Trump’s ‘massive recession’ forecast stumps economists
WASHINGTON – Donald Trump’s prediction that the U.S. economy was on the verge of a “very massive recession” hit a wall of skepticism on Sunday from economists who questioned the Republican presidential front-runner’s calculations.
As with all forms of gambling, derivatives trading carries a certain amount of risk.
The scary part is that we are all exposed to the enormous derivative risks that the biggest U.S. banks have become entangled in, despite assurances to the contrary:
“Overall, the biggest U.S. banks collectively have more than 247 trillion dollars of exposure to derivatives contracts. That is an amount of money that is more than 13 times the size of the U.S. national debt, and it is a ticking time bomb that could set off financial Armageddon at any moment. Globally, the notional value of all outstanding derivatives contracts is a staggering 552.9 trillion dollars according to the Bank for International Settlements. The bankers assure us that these financial instruments are far less risky than they sound, and that they have spread the risk around enough so that there is no way they could bring the entire system down.”
In a revealing interview, Trump predicts a ‘massive recession‘
If they are actually telling us that a recession is coming this time around, how bad is it going to be? In 2008, officials kept assuring us over and over again that there wouldn’t be a recession, and then we plunged into the greatest economic downturn since the Great Depression of the 1930s. But here in 2023, what is coming is so obvious that nobody can deny what is happening. The economy is already starting to come apart at the seams all around us, and the “experts” at the Federal Reserve openly acknowledge that they are making things even worse by hiking interest rates. Pretty much everyone agrees that rougher times are ahead of us, and “a probability model from the New York Federal Reserve” is now projecting that there is a 68.2 percent chance that there will be a recession within the next 12 months…
The odds that the United States will fall into a recession at some point over the next 12 months have risen to a 40-year high, according to a probability model from the New York Federal Reserve.
The probability that the country will enter a recession within the next year has risen to 68.2 percent, according to the New York Fed, which is the highest level since 1982.
The Fed’s recession risk indicator is now greater than it was in November 2007, not long before the subprime crisis, when it stood at 40 percent.
This is the highest that figure has been in more than 40 years.
Just think about that for a moment.
The recession of the early 1980s was a real whopper, and if you were alive at that time you probably still have very painful memories of it.
Are we about to experience something similar?
Former Treasury Secretary Larry Summers has also expressed his view that the odds of a downturn are “probably about 70 percent.”
“The chance that a recession will have begun this year in the U.S. over the next 12 months is probably about 70 percent,” Summers said in a recent interview with Foreign Policy. “As I put together the lags associated with monetary policy, the credit crunch risks, the need for continuing action around inflation, the risk of geopolitical or other shocks affecting commodities, 70 percent would be the range that I would be in.”
So many pundits are very negative about the next 12 months, but we certainly don’t have to wait for bad economic news, because it is happening all around us right now.
In fact, the New York Fed’s Empire State business conditions index just fell more than 42 points in a single month…
After an unexpected surge into growth territory in April, the New York Fed’s Empire State business conditions index plunged 42.6 points in May to minus 31.8.
Economists had forecast a milder slump to negative two.
Readings below zero indicate worsening conditions. The May decline is the sharpest on record apart from the initial lockdown months of the pandemic.
Read that last sentence again.
Not even when nearly the entire country was locked down did we see a drop of this magnitude.
And this comes at a time when consumers, small businesses, and large businesses are all struggling.
On Monday, we learned that total consumer debt in the U.S. has just reached a brand new all-time record high…
Total consumer debt hit a fresh new high in the first quarter of 2023, pushing past $17 trillion even amid a sharp pullback in home borrowing.
The total for borrowing across all categories hit $17.05 trillion, an increase of nearly $150 billion, or 0.9% during the January-to-March period, the New York Federal Reserve reported Monday. That took total indebtedness up about $2.9 trillion from the pre-Covid period ended in 2019.
Of course interest rates are moving higher at the same time.
If you can believe it, the average rate of interest on credit card balances is now over 20 percent…
The rise in credit card usage and debt is particularly concerning because interest rates are astronomically high right now. The average credit card annual percentage rate, or APR, hit a new record of 20.33% last week, according to a Bankrate database that goes back to 1985.
Carrying credit card balances in this environment is financial suicide, but many Americans find themselves forced to charge food and other basic supplies these days because they don’t have any other options.
Millions upon millions of people are barely scraping by from month to month, and delinquency rates just continue to move higher…
Delinquency rates for all debt increased, up 0.6 percentage point for credit cards to 6.5% and 0.2 percentage point for auto loans to 6.9%. Total delinquency rates moved up 0.2 percentage point to 3%, the highest since the third quarter of 2020.
Meanwhile, here in the early stages of 2023 small businesses are “filing for bankruptcy at a record pace”…
Small businesses throughout the United States are currently filing for bankruptcy at a record pace, exceeding the levels observed in 2020 at the height of the coronavirus pandemic.
According to a UBS Evidence Lab note reviewed by The Epoch Times, the four-week moving average for private filings was 73 percent higher than it was in June 2020. They also warned the situation may worsen as the repercussions of the recent banking crises start to manifest.
