Recession fears as bankers warn next global crash could arrive with a vengeance

[Hydrogen]

Great recession fears as bankers warn next global crash could arrive 'with a vengeance'

Next major recession could be brewing in countries like China, a new report warns

A new financial crisis is brewing in the emerging economies and it could hit “with a vengeance”, an influential group of central bankers has warned.

Emerging markets such as China are showing the same signs that their economies are overheating as the US and the UK demonstrated before the financial crisis of 2007-08, according to the annual report of the Bank for International Settlements (BIS).

Claudio Borio, the head of the BIS monetary and economic department, said a new recession could come “with a vengeance” and “the end may come to resemble more closely a financial boom gone wrong”.

The BIS, which is sometimes known as the central bank for central banks and counts Bank of England Governor Mark Carney among its members, warned of trouble ahead for the world economy.

It predicted that central banks would be forced to raise interest rates after years of record lows in order to combat inflation which will “smother” growth.

The group also warned about the threat poised by rising debt in countries like China and the rise in protectionism such as in the US under Donald Trump, City AM reported.

Chinese corporate debt has almost doubled since 2007, now reaching 166 per cent of GDP, while household debt rose to 44 per cent of GDP last year.

In May, Moody's cut China's credit rating for the first time since 1989 from A1 to Aa3 which could potentially raise the cost of borrowing for the Chinese government.

The BIS’s credit-to-GDP gap indicator also showed debt, which is seen as an “early warning indicator” for a country’s banking system, is rising far faster than growth in other Asian economies such as Thailand and Hong Kong.
 
The world economy is still recovering from the financial crisis and the euro crisis which followed it in 2010.

The UK is said to be experiencing a “lost decade” as productivity and wages have flatlined.

http://www.independent.co.uk/news/business/news/global-financial-crash-central-bankers-warn-back-with-a-vengeance-china-debt-gdp-ratio-a7807811.html

There's always lots of discussion about the state of the economy.

My questions right now are: can wealth be created or destroyed(contrast with Einstein's theory of relativity).

Can recession/depression be defined as the negative outcome of a substantial portion of wealth being destroyed..

If the above definition is correct, then where did all the missing wealth go?

 

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[arpon11]

The missing wealth goe to the bank account and house of elites and greedy men. You should not think that all the wealth has been destroyed because the evil create wars and famine for their evil benefits and that is what is creating this world financial crisis.

[HeRetiK]

There's always lots of discussion about the state of the economy.

My questions right now are: can wealth be created or destroyed(contrast with Einstein's theory of relativity).

Can recession/depression be defined as the negative outcome of a substantial portion of wealth being destroyed..

If the above definition is correct, then where did all the missing wealth go?

 

Wealth is created by the production of goods and the providing of services

Apart from physical destruction of wealth (eg. by wars or natural catastrophes) it's not destroyed... it rather never existed in the first place.

[deisik]

There's always lots of discussion about the state of the economy.

My questions right now are: can wealth be created or destroyed(contrast with Einstein's theory of relativity).

Can recession/depression be defined as the negative outcome of a substantial portion of wealth being destroyed..

If the above definition is correct, then where did all the missing wealth go?

Wealth can certainly be destroyed

It gets massively destroyed directly during wars (that should be self-explanatory) but even without major wars there is constant wear and tear, so wealth gets destroyed due to natural causes too, and if there is not enough new wealth created (yes, it can be created), the net effect is essentially the same. Further, productive capacities are not employed in full during recession or depression, and that amounts to wealth being destroyed as well (net effect). And if the wealth is destroyed, it doesn't go anywhere, it just gets destroyed (i.e. turns to dust and ruins, often literally, see Detroit). Regarding your definition, you are obviously confusing cause and effect

[HabBear]

Economists have been threatening recession crash for YEARS!

I'm not saying it won't happen, only that it's not news.

Ever since the US started issuing Treasuries for the US and other Governments to buy in huge quantities, they started messing with the money supply in a way that's never been done before. It kept interest rates low. But at some point all those Treasuries need to be sold or retired and that floods the market with US-based instruments which can further devalue the currency and cause a recession.

The world has never done such a monumental monkeying with the money supply, particularly the world's reserve currency (yes, it's still the Dollar). As a result major Economists are fearful of what the longer term implications will be, hence the warnings.

