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New Global Banking Crisis Risk

Banking & Financial Crisis Risk Rising

European Banks at the Epicenter of Potential New Financial Crisis

European banks more than others are already showing signs of stress in the face of not only China, collapsing oil, but now, unintended consequences of the increasing number of central banks implementing Negative Interest Rate Policy, or NIRP.

European banks near 'terrifying' crisis

With European banks sitting at multiyear lows, one widely followed market watcher said some of the biggest ones could go bankrupt...

Former hedge fund manager and Goldman Sachs alumnus Raoul Pal said his scenario is one most investors aren't looking at right now.

Pal said the banking issues have the potential to overtake risks associated with China's growth slowdown and cheap oil.

"So many of these [bank stocks] are falling so sharply. I think people haven't even caught up with what is going on... "I look at the big long-term share charts of them, and I think this looks very terrifying indeed. I have not seen anything like this for a long time."

For Pal, negative interest rates are the chief reason why the bank stocks are in trouble. (Full video here

Also from CNBC:
Here’s what is rocking European banks ahead of earnings
Italy: Bad loans Italian banks faced intense market pressure in January due to concerns about their still very high levels of bad debts. These fears were ignited when the European Central Bank requested further details on nonperforming loan portfolios..

Germany: Record loss for Deutsche Deutsche Bank, Germany's largest bank, reported Thursday that it had a record loss for 2015...

UK: China exposure Outside of Asia, British banks are among the most exposed in the industry to Hong Kong and mainland China. This increases their vulnerability to the slowdown in the world's second-biggest economy and the disruption in its equity market. Full story here
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Business Loan Demand Now Contracting

US Recession 2016 Leading Indicator: Red

2016 US Recession Flag Flashing Red as Business Loan Demand Tanks

business loan demand contracting recession 2016 indicator
Above: Loan growth among large firms is declining for the first time in several years

Business demand for loans declined for the first time in four years, according to the just released Federal Reserve Senior Loan Officer Survey. Loan demand dropped by double digits among all size businesses, from small mom-and-pops to the largest of corporations.

According to Paul Ashworth, the Chief Economist at Capital Economics:

The weakening in demand for business loans suggests that the growth rate of actual commercial and industrial lending will grind to a halt this year..

Furthermore, banks reported that the weakness in demand for loans from businesses was primarily because the latter were scaling back their investment plans... That suggests any rebound in investment in equipment in the first half of this year will be muted at best. With the mining, manufacturing and agriculture sectors all hurting, we hadn't expected much from business investment this year, but the drop off in loan demand is worse than we would have expected.

In addition to a pronounced slump in actual demand for loans across nearly all businesses, the FRSLOS also found that
"on balance, banks tightened their standards on commercial and industrial (C&I) and commercial real estate (CRE) loans (entering 2016, and)...Modest net fractions of banks stated they expect to tighten their lending standards on C&I loans, moderate net fractions of banks stated they expect to tighten their lending standards on NFNR loans, and significant net fractions stated they expect to tighten their lending standards on CLD and MF loans over the course of this year."
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ZIRP, DERP, they've gone NIRP!

Japan Goes All Japanesa after 5th Recession Since 2008

Japan Turning Japanese - I Really Sink So
The Bank of Japan lowered interest rates Friday. After years of ZIRP, DERP, they've gone NIRP!

“Abenomics” - put in place three years ago - included 'unprecedented' Quantitative Easing, vigourous fiscal policy, and structural reforms. It was sold as the model with which mature economies battling deflation would be able free themselves of the morass.

Alas, Abenomics has shown to be not enough, and Japan is now arguably falling into its fifth or six recession since 2008, alone, depending on how one's counting. Japanese inflation has been nil, and household spending, the bulk of their GDP, has dropped over 4% since 2014. Yeah, that might be a touch recessionary.

Most recently, household spending has fallen 4.4% in the year to December, and factory output fell 1.4% in December, much worse than the market forecast of a 0.3% retreat.

Do Not Fear! NIRP is Here!

CNBC: Bank of Japan adopts negative interest rate policy

The Bank of Japan blindsided global financial markets Friday by adopting negative interest rates for the first time ever,

buckling under pressure to revive growth in the world's third-largest economy...

The BOJ left its program to buy government bonds and exchange traded funds (ETFs) unchanged.

The central bank noted that the Japanese economy has recovered modestly with underlying inflation picking up, along with spending by companies and households.
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China: 'Real Economy' Sound

China shares may be lower, but the 'real economy' is dandy, says China Free Press
China's volatile shares were lower again on Thursday, taking losses this month to about 23 percent or 12 trillion yuan ($1.8 trillion), while state media insisted that the market ructions did not reflect the real economy...