“[We] believe one of the more underappreciated signs of distress in U.S. corporate credit is already emanating from the small- and mid-size enterprises sector,” Matthew Mish, head of credit strategy at UBS, wrote in the recently published research memo. “[The] smallest of firms [are] facing the most severe pressure from rising rates, persistent inflation and slowing growth.”
Things weren’t even this bad during the extended lockdowns during the early stages of the COVID pandemic.
And many more small businesses will inevitably fail in the weeks and months to come.
Large businesses are faring relatively better, but right now we are witnessing “the most prolonged corporate profits downturn in seven years”…
As the US economy teeters on the brink of recession, Wall Street is already enduring what could turn out to be the most prolonged corporate profits downturn in seven years.
With the first-quarter earnings season drawing to a close, the profits of S&P 500 companies are estimated to have dropped 3.7% on average, compared to a year ago.
And as I have detailed extensively in previous articles, large companies all over the U.S. have already started conducting mass layoffs.
Needless to say, they aren’t letting people go because they think the economy is about to turn around.
They can see what is coming, and they are trying to get ready in advance.
Before I end this article, let me give you one more very troubling sign.
In April, the federal government brought in 26.1 percent less tax revenue than it did in April 2022…
The Treasury took in $638.52 billion in April. That was more than double the receipts in March. This is to be expected as the government collects a large amount of tax revenue in April. But compared to April 2022, tax receipts were down 26.1%.
This is one number that the federal government cannot doctor, and it is absolutely horrible.
We really are heading into an economic nightmare, and of course the economy is just one element of the “perfect storm” that we are now facing.
So what should you do?
I would encourage you to do whatever you need to do in order to get prepared for very rough times.
Our system is in the process of melting down, and the government is not going to come riding to your rescue when everything finally hits the fan.
My plan to prepare for the next recession is as follow .
Preparing for Recession
1# Prepare to — In the 1930′s, people were generally much more law abiding. Life centered upon your neighborhood, work, and church. If you got out of line or caused trouble, the community reacted quickly. In this day and age, people are less connected to their communities. If we have another great depression, crime will be rampant. Staving and desperate people lower their moral standards. You need a defensive carbine, shotgun, and pistol for every member of your family. Have enough ammunition, such that if you never could buy ammo again, you would have enough. Children from age 13 and above should learn how to shoot in a responsible and safe manner. (I am a super strong advocate of safety and working within the law. Take a safe gun course and know your state and local gun laws!)
2# Get to know your neighbors – In 1930′s everyone in your neighborhood knew you and you knew everyone. It is time to return our communities to friendly helpful neighbors. Learn about your neighbors. Know their strengths, weaknesses and values. Know whom you can count on in an emergency and who you would help in an emergency. In a subtle manner, discuss emergency preparedness. Ask questions like, in case of a bad storm, do you have a chain saw to help clear the streets of downed trees? Start the seeds of a community watch program, which can evolve into a community safety program if WROL occurs. The best way to get to know your neighbors is to throw a block party. In my neighborhood, we throw a block party on Halloween for all of our children. And we are looking to possibly throw a New Year’s Day open house. Also, offer to watch your neighbor’s house when they go on vacation. Be a good neighbor and your neighborhood will respond to you.
3# Avoid all types of debt — Except for your primary mortgage, try hard to avoid any type of debt. During the great depression, many homes and farms where repossessed, leaving families as refugees. Instead of buying new cars on credit, but used for cash.
4# Find alternative sources of income — People in the 1930′s did everything and anything to earn income. If they had a job, then often had a 2nd job. If they had a job, the often had a home based business in addition. If they had no job, they took odd jobs or day labor to earn money. If you have skills of an essential service, offer that services to your friends and neighbors, and then ask for referrals from them.
5# Find alternative sources of food — When the next great depression strikes, the biggest problem will be access to food. Supply chains will collapse. Food supply companies will fail. Shipments of food could be blocked or delayed. You should have multiple mechanisms to obtain food. First and best is your own garden with home canned to save your results. Any home with room for a garden had a garden in the 1930′s. Additionally, join a local farm coop and go to your local farmers market. Befriend a local farmer and offer labor in return for food. Some farms will allow you to gleam from already picked fields.
6# Be prepared to double up at home — Where three generations of the same family have their own homes, that is true luxury. Back in the 1930′s, families grouped together for mutual support. Grandma and grandpa did not live in a condo in Florida, rather they lived with their children. Young children lived with their parents until such time that they married and started their own families. In the next great depression, it is unlikely that people will be able to afford to live in separate homestead. And besides, it is a better family that lives together. Grandparents have historical, Darwinist role in family. That is to teach their children and assist in the raising of grandchildren.