Information to read up on: https://en.wikipedia.org/wiki/Quantitative_easing

[Hydrogen]

Economists have been threatening recession crash for YEARS!

I'm not saying it won't happen, only that it's not news.

I think it is news.  

Many have blind faith in the government. They believe a state can spend more than they collect in taxes forever and never be negatively affected.

Ten years ago economists said if spending isn't brought under control we'll eventually have a terrible crash.

The math has always been simple. What has been difficult is convincing people to take it seriously.

[magneto]

Economists have been threatening recession crash for YEARS!

I'm not saying it won't happen, only that it's not news.

I think it is news.   

Many have blind faith in the government. They believe a state can spend more than they collect in taxes forever and never be negatively affected.

Ten years ago economists said if spending isn't brought under control we'll eventually have a terrible crash.

The math has always been simple. What has been difficult is convincing people to take it seriously.

It's funny how people say that bitcoin is a bubble right now, but compared to fiat, it is not even a bubble!

Simple logic, US and europe cannot keep going into debt just to buy stuff from China and India. Nor can china and india keep devaluing their currency so that their exports stay competitive. This is why centralized currencies never work. Governments abuse their power to fulfill short term plans without looking further ahead. When this whole thing collapses, that's when people jump ship, and switch to a decentralized economy.

As you said a lot of people think government backed = the thing to go for. Decentralization = nobody is responsible for anything, therefore, if bad things happen nobody will fix it. I really wish they can read everything about bitcoin before they speak.

[deisik]

Economists have been threatening recession crash for YEARS!

I'm not saying it won't happen, only that it's not news.

I think it is news.   

Many have blind faith in the government. They believe a state can spend more than they collect in taxes forever and never be negatively affected.

Ten years ago economists said if spending isn't brought under control we'll eventually have a terrible crash

Excessive spending (i.e. running budget deficits) has never been a problem in the way you think. It may lead to severe inflation via exuberant and uncontrolled money printing but it can't lead to a crash in the sense you mean it. Bubbles lead to such crashes while money printing in fact allows to gradually deflate them without bursting. Something to that tune happened in the US when the subprime mortgage crisis started. The Fed ran three rounds of quantitative easing to prevent this crisis from crashing the economy, and it worked out in the end. It is interesting that money itself cannot be in a state of bubble

Since prices quickly adjust to a change in the money supply

[Hydrogen]

Excessive spending (i.e. running budget deficits) has never been a problem in the way you think. It may lead to severe inflation via exuberant and uncontrolled money printing but it can't lead to a crash in the sense you mean it.

Economic crashes don't affect elites and banks much. They're too big to fail and will likely be bailed out.

Russians losing their pensions after the economic collapse of the USSR & rising death tolls caused as a result however are a good indication of how the crashes you say are "not a problem" can mean life or death for anyone who isn't filthy rich.

Unless you're a millionaire/billionaire you don't get to say economic crashes aren't a problem.

[mudiko]

Excessive spending (i.e. running budget deficits) has never been a problem in the way you think. It may lead to severe inflation via exuberant and uncontrolled money printing but it can't lead to a crash in the sense you mean it.

Economic crashes don't affect elites and banks much. They're too big to fail and will likely be bailed out.

Russians losing their pensions after the economic collapse of the USSR & rising death tolls caused as a result however are a good indication of how the crashes you say are "not a problem" can mean life or death for anyone who isn't filthy rich.

Unless you're a millionaire/billionaire you don't get to say economic crashes aren't a problem.

Crashes are a problem for anyone expect wealthy folks of conspiracy theories. Today's economy is hardly based on services and most services need demand to keep up their services fast and reliable. In a crash story services would have less costumer and would be forced to shrink. Not good services would make riches lives worst. The only positive side is that rich would be able to collect bargain assets for future enrichment, but it is not the case for the rich, which have their wealth on markets.

[pearlmen]

People will always create problem for others and the issus of wealth going somewhere unknown does not arise because its more like a zero-sum game where someone loss is another person gain which has happened in the past that the mega rich people continue getting richer while the ones that wants to join in, crashed in between. The world economy has crashed before and people still survives and sometimes I wonder if its not a figment of our own imaginations.

