybe already, they will have filled up every possible "container" and then demand from them will fall again.

Whatever one thinks about global warming it is clear that there is a lot of interest and investment in renewable energy sources.
Germany is rapidly moving in this direction and already claims to produce over 30% of their electricity needs from renewable energy sources.
Worldwide it is claimed commercial solar power plants have a combined capacity of over 6 gigawatts (GW).

Currently solar is a relatively inefficient converter of solar to electricity; most commercial systems offer around 8% to provide a reasonable sale price of the solar panel.
30% is possible today but the panels cost about 100 times more.

Clearly any small efficiency gain would be a major improvement and lead to much wider usage.

A small piece of anecdotal evidence; I was surprised to see a large solar farm (799 kWp) behind the new Migros in Eglisau.
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