Thursday in the People's Daily, the official mouthpiece of China's Communist Party, laid in to "groundless fears" about the economy, which it said was still propelling global growth, and enjoying rising foreign investment, moderate inflation and prudent monetary policy...
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US Recession by Falling Oil

Well, it's not allll that simple, and James Hamilton over at Econobrowser posits that falling oil prices alone may only be culpable in triggering regional recessions (think oil production heavy economies, like Texas, or North Dakota).

Prof. Hamilton starts out by quoting < Donald Luskin's Jan 7th article in the Wall Street Journal titled 'The Recession Caused by Low Oil Prices'

The global economy is slipping into recession. The evidence is showing up in all the usual ways: slowing output growth, slumping purchasing-manager indexes, widening credit spreads, declining corporate earnings, falling inflation expectations, receding capital investment and rising inventories. But this is a most unusual recession– the first one ever caused by falling oil prices.

Prof. Hamilton reminds us that falling oil prices should in theory, and have in the past, given consumers extra discretionary money with which to spend, spend, spend:

We usually see consumers spend their extra income right away, whereas it takes more time for producers to alter their spending plans. As a result, even if the U.S. was not a net importer of oil, we might still expect to see a short-run positive stimulus from dropping oil prices.

However, he also finds some nuances this time, not expected in classical modeling:

The actual change in overall consumption spending in response to the oil price decline through March of last year was about 0.4% smaller than would have been predicted on the basis of the historical correlations... The conclusion I draw from the seemingly conflicting evidence in the macro and micro data is that each consumer spent more than they would have if oil prices had not fallen, but that there were other macro headwinds at the same time that were offsetting some of the positive stimulus of falling oil prices. (Bolding emphasis added to highlight what my thoughts which I will add below**)

He continues,
But 1986 was a bad time for Texas and the other oil-producing states. Here’s a graph from some analysis I did with Michael Owyang of the Federal Reserve Bank of St. Louis. (LINK)

** Reason for Concern
This is not 1986

I have always believed that lower oil prices do add up to extra money in the hands of the people most likely to need and quickly spend it -elsewhere- but this 'elsewhere' is not necessarily any more beneficial to economic growth than spending it at your local gas station that ultimately also fuels jobs for workers at refineries, drills, the makers of drill bits, etc. etc. etc. ....

In fact, as I highlight above, this is -not- 1986. The US is not in a solid recovery phase from the trough of that cycle, but rather in a growth rate cycle slowdown, at best, and that, in the bigger picture of 1) Still recovering from the Great Recession and Global Financial Crisis of 2007-2012, as well as also navigating what now appears to be a world economy on the cusp of yet another Global Recession 2016 Edition.

So, yes, while I completely buy the premise that most of the time falling oil is a net plus, I strongly question the premise that these falling, rather, collapsing oil and commodities prices in this broader context of an incipient Global Recession and a still rather large US GDP Gap left in the wake of the Great Recession (ergo, not merely a recession but an outright economic Depression by any reasonable definition), leaves just the normal oil producing region at risk of outright recession. Texas, as a stand-alone, is the 12th largest economy in the whole world, and it is clearly sliding into recession now.
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Can US Recession Even be Avoided w/o Texas?

Texas alone has as about the same size economy as Canada, or Australia, or Russia!

Manufacturing activity in Texas contracted the most since the depths of the Global Financial Crisis, with the headline General Business Activity Index falling to a super recessionary -34.6 this month, vs consensus forecasts of about -14.5

January is the 13th consecutive month in contraction. The last time Texas saw a longer run of back-to-back contractions in its index was 08-09, with a grand total of 25 months in contraction during the Great Recession - which, it shouldn't go without reminding, was not just a US Recession - but an entire worldwide economic meltdown.

Looking out ahead, the Texas Business outlook also tumbled deeper in the red, at -19.5, compared to -10.5 in December. Survey respondents pointed to the collapsing oil prices, slumping stock market, and the strong dollar as the three biggest culprits to statewide weakness.

Texas Leading Index (last updated for Nov 2015) strongly flagged a coming US Recession alert. Texas leads the nation in...

Posted by Recession Journal on Monday, January 25, 2016

Some Texas Stats
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US Gas Under a Dollar a Gal. ?


How Low Can You Go
Gasoline prices continue to plummet, and one of our Facebook Recession members found this station in Texas now at $1.35/gal ~ But get this! In one part of Michigan, several competing stations were already coming in with GAS UNDER A DOLLAR ... Well under a dollar! Gas prices in Houghton Lake, Michigan, fell below 50 cents over the MLK weekend. (Story)

$1.35 in Texas! What's the lowest you've found so far and where?

Posted by Recession Journal on Monday, January 25, 2016
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Markets in store for a "Thundering Reset"

Stockman: "I think we have a dead cat bounce in no-man's-land" David Stockman on the 'EPIC' debt-deflation bubble he believes is now unraveling.