[iamTom123]

Economists have been threatening recession crash for YEARS!

I'm not saying it won't happen, only that it's not news.

I think it is news.  

Many have blind faith in the government. They believe a state can spend more than they collect in taxes forever and never be negatively affected.

Ten years ago economists said if spending isn't brought under control we'll eventually have a terrible crash.

The math has always been simple. What has been difficult is convincing people to take it seriously.

We are living in a world where debt can be so fashionable. Yes, debt can help when it is used to enhance more production and to stimulate the economy but there has to be a certain limit. When laws are made to extend the debt ceiling and just forget all the possible ramification, then expect bigger problems to come back in later years. Debt can be a big master.

Right now, there are already some economies destroyed due to unabashed and profligate way of spending money beyond what they can collect...they always raised taxes but sometimes they can too be counterproductive. An economy destroyed means wealth and the future of the people are also gone with it. Yes, they can be burned and reduced to ashes.

[Rahar02]

There's always lots of discussion about the state of the economy.

My questions right now are: can wealth be created or destroyed(contrast with Einstein's theory of relativity).

Can recession/depression be defined as the negative outcome of a substantial portion of wealth being destroyed..

If the above definition is correct, then where did all the missing wealth go?

 

Wealth is created by the production of goods and the providing of services

Apart from physical destruction of wealth (eg. by wars or natural catastrophes) it's not destroyed... it rather never existed in the first place.

What do you mean with never existed in the first place? If wealth describe as some precious things such as fiat money, gold, houses, cars, land, and so on, then it is exist obviously. I just don't get it.

If recession or depression happen, wealth still there on some people or outside the country. We know there are some reasons why it could happen in the first place, the most influential thing is ; the government's inability to manage finances and a lot of corruptions, then and the state debts completes it. Bank interest, debt interest make it happen.

[deisik]

Excessive spending (i.e. running budget deficits) has never been a problem in the way you think. It may lead to severe inflation via exuberant and uncontrolled money printing but it can't lead to a crash in the sense you mean it.

Economic crashes don't affect elites and banks much. They're too big to fail and will likely be bailed out.

Russians losing their pensions after the economic collapse of the USSR & rising death tolls caused as a result however are a good indication of how the crashes you say are "not a problem" can mean life or death for anyone who isn't filthy rich.

Unless you're a millionaire/billionaire you don't get to say economic crashes aren't a problem.

You seem to have misunderstood my thought completely

I don't say that crashes are good or that they can't make the lives of the majority of population miserable and destitute. They are not and they certainly can. My point is that in practice printing excessive amounts of money is not the cause of crashes. It is itself only an effect of some prior negative state in the economy, and by printing money governments are trying to fix this primary issue (e.g. the subprime mortgage crisis in the US). Whether they succeed or fail is another question, though

[pinkflower]

Dont forget South Korea's household debt is in record highs too and its a sign that their economy is weakened by this. A small nudge of a Chinese recession will also make the Asian countries economies fall like dominoes.

How does this affect BTC? Will it be a currency to buy and hold on to making the price increase or will it also lose value in the recession?

[Mometaskers]

Fortunes are made and broken all the time and you can just imagine what happen during crashes. These periodic crashes are only good if it forces the government to increase taxes on the uber wealthy but seems what's happening in previous crashes is that it just manages to squeeze the middle class down to poverty level. The more recent ones didn't affect the rich as much.

Anyway, earlier this day I was reading an article and I thought it somehow goes well with this topic.

http://www.pbs.org/newshour/making-sense/column-conquerors-inequality-four-horsemen-apocalypse/

[deisik]

Dont forget South Korea's household debt is in record highs too and its a sign that their economy is weakened by this. A small nudge of a Chinese recession will also make the Asian countries economies fall like dominoes.

How does this affect BTC? Will it be a currency to buy and hold on to making the price increase or will it also lose value in the recession?

I don't think that would bode well for Bitcoin

Obviously, it largely depends on how many people are actually involved in Bitcoin in these countries and whether they will get affected by the crashes you are talking about (they certainly will). If people's wealth gets burned, for example, due to housing market meltdown, I don't think they will be inclined to invest in Bitcoin. As to me, they will most likely be looking into less volatile assets like the US dollar

[Omega Weapon]

Excessive spending (i.e. running budget deficits) has never been a problem in the way you think. It may lead to severe inflation via exuberant and uncontrolled money printing but it can't lead to a crash in the sense you mean it.

