Fears grow of repeat of 2008 financial crash

[San Lumen]

The world economic collapse is coming!

The US should default on its debt and bring risk into treasury bonds and end the ridiculousness that the world financial infrastructure is built around it.

[USS Monitor]

Like the football team? No wonder it's been having so many problems. Everyone knows football players aren't smart enough to run the economy.

Are the members of this football team named JD, AL, TR, and TJ?

I have no idea. I don't watch football. I was making a stupid joke about the New England Patriots. What are you talking about?

[Samnoreg]

I don't know if it's just me thinking this, but the cycle of variable growth and panicky crisis is a bit of an odd way to keep an economy. Sure, there'll be good times and bad, but crisis capitalism shouldn't be the rule of the day.

[Arkinesia]

Is there a massive bubble in any given sector? No? Then it won't be a repeat of 2008 and no one with sense should suggest it is.

Yeah, it will just be a stock market correction, nothing more most likely. It happens.

[Arkinesia]

I don't know if it's just me thinking this, but the cycle of variable growth and panicky crisis is a bit of an odd way to keep an economy. Sure, there'll be good times and bad, but crisis capitalism shouldn't be the rule of the day.

It will keep going like this until interest rates are bumped up. This Keynesian notion that short-term interest rate cuts are a long-term economic plan is clearly untrue.

[Greed and Death]

Is there a massive bubble in any given sector? No? Then it won't be a repeat of 2008 and no one with sense should suggest it is.

Maybe in energy, but unlike housing once that hits the depleted prices tend to drive economic activity.

[U n i t y]

There is no bubble in America. However, there are bubbles in China now. The Great Recession was made in America. The next one will be made in China. Your right, America is relatively stable right now. However, China is accruing too much unsustainable debt.

[Lancaster of Wessex]

2008 was brought on by Lehman Brothers as a domestic shock to the US that spread shockwaves globally. This time around it's largely foreign stimuli that are affecting the markets, namely China obviously and the collapse in oil prices. China still has impressive growth, albeit apparently set for the lowest in 25 years, but it's still outpacing the Western world. If OPEC would get its head out of its ass and cut production - which I doubt they'll do - oil too could stabilize. I don't think we're set for a repeat of 2008 quite yet, but things could change if there are international crises, e.g.

I also don't see the Fed raising rates again for a while in such a tumultuous environment.

[Rusozak]

Kind of a broad poll question. There's going to be another recession some day. It's just the nature of a capitalist system. But I don't think it's going to happen anytime in the next year unless some unforeseeable event happens that triggers a tidal wave of economic chaos.

[U n i t y]

2008 was brought on by Lehman Brothers as a domestic shock to the US that spread shockwaves globally. This time around it's largely foreign stimuli that are affecting the markets, namely China obviously and the collapse in oil prices. China still has impressive growth, albeit apparently set for the lowest in 25 years, but it's still outpacing the Western world. If OPEC would get its head out of its ass and cut production - which I doubt they'll do - oil too could stabilize. I don't think we're set for a repeat of 2008 quite yet, but things could change if there are international crises, e.g.

I also don't see the Fed raising rates again for a while in such a tumultuous environment.

The low growth in China has spooked global markets. What I am concerned about is not the low growth in China but the debt used to achieve that growth. China's debt is growing far faster than America's debt did before the Great Recession. Debt causes recessions. China's debt is also massive compared to GDP. Also, China is spending four -ten dollars of debt to achieve just one dollar of growth. That is completely unsustainable! Saudi Arabia has raised oil production to put Iran and the US out of business in the oil business. Its working too.

The Fed, in my opinion, will be raising rates still because the US economy is still going strong.

[Lancaster of Wessex]

2008 was brought on by Lehman Brothers as a domestic shock to the US that spread shockwaves globally. This time around it's largely foreign stimuli that are affecting the markets, namely China obviously and the collapse in oil prices. China still has impressive growth, albeit apparently set for the lowest in 25 years, but it's still outpacing the Western world. If OPEC would get its head out of its ass and cut production - which I doubt they'll do - oil too could stabilize. I don't think we're set for a repeat of 2008 quite yet, but things could change if there are international crises, e.g.