Posted by Recession Journal on Sunday, January 24, 2016
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More than 3 million people will become unemployed worldwide in the next two years, making existing jobs vulnerable and fuelling potential social unrest as the global economy slows, a report warns.

The International Labour Organization predicts unemployment will rise by about 2.3 million this year to 199.4 million, and that 1.1 million will be added to the global count in 2017, taking joblessness to more than 200 million for the first time on record.

The ILO, a UN agency focused on labour standards and social protection, said the effects of last year’s economic slowdown would play out in higher unemployment in 2016, particularly in Asia, Africa, Latin America and the Middle East.

Developing markets in those areas will bear the brunt of increased joblessness after the prices of oil and other commodities tumbled in response to slowing growth, the ILO said in its World Employment and Social Outlook report for 2016.

The ILO released the forecasts as the global financial elite gathered in the Swiss ski resort of Davos for the World Economic Forum’s annual meeting. The event takes place as oil prices hover near 13-year lows below $30 a barrel, share prices tumble and analysts try to determine the impact of China’s slowing economy.

Raymond Torres, one of the report’s authors, said market turmoil at the start of 2016 meant his already gloomy predictions could prove overoptimistic. The International Monetary Fund cut its global growth forecast on Tuesday.

“There are risks and they are mainly on the downside,” Torres said. “We don’t know the exact dimensions of the slowdown in China. The labour market impact is one of the unknowns because we are going into uncharted territory.”

The ILO said oil producers such as Brazil, Nigeria and Russia could suffer social instability as unemployment rose. Brazil has experienced bouts of protest and social disorder in response to spending cuts, tax rises and joblessness.

Torres said: “In these countries, there are shrinking budgets for social protection, food subsidies and so on. When measures like this are taken, it can fuel social tensions.”

Unemployment fell last year in developed economies, but the global total of 197.1 million remained 27 million higher than in 2007, before the financial crisis.

Torres said the expected rise in unemployment to 200 million was coupled with increasing insecurity, as solid jobs are replaced by unstable work in developing and developed countries.

“It’s not just unemployment – underemployment is going in the same direction. There are lower participation rates in India but also in the US, where people have dropped out of the labour market, and also in the UK, where for some groups there is low participation.”

The ILO research showsthe UK is one of the stronger countries for employment. Britain’s unemployment rate of 5.2% in October 2015 was the lowest since January 2006. The number of young people not in education, unemployment or training was at an eight-year low and prospects look positive for job creation, it concludes.

But Torres said poor quality, unstable jobs remained a problem for the UK and that welfare changes needed to maintain support for people struggling to find work. Low-paid, insecure jobs weaken the economy by reducing the living standards of those most likely to spend money, he said.

Guy Ryder, the ILO director general, said: “Many working women and men are having to accept low-paid jobs, both in emerging and developing economies, and also increasingly in developed countries. Despite a drop in the number of unemployed in some EU countries and the US, too many people are still jobless. We need to take urgent action to boost the number of decent work opportunities or we risk intensified social tensions.”

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Almost two in three Americans don't have enough savings to pay for a $500 car repair or a $1,000 emergency room bill, according to a new Bankrate report.

Only 37% of U.S. adults have enough savings to pay for these unexpected expenses. 23% would reduce their spending on other things to make ends meet, 15% would use credit cards and another 15% would borrow from family or friends.

Americans are most likely to part with restaurant meals when money gets tight: 58% are very or somewhat likely to cut back this year in order to save money. They would have a much harder time reducing their spending on alcohol (just 35% are very or somewhat likely to trim their spending in this area, the lowest of the five choices that were offered).

46% are very/somewhat likely to decrease their cable/satellite TV expenses, 41% plan to spend less on coffee and 39% are aiming for lower cell phone costs.

While savings predictably increase with income and education, even 46% of the highest-income households ($75,000+ per year) and 52% of college graduates lack enough savings to cover a $500 car repair or $1,000 emergency room visit.

via Undernews
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United States Recession

The question as to whether or not there will be a US Recession has been garnering more and more buzz lately. "Recession in the United States" or "US Recession" are indeed fast becoming headlines. But the picture is more nuanced than a simple yes, there will be a US Recession, or not, and anyone focusing on the "technical definition of recession" is sorely missing the point.

Right now, it is easy enough for most economic statisticians to point to things like the unemployment rate, initial unemployment claims, new home sales and even GDP, and, with good numbers to back them up, proclaim that the US is far from being in recession. Or is it?

This has been an a perennial problem among economists, and by extension, the press that reports on what they say. The crux of the problem is this: the data that these economists use to determine the current state of the US economy, and thereby make an estimation of whether or not there is even a hint of US recession, are subject to very large revisions, sometimes even years later.