Economic crashes don't affect elites and banks much. They're too big to fail and will likely be bailed out.

Russians losing their pensions after the economic collapse of the USSR & rising death tolls caused as a result however are a good indication of how the crashes you say are "not a problem" can mean life or death for anyone who isn't filthy rich.

Unless you're a millionaire/billionaire you don't get to say economic crashes aren't a problem.

Crashes are a problem for anyone expect wealthy folks of conspiracy theories. Today's economy is hardly based on services and most services need demand to keep up their services fast and reliable. In a crash story services would have less costumer and would be forced to shrink. Not good services would make riches lives worst. The only positive side is that rich would be able to collect bargain assets for future enrichment, but it is not the case for the rich, which have their wealth on markets.

A crash is bad for everyone including the rich, the only difference is the rich since they have an abundance of resources in the first place give the impression of not suffering because of it, but they lose wealth too, but they are protected by having different assets that helps them, gold, real estate, jewelry, businesses, the ones most affected by it are the middle class, since they are the ones that tend to lose everything.

[pinkflower]

Dont forget South Korea's household debt is in record highs too and its a sign that their economy is weakened by this. A small nudge of a Chinese recession will also make the Asian countries economies fall like dominoes.

How does this affect BTC? Will it be a currency to buy and hold on to making the price increase or will it also lose value in the recession?

I don't think that would bode well for Bitcoin

Obviously, it largely depends on how many people are actually involved in Bitcoin in these countries and whether they will get affected by the crashes you are talking about (they certainly will). If people's wealth gets burned, for example, due to housing market meltdown, I don't think they will be inclined to invest in Bitcoin. As to me, they will most likely be looking into less volatile assets like the US dollar

You are right. Cash or gold will be the more odds on favorite assets to buy and hold onto especially for less sophisticated people. But will the casual Bitcoiners buy BTC and hold onto it in search for a safety net?

Maybe some will but I doubt others will have enough belief in it.

[deisik]

Dont forget South Korea's household debt is in record highs too and its a sign that their economy is weakened by this. A small nudge of a Chinese recession will also make the Asian countries economies fall like dominoes.

How does this affect BTC? Will it be a currency to buy and hold on to making the price increase or will it also lose value in the recession?

I don't think that would bode well for Bitcoin

Obviously, it largely depends on how many people are actually involved in Bitcoin in these countries and whether they will get affected by the crashes you are talking about (they certainly will). If people's wealth gets burned, for example, due to housing market meltdown, I don't think they will be inclined to invest in Bitcoin. As to me, they will most likely be looking into less volatile assets like the US dollar

You are right. Cash or gold will be the more odds on favorite assets to buy and hold onto especially for less sophisticated people. But will the casual Bitcoiners buy BTC and hold onto it in search for a safety net?

That's not very likely

Even today, when there is no economic crisis yet (well, at least, not in the form of a crash or severe meltdown) but just escalating tensions between various groups in Bitcoin itself pursuing different and often mutually exclusive interests, we see that people lose faith in Bitcoin and don't consider it as a "safety net". It seems to me there are very little die-hard Bitcoin supporters and enthusiasts that are not going to cash out no matter what. Most folks are there just for profits, and when they feel that Bitcoin is no longer what it used to be, they will leave it without any regrets or scruples

[Thule]

You should first define what wealth is.
Paper money and bitcoin is no wealth.It can mean today wealth but tomorrow nothing.Real assets mean wealth and since paper money is going to be destroyed in a crash most people won't be able to buy in into wealth since their fiat is worthless.

[pinkflower]

You should first define what wealth is.
Paper money and bitcoin is no wealth.It can mean today wealth but tomorrow nothing.Real assets mean wealth and since paper money is going to be destroyed in a crash most people won't be able to buy in into wealth since their fiat is worthless.

Then what is wealth in your definition and what should the people be holding onto if theres an economic crisis happening? Is it real estate, gold and other precious metals? 

[craked5]

There's always lots of discussion about the state of the economy.

My questions right now are: can wealth be created or destroyed(contrast with Einstein's theory of relativity).