I also don't see the Fed raising rates again for a while in such a tumultuous environment.

The low growth in China has spooked global markets. What I am concerned about is not the low growth in China but the debt used to achieve that growth. China's debt is growing far faster than America's debt did before the Great Recession. Debt causes recessions. China's debt is also massive compared to GDP. Also, China is spending four -ten dollars of debt to achieve just one dollar of growth. That is completely unsustainable! Saudi Arabia has raised oil production to put Iran and the US out of business in the oil business. Its working too.

The Fed, in my opinion, will be raising rates still because the US economy is still going strong.

I don't think debt is the sole cause of recessions, but it certainly would exacerbate things.

I can't see the Fed raising rates too much or for too long if they're one of the only central banks in the West doing so. It'll push the dollar up too high making, as you know, US exports less and less competitive to buy.

[Kelinfort]

Is there a massive bubble in any given sector? No? Then it won't be a repeat of 2008 and no one with sense should suggest it is.

Maybe in energy, but unlike housing once that hits the depleted prices tend to drive economic activity.

Also, there may be a lot of people who work in oil extraction and refining, but the total economic impact of them losing their jobs is far less than a significant amount of home owners defaulting on their mortgages.

[Geilinor]

Is there a massive bubble in any given sector? No? Then it won't be a repeat of 2008 and no one with sense should suggest it is.

Maybe in energy, but unlike housing once that hits the depleted prices tend to drive economic activity.

The decline in energy prices caused a recession in Canada but we'll be fine. Energy is only a small part of our economy.

[Lancaster of Wessex]

Maybe in energy, but unlike housing once that hits the depleted prices tend to drive economic activity.

The decline in energy prices caused a recession in Canada but we'll be fine. Energy is only a small part of our economy.

It was a technical recession but it was extremely brief. We are, however, being pounded by said low energy prices with our dollar reaching decade plus lows...

[New Chalcedon]

even the capitalist economics admit that capitalism operations on a cycle of growth and recession. the communists say the collapses will get progressively closer together and worse. death is certain.

I have studied basic Keynesian economics. I understand the method. I think it will get worse and worse but each boom will be smaller. I just though the boom would be bigger.

Keynesian economics doesn't postulate this scenario.

Secondly, the US debt crisis caused by oil prices this low is really more a hard recession in oil shale areas of Texas and North Dakota.

What US debt crisis? Seriously, the 10-year TIPS yield is still only 0.7%, meaning that the market thinks that US Government bonds are literally safer than houses.

Don't worry I already have enough food, water, guns and gold to survive this.

What use is gold, should things turn to a post-apocalyptic wasteland?

Not really surprising that the economy would crash again soon.

We haven't learned anything from the 2008 crash. The rich are getting richer, the poor are getting poorer and it's all business as usual.

Don't think this has something to do with the next crash on the stock market.

Not directly, no. But the key ingredient to a sustained recovery is a prosperous middle class, and that's missing. In large part, it's because wealth is so concentrated in a few pairs of hands at the top.

[Geilinor]

I don't know if it's just me thinking this, but the cycle of variable growth and panicky crisis is a bit of an odd way to keep an economy. Sure, there'll be good times and bad, but crisis capitalism shouldn't be the rule of the day.

It will keep going like this until interest rates are bumped up. This Keynesian notion that short-term interest rate cuts are a long-term economic plan is clearly untrue.

They aren't a long-term economic plan, that's why the Fed is going to raise them as circumstances allow.

[Mike the Progressive]

even the capitalist economics admit that capitalism operations on a cycle of growth and recession. the communists say the collapses will get progressively closer together and worse. death is certain.

Er. Ups and downs are necessary, even normal. It's not "death" and it has gotten better progressively.

[Greed and Death]

Maybe in energy, but unlike housing once that hits the depleted prices tend to drive economic activity.