So right now, ask yourself, "Is the US in a recession" - or even "Is the US entering a recession" ... or "Is the US at risk of recession" - Maybe the real answer lies with the old adage, "If it walks like a duck..."
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Below was originally posted at Crazy Eddie's Motie News on January 14, 2016.

I bragged about a forecast that came true in Michigan has the cheapest gas in the U.S.

I opened Regular falls below $2.00 in metro Detroit before Thanksgiving as predicted by forecasting that gas would fall to $1.75 by Christmas, either as the average price in my old neighborhood as as the Detroit average from GasBuddy. The first happened this weekend as the price in my old neighborhood was $1.69 at all three stations on Tuesday. The second nearly happened, as the average was $1.79 Tuesday morning and is $1.78 now. I'll claim credit for being right 23 days early.

I ended with a weak prediction that "Limbo Kitty might be getting quite a workout this winter." So far, that hasn't happened, at least for gasoline, as the cheapest I've seen the stations in my old neighborhood since was $1.73 on Tuesday when I filled up Pearl, and the Detroit average never quite hit $1.75.Oil, however, was another story.Collapse )
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The 0.1%’s Marie Antoinette Moment

Posted on January 21, 2016 by Yves Smith

When you think you’ve seen everything imaginable in the “shameless” category, count on someone in finance to reach a new low.

The latest example comes from Davos. Private equity billionaire, Blackstone’s Steve Schwarzman is famed for his spending ($6 million 60th birthday party) and verbal excesses (comparing a proposal to end the carried interest tax loophole that made him super rich as opposed to merely rich to Hitler invading Poland). But those have either been to gratify his outsized ego or to defend his money machine. And although extreme, Schwarzman is hardly alone. In fact, Wall Street throwing tantrums over even small-potatoes threats to its profits is part of the new normal.

But Schwarzman at Davos has revealed himself to be utterly out of touch. His remarks in a Bloomberg interview:

“What’s remarkable is the amount of anger, whether it’s on the Republican side or the Democratic side. Bernie Sanders to me is almost more stunning than some of the stuff going on on the Republican side, How is that happening, why is that happening? What is the vein in America that is being tapped into across parties that’s made people so unhappy? That’s something you should spend some time on.”

For someone whose major business consists of investing in real-economy businesses, that’s an astonishing admission of cluelessness. Schwarzman is undeniably a fine actor; you have to be to get to the top of his heap. Yet his tone of voice, as well as the cluelessness of his remarks, say he is genuinely perplexed. Haven’t people like him managed to create the best of all possible worlds? Why doesn’t everyone see that?

Read his statement again, or listen to the segment. “What is the vein…that is being tapped into…that is making people so unhappy?” has a bizarre lack of agency. And it also suggests that the the unhappiness is somehow being created or cultivated aso opposed to is a long-standing, genuine sentiment that has finally found political outlets. As Clinton said, “It’s the economy, stupid.” Yet Schwarzman blandly intimates that populists on both sides of the aisle have managed to stir up such malcontent. Something must have failed on the messaging front.

And that’s before getting to the fact that his remarks confirm what clued-in Americans know well: the top wealthy lead lifestyles that are so disconnected from the rest of the public that they are dangerously out of touch. And elites who think they can remove themselves from the societies on which their lifestyles depend at no risk are kidding themselves. Despite their greater ability to put themselves at a class remove, the considerable interdependencies of our modern world means they can’t achieve real independence. They need chips, medical care, food, and other necessities. Yes, in an extreme scenario, they might be able to lay up supplies to last for years against the scenario that some of the more paranoid, like Pierre Omidyar, are worried about, that of an uprising. But most of them hope to live longer than that.

Their best protection for the 0.1% is more engagement in the societies that have provided them with their lucre, and on which they ultimately depend, as much as they’d like to deny that. Yet most of them conceive the whole point of winning as circulating only in the most exclusive circles and being able to treat everyone else as inferiors. You can see that in Schwarzman’s interaction: he can’t refrain from giving the Bloomberg reporter an assignment to figure out why the natives are restless. But he’s a big part of the problem, if not the problem. Exactly how many jobs and even companies have been lost, and wages and pensions have been cut, to fatten his bank account? Does he truly not get it, or does he somehow think that if people like him say the right thing, the anger will go away? He’s not going to get the caliber of information he needs to penetrate his bubble even if he were to hire someone to investigate. Guys like Schwarzman are incapable of getting past their preening self-regard, and that blindness puts them at risk.

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January 22, 2016
from Norbert Häring

A central bank governor in Athens conspires with the President of the Republic to sabotage the negotiation strategy of his government to weaken it in its negotiations with the European Central Bank. After the government has capitulated, this governor, who is a close friend of the new finance minister and boss of the finance ministers wife, and the President of the Republic travel together to the ECB to collect their praise and rewards. This is not an invention, this is now documented.