Can recession/depression be defined as the negative outcome of a substantial portion of wealth being destroyed..

If the above definition is correct, then where did all the missing wealth go?

 

Wealth is created by the production of goods and the providing of services

Apart from physical destruction of wealth (eg. by wars or natural catastrophes) it's not destroyed... it rather never existed in the first place.

It never existed... Or it was misplaced.
Majority of wealth that exists is sooooooo concentrated that people are using a false one.
They think money on their bank account is something real.

While bankers and big corporations are sinking in the real wealth

[deisik]

You should first define what wealth is.
Paper money and bitcoin is no wealth.It can mean today wealth but tomorrow nothing.Real assets mean wealth and since paper money is going to be destroyed in a crash most people won't be able to buy in into wealth since their fiat is worthless

I think the OP was clear that he didn't mean money or Bitcoin

Obviously, wealth is everything that provides utility and is scarce at that. The last point (being scarce) is debatable but I added it specifically to prevent futile arguments, for example, whether air is wealth or not. Strictly speaking, money is also wealth since it provides utility too, but when there is a crash money tokens representing money simply stop being money, and thus cannot be considered as real wealth. So we could define wealth as anything providing utility and which doesn't lose this utility in case of a severe economic meltdown

[audaciousbeing]

These same set of people have turned the world to what it is today and they have failed woefully after we have mortgaged our future for them to be in charge of decision making. However, I dont expect anything different afterall, I have witnessed on recession in my lifetime and it didnt kill me and several people I know. And as a consolation, I am already involved in bitcoin which was the up-shoot of their failures in the one I have witnessed so I am good to go.

[Thule]

If you look at most people in western countries everyone owns the same like a TV,Cellphone,Computer etc .....its a standard and has nothing to do with wealth since you need to "update" it every few years.Its funny that most people work just to keep them updated

[Hydrogen]

If you look at most people in western countries everyone owns the same like a TV,Cellphone,Computer etc .....its a standard and has nothing to do with wealth since you need to "update" it every few years.Its funny that most people work just to keep them updated

Reminds me of something Lewis Mumford said.

The dogma of ‘increasing wants’ as an indispensible basis for further industrial progress. Instead of the duty to work, we now have the duty to consume. To ensure rapid absorbtion of its immense productivity, megatechnics resorts to a score of different devices: consumer credit, installment buying, multiple packaging, non-functional designs, meretricious novelties, shoddy materials, defective workmanship, built-in fragility.

The aim of industry is not primarily to satisfy essential human needs with a minimal productive effort, but to multiply the number of needs, factitious and fictitious, and accommodate them to the maximum mechanical capacity to produce profits. These are the sacred principle of the power complex. Not the least effort of this system is that of replacing selectivity and quantitative restriction by indiscriminate and incontinent consumption.

--Lewis Mumford

Milton Friedman and Karl Marx are more famous than Lewis Mumford.

I can't remember either of them ever putting things into perspective the way Mumford did though.

[Palmerson]

You should first define what wealth is.
Paper money and bitcoin is no wealth.It can mean today wealth but tomorrow nothing.Real assets mean wealth and since paper money is going to be destroyed in a crash most people won't be able to buy in into wealth since their fiat is worthless

I think the OP was clear that he didn't mean money or Bitcoin

Obviously, wealth is everything that provides utility and is scarce at that. The last point (being scarce) is debatable but I added it specifically to prevent futile arguments, for example, whether air is wealth or not. Strictly speaking, money is also wealth since it provides utility too, but when there is a crash money tokens representing money simply stop being money, and thus cannot be considered as real wealth. So we could define wealth as anything providing utility and which doesn't lose this utility in case of a severe economic meltdown

If we follow your logic, then gold will also not be called wealth. It is not vital for us. Just not that easy. There are always people who have a greater number of essential goods than they need and they're willing to sell it or exchange it for something. It turns out that gold and money is also wealth.

