Recession? What recession?

It’s entirely possible, but not probable, that as long as I live I’ll never again experience another recession.

Your first questions, if you’re curious about my meaning, is “How long will you stay alive?”

Last Wednesday, my daily post was entitled Will There Be A Recession Soon? Your second question might be “What’s the definition of “soon”?

All this is to say that despite the denials coming out of the White House, more and more credible voices are appearing in print and other places who believe it will happen ‘soon’. Some credible voices suggest it has already started.

To the extent I have at least some credibility, be assured we will have a recession. Just don’t ask me to give you a specific date. My gut tells me we’re close.

I had intended here to allude to the efforts of the White House as being similar to King Canute who, the story goes, commanded the tides to stop, presumably sometime in the 12th Century. I’ve since come to learn the event in question may have be staged by him to rebuke the flattery of his followers and close associates who likened him to God. Anyone see parallels here?

Last week you saw the effect of the current bond market on the stock market. We had a minus 800 number on the DOW that may or may not have been prophetic. Since then it’s been all downhill with the market doing going more or less up again.

Please don’t confuse the performance of the stock market with a global recession. One does not preclude the other but they are not always in lock step. The only reason the market is going up is there are more people buying than there are selling. Some of that is because the tax cut enacted under this administration is leaving enormous piles of cash in the coffers of companies. They’re using it to buy back outstanding shares of their stock which supports the illusion that all is well.

In my judgement, such as it is, there is a fundamental slowdown happening, not only in the US, but across the globe. There are subtle signs that if you know how to read the tea leaves, give you a reasonable picture of how all this is going to play out.

Here are three things I’ve read about recently that support this premise.

  • Rates are low, and mortgages are cheap. So why aren’t Americans buying more homes?
  • Sales of recreational vehicles (RVs) are down significantly. The RV industry has repeatedly fallen in advance of more widespread economic troubles.
  • The world’s biggest shipping company just put up a red flag that the trade war is crushing the global economy

And here’s a fourth sign to consider. The last three recessions were triggered largely by bubbles. ie housing,in 2008; dot-com in 2000; high interest rates in the 90’s. Today the bubble is debt. The International Monetary Fund says worldwide outstanding debt reached USD 184 trillion ($184,000,000,000,000). It only takes a hiccup along the way for it to all fall down.

Or you can assume that people who are well versed in economics, finance, global trade, etc., are among those who decided to form a conspiracy to keep Trump from being re-elected. I don’t think so…

by Tony Kendzior \ August 20, 2019