On 19 January the German Central Bank in Frankfurt informed the media that the Greek President Prokopis Pavlopoulos visited the ECB and met with ECB-President Mario Draghi, and that he was accompanied by the President of the Greek central Bank, Yanis Stournaras.

Remember. When the Syriza-led government in Athens was in tense negotiations with the European institutions, the ECB excerted pressure by cutting Greek banks off the regular financing operations with the ECB. They could get euros only via Emergency Liquidty Assistance from the Greek central bank and the ECB placed a strict limit on these. Finance minister Yanis Varoufakis worked on emergency plans to keep the payment system going in case the ECB would cut off the euro supply completely.

It has already been reported and discussed that a close aide of Stournaras sabotaged the government during this time by sending a memo to a financial journalist, which was very critical with the governments negotiation tactics and blamed it for the troubles of the banks, which the ECB had intensified, if not provoked.

A few days ago, Stournaras himself exposed a conspiracy. He bragged that he had convened former prime ministers and talked to the President of the Republic to raise a wall blocking Varoufakis’ emergency plan.

In retrospect it looks as if Alexis Tsipras might have signed his capitulation to Stournaras and the ECB already in April 2015, when he replaced Varoufakis as chief negotiator by Euklid Tsakalotos, who would later become finance minister after Varoufakis resigned. In this case the nightly negotiating marathon in July, after which Tsipras publicly signed his capitulation, might just have been a show to demonstrate that he fought bravely to the end.

Why would I suspect that? Because I learned in a Handelsblatt-Interview with Tsakalotos published on 15 January 2016 that he is a close friend of Stournaras. Looking around a bit more, I learned that Tsakalotos wife is “Director Advisor” to the Bank of Greece.

This is the Wikipedia entry:

„Heather Denise Gibson (Greek: Χέδερ Ντενίζ Γκίμπσον; born in Glasgow) is a Scottish economist currently serving as Director-Advisor to the Bank of Greece (since 2011). She is the spouse of Euclid Tsakalotos, current Greek Minister of Finance.”

At the time she entered, Stournaras was serving as Director General of a think tank of the Bank of Greece.

The friendship of the trio goes back decades to their time together at a British university. They even wrote a book together in 1992. (Heather D. Gibson, Yannis Stournaras, Euclid Tsakalotos: The Real and Financial Sectors in Southern Europe: Catch-up, Convergence and Financial Institutions, University of Kent, Canterbury 1992.)

Thus: The former chief negotiator of the Greek government is and was a close friend of the central bank governor and the central bank governor was the boss of his wife. The governor of the Bank of Greece, which is part of the Eurosystem of central banks, gets his orders from the ECB, i.e. the opposing side in the negotiations. He actively sabotaged the negotiation strategy of his government.

If this does not look like an inappropriate association for a chief negotiator, I don’t know, what would.
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Recession 2016 Stock Markets

Worst-Ever New Year Start for Stock Markets
Major markets around the world, including the supposedly more resilient United States, have been hit with the worst first few weeks of trading in a new year - ever. These stock market falls could be indicating a brutal slowdown and correction, imminent global recession, or worse.

Almost nowhere is this more visible than in the Emerging Market

Above: The MSCI Emerging Markets Index has fallen more than 12 percent this year, the most since data started in 1988. Credit: Bloomberg
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Q4 US GDP Estimates Falling Like a Rock

Recession 2016

Has it already begun?

Early calls for the just completed fourth quarter of 2015 have been coming down from a pre-quarter consensus forecast of about 2.7% growth, to an estimate now under 1%. No one heavyweight is yet expecting a negative print for the quarter as a whole, but early indications are that we have had at least one or two months during the final quarter in outright contraction, with only one to two months experiencing modest growth, at best.

GDP Growth Estimates Fall
CNBC's Steve Liesman discusses the declining estimates for Q4 GDP
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Recession 2016 Update


No two recessions are ever exactly alike, and history does not repeat itself, but it does rhyme.

While some of the indicators of recession that are most closely watched are not flagging recession, those very same indicators are often the most revised, as new data comes in. In fact, on things such as GDP, GDI and employment data, large, sweeping revisions (up or down) are made months, even years later. That's because a huge chunk of the early estimates are made up of 'expected' results. In other words, the hard data is not actually yet in, but the results of the past several months or years are merely extrapolated and plugged in to the initial reports. You read that right.

There are, however, other recession indicator series that are far less subject to revisions, because the numbers are, for the most part, real-time. The most reliably up-to-date of these is arguably Industrial Production, and it is not looking good - not. at. all.

YoY US Industrial Production Has Never Fallen This Low Outside of Recession

Image credit: Dshort.com
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Welcome back to The Recession!