[deisik]

You should first define what wealth is.
Paper money and bitcoin is no wealth.It can mean today wealth but tomorrow nothing.Real assets mean wealth and since paper money is going to be destroyed in a crash most people won't be able to buy in into wealth since their fiat is worthless

I think the OP was clear that he didn't mean money or Bitcoin

Obviously, wealth is everything that provides utility and is scarce at that. The last point (being scarce) is debatable but I added it specifically to prevent futile arguments, for example, whether air is wealth or not. Strictly speaking, money is also wealth since it provides utility too, but when there is a crash money tokens representing money simply stop being money, and thus cannot be considered as real wealth. So we could define wealth as anything providing utility and which doesn't lose this utility in case of a severe economic meltdown

If we follow your logic, then gold will also not be called wealth. It is not vital for us. Just not that easy. There are always people who have a greater number of essential goods than they need and they're willing to sell it or exchange it for something. It turns out that gold and money is also wealth

I don't see any contradiction, conflict or inconsistency in my point

Gold as well as money will remain wealth as long as you can exchange them for something "vital for us". This moment I specifically mentioned in my post ("money is also wealth since it provides utility too"), so it seems that you should really follow my logic through if you want to see my point. Other than that, it should be abundantly clear that gold will preserve its utility (read wealth status) long after money tokens turn to outright garbage and trash. But ultimately yes, for a man dying of hunger or thirst gold will lose any utility (unless he is able to exchange it for food or water)

[Pearls Before Swine]

They believe a state can spend more than they collect in taxes forever and never be negatively affected.

I agree with that part of what you wrote.  What's this about Einstein's relativity thing?  Don't know what you mean by that.

Wealth certainly can be destroyed, and it happens all the time.  This is not physical matter or particles or whatever.  There is no conservation of wealth.  lol
Look at any stock market crash and you'll see wealth destroyed in the blink of an eye.

[Qartersa]

-snip-

There's always lots of discussion about the state of the economy.

My questions right now are: can wealth be created or destroyed(contrast with Einstein's theory of relativity).

Can recession/depression be defined as the negative outcome of a substantial portion of wealth being destroyed..

If the above definition is correct, then where did all the missing wealth go?

 

It is not about destroying wealth. I would be more inclined to the theory that "energy is not lost, it is only transferred." The economy doesn't really lose value in it. The problem is that everybody owes everybody. As an illustration,

A owes B
B owes C
C owes D
D owes A

In this example, it's just a cycle of owing people that is cause liabilities in everyone's books.

[iamTom123]

Economists have been threatening recession crash for YEARS! I'm not saying it won't happen, only that it's not news.

Ever since the US started issuing Treasuries for the US and other Governments to buy in huge quantities, they started messing with the money supply in a way that's never been done before. It kept interest rates low. But at some point all those Treasuries need to be sold or retired and that floods the market with US-based instruments which can further devalue the currency and cause a recession.

The world has never done such a monumental monkeying with the money supply, particularly the world's reserve currency (yes, it's still the Dollar). As a result major Economists are fearful of what the longer term implications will be, hence the warnings.

Information to read up on: https://en.wikipedia.org/wiki/Quantitative_easing

A recession similar to what happened in 2008 can happen again anytime because basically the world economies have not actually done anything significant to dealt with the problems that can cause recession. Because of political correctness, most governments are only willing to do band-aid types of reforms as they don't want to hurt their political careers on the line. The printed more money to spruce up the economy and they procure more debts to stimulate more economic activities and in the short-term these can work but speaking of what can happen long-term is another area to consider. They call this whole mess by the nice term "quantitative easing."

We are so willing to sacrifice the future in order to survive today. While that can be okay, things would come back roaring in the coming years. It is always the next generation who will bear the burden of the monumental wrong decisions in the past.

Now, am wondering, if there would be a recession, do you think Bitcoin can be of big help or will Bitcoin also go with the flow downward?

[Hydrogen]

What's this about Einstein's relativity thing?  Don't know what you mean by that.

Wealth certainly can be destroyed, and it happens all the time.  This is not physical matter or particles or whatever.  There is no conservation of wealth.  lol
Look at any stock market crash and you'll see wealth destroyed in the blink of an eye.

There is something known as "thermoeconomics" that is interesting:

https://en.wikipedia.org/wiki/Thermoeconomics

Some monetary and financial policy could be comparable to conditions present in the transference of energy.

Some metals are good conductors and allow electricity to be transmitted easily and efficiently.

Other metals are bad conductors.

States and governments which are usually inefficient with money could be comparable to an attempt to conduct electricity through something that is a bad conductor.