7# Position your finances – For your investments, you should always have a diversified asset allocation. While I will not provide recommendations on your investments and retirement funds (I am not a financial advisor), I would recommend that you take a serious look at all of your investments. In the remote possibility of a full economic collapse, I do recommend that 5% of your investments are held in physical (within your hands-on control) in gold or silver. Otherwise, there are very tough decisions to be made regarding your investments. The economy may or may not recover. Stock market may go up or down. You need to decide for yourself how much risk you are willing to take. Due to near 0% Fed interest rate, bond are risky. If interest rates need to rise in the future, the value of bonds may go down. Do watch market conditions closely. Have a plan to quickly move your savings and investments to less-risky, principal protecting securities, if the economy looks to about collapse.
8# Build an emergency fund — Every prudent family should have an emergency fund. Rather than using credit cards for emergencies, better to pull from savings. Emergencies tend to cluster, unfortunately. Illnesses, job losses, and weather disasters can all hit at once. Putting emergencies on a credit card have lead to many bankruptcies. Ideally, you should have 6 to 12 months of emergency savings. If you are single or have a two wage family, then perhaps 6 months is enough. If your family has only a single income earner, or you have a seasonal job, or employer is having financial problems, then 12 months of emergency savings is appropriate. You can start by simply taking $50 or $100 from each paycheck to put in a savings account. Cut back on expenses everywhere in your life, so that every penny saved is directed to emergency savings.
9# Do not delay medical issues — If you have any outstanding minor surgeries or dental care, please deal with it now. You may not have access to medical insurance or health care providers when the economy collapses. Get your eyes checked and update your eye glasses prescription. The hernia operation you have been putting off may be a life-ending after economic collapse. If you are overweight, drink too much alcohol, use tobacco products, or addicted to drugs, you are running out of time to correct these issues. Alcoholic and drug addicts will be among the first to die after an economic collapse.
10#Shed non-essential toys — While you still have time and your toys still have economic value, shift your assets from non-essential to essentials. Have a jet ski, weekend motorcycle, and 48 inch LCD TV, but no long-term food storage? Have a baseball card collection or your wife has a doll collection, but no way to defend your family? Sell the toys. Buy essentials. One of my hobbies is coin collecting. I shifted my collection from collectibles coins to gold and silver coins.
11#Take up hiking and camping as a hobby – The best way to build a bug-out bag or be prepared for an emergency relocation is hiking and camping. Hiking, for that matter any walking, is great exercise. Your preparations for hiking and camping will enable you to prepare for a bug-out situation. You will learn about what gear you need. An overnight hiking trip will teach you how to pack lightly and with only essentials. This past Summer, I took my young family on their first camping trip. They loved it. We started with just camping in just a cabin (we are suburbanites, so you will need to cut us some slack). And we are working our way up to tents.
12#Produce your own energy — If you can afford it, adding solar panels to your home is starting towards becoming energy efficient. Add a wood-burning fireplace and cast iron stoves to you home, so that you can heat your home from firewood. In an economic collapse, you may not be able to afford to pay for heating fuel. There are many interesting home kits to produce bio-diesel and alcohol fuels for vehicles.
14#Monitor the news — Watch the economic news closely. Do not be blind sided by a possible economic collapse. Be prepared to move quick to move your money and investments to safer assets. Be quick or be poor.
15#Watch your banks closely — If your bank has a lot of negative news, consider moving your accounts. Watch for a potential run on your bank. Make sure your bank is FDIC insured. FDIC insurance only covers up to $250,000 in deposits. So if you have more than $250,000 at one bank, then spread it out to multiple banks.
16#Learn new skills — Never shot a gun before, then take a gun safety class and obtain your concealed carry permit. Learn now to do home canning with a pressure cooker. Take first aid courses. Learn how to plant a home garden. Gain the skills now that will carry you through.
17#Buy farmland – If you have the money, it would be hard not to consider buying a plot of farmland for your family. Even 10 or 20 acres in a remote location with ample annual rain or source of clean ground water would be an excellent way to insure your family will have food in the future.
I truly hope there will not be an economic collapse. But for some countries, economic collapse has already come. Look at the situations in Argentina and Greece. Debt levels for Great Britain, France, Spain, Portugal, Germany, Japan and USA are reaching crisis levels, yet still growing. An economic collapse is possible, not an alarmst bloggers posting. It is time to prepare your family.
Growing your own groceries, and making your own food out of basic ingredients, such as cheese, bread and even chocolate to name a few…
Then you could stockpile the excess produce for dark days… (The shelf life of ingredients is longer than that of the resulting foods, anyway…) So while other preppers pay thousands for overpriced, highly-processed “emergency food”, you’ll build your survival stockpile for free…
Former Adviser To Ex UK Prime Minister Warns Public To Start Prepping
HSBC payment system collapses. Corporate media continually using propaganda that the stock market can’t crash. Consumer sentiment tumbles. Personal spending declines as J Crew reports a decline in sales. It is looking like 2008 all over again, as retail investors are getting out of the market. China unwinding dumping treasuries. Huge push to get rid of paper currency so the central banks have full control. Former Adviser to Ex UK Prime Minister warns everyone needs to prepare for the upcoming collapse. The US Government/central bank continues to blame China for the crash of the market.