It's been a while. You may have felt that recovery these past seven years. Pretty good, huh? All vested in those stocks? Enjoying the spreading of wealth? Part of the 1%, yes?


Leading, and now a growing chorus of coincident indicators, are flagging a new Global Recession in 2016. Now to the US's credit, we have indeed seen a record duration of consecutive private sector jobs growth, and that is nothing to complain about. Unless of course you consider that a startling large percentage of this job growth has been in minimum wage, or just-above-minimum-wage positions. Also, as ECRI keeps pointing out, a large number of these counted 'full-time' employees are actually workers who have 'cobbled together' enough part-time gigs to add up to 35 or more hours a week story. And at eight fucks an hour, it's a pretty safe bet that a lot more than 35 hours are being totaled up, somehow, someway, for anyone that wants to not live in a cardboard box on the corner of Hope and Less.

But, not you. You've been living on the corner of Wall and Street, and I'm sure every day lately as you've watched as your offshore accounts rocket to new highs, you plan out your next vacation, perhaps in your Davos summer 4000 sq foot cabin. Bravo!

US Federal Reserve Plans to Give Everyone Raises in 2016!
Sarcasm aside, it is a more treacherous time than we have maybe seen in the last five years, and possibly longer. Good thing the Yellen Fed has more incremental raises planned for your wallet in this time of plenty!

The List of Recession 2016 Calls Keeps Growing
The list of forecasts for recession in 2016 is growing, and growing, and growing, and definitely not just from the doomers and permabears, either. Here's a sampling:

Citibank: China leading world towards global economic recession
A brutal slowdown across emerging markets will hurl the global economy into a fresh recession

(Article from The Telegraph) A “hard landing” for the Chinese economy will likely lead the world into a recession in the next year, Citi’s global economics team has warned.

Analysts at the Wall Street bank believe that a slowdown concentrated in emerging markets will drag down demand and see economic activity fall well below its potential across the world.

They anticipate the global economy to slide into recessionary territory (in 2016), and remain there for most of 2017.
Full story here

RBS:'Sell everything' as deflationary crisis nears
Clients told to seek safety of Bunds and Treasuries. 'This is about return of capital, not return on capital. In a crowded hall, exit doors are small'

(Article from The Telegraph) RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel.

The bank’s credit team said markets are flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008. “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note." Full story here

SocGen's Edwards: S&P will plunge 75% on China deflation
(Article from CNBC) A falling Chinese yuan will unleash a wave of global deflation that will send the U.S. into its next recession and pull the S&P 500 back down to 550 points, according to a strategist at Societe Generale." Full story here

David Levy: Global recession intensifying and engulfing the world’s economies
(Article from Barron's) Although the U.S. economy is in pretty good shape, it doesn’t have enough strength to fend off weakening fundamentals elsewhere, particularly in the emerging markets... And he worries that China will have a very tough time making a soft landing as it tries to refocus. Full story here.
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Shadow Stats - We Are in a 'NEW RECESSION'

Greg Hunter of USAWatchdog.com interviews John Williams of ShadowStats.com...

At the beginning of 2015, economist John Williams predicted the U.S. economy would continue to slow down to stall speed, but it is much worse than that. Williams explains, “I’ll contend we’re in a new recession and recognized likely to be timed from December of 2014. . . . The downturn in 2007 wasn’t recognized until the end of 2008. I think by the end of this year, people will recognize the economy turned down in December of 2014. I’ll tell you why I say that. There are a couple of very solid leading indicators . . . of the broad economy. One is industrial production. Industrial production contracted in both the 1st and 2nd quarter of this year. Those are the official numbers out of the Federal Reserve. Estimations for industrial production are for continued contraction. Industrial production used to be the GDP measure. . . . Retail sales contracted in the first quarter, adjusted for inflation. Year over year growth have dropped to levels you only see in a recession. It’s the same thing again with industrial production.”

The Whole Shebang...& VIDEO...
This recession related topic is being discussed in the_recession
Journal of US and Global Recessions at RecessionJournal.com

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German exports and imports fell even further in August, and in case you were wondering, this was during the month prior to the start of the Fartandlyin scandal that is stinking it to Germany's entire automotive industry right now.

From The Irish Times

German exports fall at fastest pace since financial crisis

Exports and imports post steepest drops in years as weakness in China drags trade back

German exports plunged in August by their largest amount since the height of the global financial crisis and imports also fell sharply in the latest sign that Europe’s largest economy is feeling the pain from a slowdown in emerging markets.

Data from the Federal Statistics Office showed seasonally-adjusted exports sliding by 5.2 per cent to €97.7 billion month-on-month, the steepest drop since January 2009. Imports tumbled by 3.1 pe rcent to €78.2 billion, the biggest one-month decline since November 2012...
This recession related topic is being discussed in the_recession
Journal of US and Global Recessions at RecessionJournal.com

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Recession Journal
█▓▒░ The Recession ░▒▓
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Welcome to

Welcome visitors, members one and all! We hope you find this site as informative, useful and entertaining as we do!