The decline in energy prices caused a recession in Canada but we'll be fine. Energy is only a small part of our economy.

It is a little more complicated than that. And I feel a little embarrassed.

Since my quantitative finance guy calculated oil would not go below 80 dollars a barrel we actually created a securitized oil future and then we started using them for collateralize debt swaps with other banks and then these CDS were rehypothecated and yeah so bets on oil going up is actually a large part of all of our financial system now like maybe 10 or 15 trillion dollars.

But it should not worry anyone since I am sure we can get the oil prices back above 80 a barrel by next month. If not I received a large bonus that is now safely in govnerment bonds and I am a position to short the market.

[Wallenburg]

even the capitalist economics admit that capitalism operations on a cycle of growth and recession. the communists say the collapses will get progressively closer together and worse. death is certain.

Er. Ups and downs are necessary, even normal. It's not "death" and it has gotten better progressively.

I don't see how the Great Depression was necessary.

[Mike the Progressive]

Er. Ups and downs are necessary, even normal. It's not "death" and it has gotten better progressively.

I don't see how the Great Depression was necessary.

It wasn't. And it didn't start out as an economic depression. It became one the moment Hoover decided to tighten the money supply, raised taxes and increased tariffs.

[Greed and Death]

Er. Ups and downs are necessary, even normal. It's not "death" and it has gotten better progressively.

I don't see how the Great Depression was necessary.

Our response to a down in the stock market went a long way to making that depression great.

1. We mismanaged our currency which was not surprising given the central bank with less than 20 years in Existence was running the worlds currency.

2. we started a global trade war

[The Rich Port]

This is nothing like the 2008 financial crash... Like, at all.

The biggest catalyst was the crash of the housing market, which collapsed the many Collateralized Debt Obligations on the market.

CDOs are basically junk bonds, except they're gigantic groups of junk bonds all smushed together. Basically guaranteed for some portion of them to default.

They depend solely on cash flow.

Watching the tickers means nothing unless we understand what's causing the downturn.

Nothing was fixed after the 2008 crash. Banks continue to be de-regulated despite risk-taking behavior and predatory lending are still common practice.

[Greed and Death]

This is nothing like the 2008 financial crash... Like, at all.

The biggest catalyst was the crash of the housing market, which collapsed the many Collateralized Debt Obligations on the market.

CDOs are basically junk bonds, except they're gigantic groups of junk bonds all smushed together. Basically guaranteed for some portion of them to default.

They depend solely on cash flow.

Watching the tickers means nothing unless we understand what's causing the downturn.

Nothing was fixed after the 2008 crash. Banks continue to be de-regulated despite risk-taking behavior and predatory lending are still common practice.

Banks manage risk that is literally the entire point of banking to manage risk.

[Wallenburg]

This is nothing like the 2008 financial crash... Like, at all.

The biggest catalyst was the crash of the housing market, which collapsed the many Collateralized Debt Obligations on the market.

CDOs are basically junk bonds, except they're gigantic groups of junk bonds all smushed together. Basically guaranteed for some portion of them to default.

They depend solely on cash flow.

Watching the tickers means nothing unless we understand what's causing the downturn.

Nothing was fixed after the 2008 crash. Banks continue to be de-regulated despite risk-taking behavior and predatory lending are still common practice.

Banks exist to take risks with other people's money. That is their fundamental business model.

[The Rich Port]

This is nothing like the 2008 financial crash... Like, at all.

The biggest catalyst was the crash of the housing market, which collapsed the many Collateralized Debt Obligations on the market.

CDOs are basically junk bonds, except they're gigantic groups of junk bonds all smushed together. Basically guaranteed for some portion of them to default.

They depend solely on cash flow.

Watching the tickers means nothing unless we understand what's causing the downturn.

Nothing was fixed after the 2008 crash. Banks continue to be de-regulated despite risk-taking behavior and predatory lending are still common practice.

Banks manage risk that is literally the entire point of banking to manage risk.

... They don't seem to be very good at it.