If you haven't done so already, please take a moment to review the couple of guidelines we have in place by clicking on the The Recession Profile. From the main profile page you can also familiarize yourself with the many websites and resources members have recommended since this community started. Some of our personal favorites include Calculated Risk, Economic Cycle Research Institute & Jeffrey Frankel's Blog.

You may also want to participate in our LiveJournal Global Economic Poll - "The Economy Around The World: A Real Live Journal Global Poll" .

Archived entry: {As the economies around the world teeter once again, with many already having slipped into "Growth Recession" if not outright technical recession, and with many more looking at the real possibility of outright recession in 2012 and 2013, "the recession" in 2011 was seeming mild by way of comparison to what could be lurking just around the corner.

Will "Recession 2012" look as bad as "The Great Recession" of 2007-2009? Could we skirt by this time without a full-on economic death spiral? Will the economy get better by election day? Or will Obama lose the election for economic reasons? (Presidential elections are usually won or lost for base economic reasons in this country, after all).

Stay tuned. I think it's fair to say that it is going to continue to be a pretty wild ride for the world economy for some time to come.}

Recession 2021
Great Recession 2021
Kondratiev Wave Theory

If a certain economic theory is correct, the US may experience a very greatest recession yet starting in late 2015 or 2016 and finally troughing out by around 2021. If and when this great recession bottoming out in 2021 does occur, it would, by this theory, bring "Spring" anew from the depths of the "Winter" phase.

As noted in Wikipedia:
"Kondratiev identified three phases in the cycle: expansion, stagnation, and recession. More common today is the division into four periods with a turning point (collapse) between the first and second phases. Writing in the 1920s, Kondratiev proposed to apply the theory to the 19th century:

1790–1849 with a turning point in 1815. 1850–1896 with a turning point in 1873. Kondratiev supposed that, in 1896, a new cycle had started.

The long cycle supposedly affects all sectors of an economy. Kondratiev focused on prices and interest rates, seeing the ascendant phase as characterized by an increase in prices and low interest rates, while the other phase consists of a decrease in prices and high interest rates. Subsequent analysis concentrated on output."

Kondratiev's ideas were seriously out of favor with the Soviet government and he was sent to prison, and later death in 1938.

In 1939 Joseph Scheumpeter put forth renaming the cycles identified by Kondratiev as "Kondratieff Waves," to honor him.

If Kondratiev's wave theory is the least bit valid, we should expect to be seeing it play out over the next few years, before finally bottoming out around 2021 after having devoured the United States in a truly great and deep recession. We'll be watching...

Recession 2016
Recession 2016? Did the Great Recession end in the first place? Many think not.

Could Kondratiev be right?

The US economy began slowing down markedly in 2015, reflecting contagion and knock-on effects from the troubled global environment and collapsing world trade.

In 2016 recession is now on the lips of people, everywhere. The situation is starting to look increasingly dire. More and more businesses, and now more consumers, are looking to save money wherever they can.

US Weekly Leading
Economic Index

risk of recession graph
RecessionAlert.com WLI

6-Month US Recession Probabilities Outlook

risk of recession 2016 chart

State Coincident Index
3-Month Change

As of Dec 2015

Was your state in expansion or recession last year?
Green: Growing
Gray: Flat
Red: Contracting


Crude Oil 1Yr Chart

What is the
definition of recession?

According to the laypress, and even many economists, a recession is defined as two consecutive quarters of negative GDP (Gross Domestic Product). While this very simple definition is usually the case during recessions, it is not always so.

Most experts now acknowledge that GDP alone is an insufficient determinant of recession.

For one, GDP is often revised several quarters - even years - later, as more complete information becomes available that changes the components of the earlier, initial GDP estimates in what can be very substantial ways.

For another, not all serious downturns exact as serious a toll on GDP. Often, the decline is much more pronounced in GDI (Gross Domestic Income) and/or employment. If the income or employment of a nation is undergoing a pronounced, pervasive and prolonged decline even if for whatever various reasons its GDP may be holding up, is it not foolish to deny that a recession is underway?

For these reasons and others, the NBER (National Bureau of Economic Research), the official arbiter of recessions and expansions in the United States, determines whether or not the US has fallen into recession using a much more holistic approach.

As the NBER explains it:
Q: The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to the NBER's recession dating procedure?

Most of the recessions identified by our procedures do consist of two or more quarters of declining real GDP, but not all of them. In 2001, for example, the recession did not include two consecutive quarters of decline in real GDP. In the recession beginning in December 2007 and ending in June 2009, real GDP declined in the first, third, and fourth quarters of 2008 and in the first quarter of 2009. The committee places real Gross Domestic Income on an equal footing with real GDP; real GDI declined for six consecutive quarters in the recent recession.

Q: Why doesn't the committee accept the two-quarter definition?

The committee's procedure for identifying turning points differs from the two-quarter rule in a number of ways. First, we do not identify economic activity solely with real GDP and real GDI, but use a range of other indicators as well. Second, we place considerable emphasis on monthly indicators in arriving at a monthly chronology. Third, we consider the depth of the decline in economic activity. Recall that our definition includes the phrase, "a significant decline in activity." Fourth, in examining the behavior of domestic production, we consider not only the conventional product-side GDP estimates, but also the conceptually equivalent income-side GDI estimates. The differences between these two sets of estimates were particularly evident in the recessions of 2001 and 2007-2009.

Q: How does the committee weight employment in determining the dates of peaks and troughs?

In the 2007-2009 recession, the central indicators–real GDP and real GDI–gave mixed signals about the peak date and a clear signal about the trough date. The peak date at the end of 2007 coincided with the peak in employment. We designated June 2009 as the trough, six months before the trough in employment, which is consistent with earlier trough dates in the NBER business-cycle chronology. In the 2001 recession, we found a clear signal in employment and a mixed one in the various measures of output. Consequently, we picked the peak month based on the clear signal in employment, as well as our consideration of output and other measures. In that cycle, as well, the dating of the trough relied primarily on output measures.

Q: Isn't a recession a period of diminished economic activity?

It's more accurate to say that a recession–the way we use the word–is a period of diminishing activity rather than diminished activity. We identify a month when the economy reached a peak of activity and a later month when the economy reached a trough. The time in between is a recession, a period when economic activity is contracting. The following period is an expansion. As of September 2010, when we decided that a trough had occurred in June 2009, the economy was still weak, with lingering high unemployment, but had expanded considerably from its trough 15 months earlier.

What is a
"Double Dip Recession"?

In the most general sense a Double Dip Recession occurs when an economy falls back into contraction for at least a couple of months (usually at least six) after a relatively brief expansion.

By this definition, the recession of 1981-82 which followed a year-long expansion after the very short, two quarter's long 1980 recession, seems to qualify. Also by this broad definition, the 1937 recession that occurred four years after the end of the 1929-1933 recession also qualifies. While each of those were technically "new" recessions, they happened so soon after their predecessors that many people tend to think of the separate 1980 & 1981-82 recessions as one nasty, long recession. Similarly, most people think of the 1929-1933 & 1937 recessions as encompassing "The Great Depression."

Another definition of a "Double Dip Recession" would be that of a recession which technically has not ended, and was only punctuated by a quarter or twos worth of head-fake rise in GDP. Many recessions throughout history have had such false hopes, only to swoon back down into contraction, until they finally came to an end.

List of Recessions:
Post-1900 US Recessions

Mo/Yr Started Duration
Sep 1902 - 23 Months
May 1907 - 13 Months
Jan 1910 - 24 Months
Jan 1913 - 23 Months
Aug 1918 - 7 Months
Jan 1920 - 18 Months
May 1923 - 14 Months
Oct 1926 - 13 Months
Aug 1929 - 43 Months
May 1937 - 13 Months
Feb 1945 - 8 Months
Nov 1948 - 11 Months
Jul 1953 - 10 Months
Aug 1957 - 8 Months
Apr 1960 - 10 Months
Dec 1969 - 11 Months
Nov 1973 - 16 Months
Jan 1980 - 6 Months
Jul 1981 - 16 Months
Jul 1990 - 8 Months
Mar 2001 - 8 Months
Dec 2007 - 18 Months

What is
Gross National Happiness (GNH)?

An alternate measure of a nation's wealth was conceptualized several decades ago as a means of cutting through the overemphasis on materialism of traditional wealth measures, and seeing the bigger picture.

According to GNHUSA.Org

  Gross National Happiness (GNH) is an indicator developed in Bhutan in the Himalayas, based on the concept elaborated in 1972 by the then King Jigme Singye Wangchuck. Since then, the kingdom of Bhutan, with the support of UNDP (UN Development Program), began to put this concept into practice, and has attracted the attention of the rest of the world with its new formula to measure the progress of a community or nation.

GNH is based on the premise that the calculation of "wealth" should consider other aspects besides economic development: the preservation of the environment and the quality of life of the people. The goal of a society should be the integration of material development with psychological, cultural, and spiritual aspects - all in harmony with the Earth.

The Four Pillars of GNH

  • the promotion of equitable and sustainable socio-economic development
  • the preservation and promotion of cultural values
  • the conservation of the natural environment, and
  • the establishment of good governance.


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