World Bank: Here’s what it will take to spark a global recession
Any adverse development hitting the world economy – such as higher than expected inflation, abrupt rises in interest rates to battle it, a resurgence of Covid-19 or rising geopolitical tensions – could put the global economy into recession this year, the World Bank has warned.
It said it would be the first time in more than 80 years that there had been two global recessions within a decade.
It has released its latest Global Economic Prospects report, which says the global economy will grow by 1.7% this year and 2.7% next.
The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95% of advanced economies and nearly 70% of emerging market and developing economies.
I think we are in a unique crisis of Capitalism.
I think the $25Trillion Central Banks printed to fend of the 2008 Global Financial Recession (thanks to the naked greed of Transnational Banks) didn’t become inflationary because Transnational Corporations moved their Just-In-Time supply chains to China and that lowered the base cost of manufacturing.
The problem is that Covid shut down those supply chains forcing Corporations to move to Just-In-Case Supply chains which import inflation.
The recent drop in US inflation was in part driven by Biden tapping the US Strategic Petroleum Reserve (SPR) by 15 million barrels at a time when the SPR is at its lowest reserves of 450million barrels. If Russia suspends their oil because of the attempt by America and the EU to cap the cost of a Russian barrel of oil to $60 by refusing insurance on any tanker carrying Russian oil, that would see a removal of up to 700 000 barrels a day.
If America gets hits by a bad Hurricane season and are forced to use the SPR at a time when Russia is cutting their supply, that inflation rate is going to jump again.
This is why Putin is considering lifting taxes because he’s preparing for a hit on oil when he goes through with his threat in March to suspend Russian oil sales.
While inflation is slowing in the US, thanks to decreasing petrol prices, the core inflation for food is still going up. Inflation has been slowed, it certainly hasn’t been tamed but it has been slowed by oil levers that are not without intense vulnerability.
In NZ, the Government has the exact same problem with their $25cent reduction on the petrol tax.
Orr has no choice but to use a 100 post rise in February, despite the intense depression and Armageddon level reading of todays mood of the economy…
‘Worst of all worlds’: Why business confidence survey suggests recession ‘faster, deeper’
The latest quarterly survey of business opinion from the New Zealand Institute of Economic Research is “the worst of all worlds”, BNZ says.
It suggested profits were “collapsing” and hiring intentions were down, but that costs pressures for businesses remained extremely elevated, the difficulty in finding labour is extreme and their expectations of price rises are as high as ever, the bank said in a research note.
“It’s all starting to look like stagflation on steroids.
“There is no sign inflation is abating in any meaningful way, yet the survey adds more weight to our long-held argument that the economy is headed for recession. Moreover, that recession could come faster, and be much deeper, than many care to believe.”
…inflation has not been tamed, there are intense geopolitical shockwaves hitting us that could exacerbate things dangerously and the ever threatening extreme climate events are going to unravel things even further.
50% of those on a floating mortgage in NZ will be walking off 3.5% into 7% rates. That’s an extra $400 PER WEEK that first time home owners will need to find.
I don’t think that level of distortion to peoples take home pay is sustainable and the real possibility (as I have been pointing out) is stagflation.
All we’ve done is pacify inflation for a quarter, at any point in can erupt back into life meaning all the capital Reserve Bank Governors have burnt to get this level of credibility with the market will be wasted.
The millisecond Orr blinks the Market will exploit him.
If Orr comes in with a 100 point rise, the Market have to believe him, while the 125 000 people he’s about to sacrifice on the altar of Economic Theology will want to know why an unelected Technocrat is fucking up their lives.
The black swans aren’t just circling, they’re in an Uber on the way.
This recession will quickly start feeling like a crisis.
Increasingly having independent opinion in a mainstream media environment which mostly echo one another has become more important than ever, so if you value having an independent voice – please donate here.
If you can’t contribute but want to help, please always feel free to share our blogs on social media
Biden tapped into the strategic reserve just to get through the midterm elections.
So only now the wheels come off the bus.
Just like Jerome Powell, the problem for Orr is that he is nowhere near positive real rates.
He’s only at 4.25%. With the next C.P.I. print forecast to come in at 7.7%, he’d have to hike all the way past 9.0%.
If he does this, there will be mass defaults: too many debtors are technically insolvent, and will go bust if rates are truly normalised.
He is more likely to do what Powell will also be forced to do: let inflation run hot, and inflate away the debt.
A disaster for real wages, which will not keep up with this depreciation of the currency.
A much smarter option would be a jubilee, plus a currency reset: print enough dollars to buy all the debt (which is unpayable anyway), write it all off, limit the currency supply, then make it fully backed by gold (and reopen the gold window).
The GOP led House is threatening to cut of supply if Biden does not agree to cuts to Social Security, Medicare and Medicaid. Biden could use that as an excuse to do something revolutionary.
Higher debt costs impact on government budget financing – maybe its time for government to finance itself with debt free money. I’d use digital money to finance government and leave the existing monetary system intact otherwise (tightening it to account for the money created free of debt for government use). And yeah one could use it to pay off existing debt, or a more moderate alternative just enough to cover the cost of public debt each year.
The prospect of such an option might just scare off the GOP …
A jubilee! Yes Ned Kelly please tell Grant Robertson to arrange for my mortgage to ripped up. Absolutely in support of this. Thanks
So, do I buy that new lounge suite at harvey normans on 3 years interest free or do I get some chickens, dig up the lawn for a vege garden and cancel Netflix.
Don’t cancel Netflix would be my advise.
Anyone currently on a floating mortgage is a dumbarse. At some stage you smell the coffee, you hear the warnings and you heed them. Call the bank and get that sucker fixed.
We have been in a recession now since at least last year. Many businesses are saying that we are in a recession because they know what normal business is and what not normal business is. They talk to their customers and hear what they say. And one of the problems the government has is that no one believes a single word that comes out of Grant Robertsons office, because the man don’t give a fuck, he is busy pretending that all is well. At least until they either lost or won the election. Never mind that the train has already derailed a few kms back. Prepare to come to a screeching halt.
National didnt give a fuck either. Ran all our infrastructure into the ground. Slave labour economy that only favours the well off. Housing market allowed to be used as an investment vehicle.
Labour came along and had handbrake winston attached and couldnt fix anything, covid hit and now the country is crumbling thanks to bad decisions for decades.
National brainwashed people into thinking the great housing ponzi scheme was a winner. History tells us otherwise and those of us wise enough to see what was coming put our nest eggs into another basket. The Labour government are left with National throwing N.Z. home owners under the bus.
Seems everyone bought into Nationals Rockstar economy and believed everything English told them. He was a known liar.
Robertson is on the end of a hospital pass.
Grant is still better at driving the train than David would be. That is not to suggest that I endorse everything he does & I agree with your warning that hard times are coming but I hope that voters’ choices do not end up making things even worse than they need to be.
@ rb. ” Call the bank and get that sucker fixed.”
The only suckers, to use your nauseating ‘mericanism, are the poor bastards who listen to the msm, the banks and their all bought and paid for minions who should be ours. We pay them all our all hard earned hundreds and hundreds of thousands of dollars yearly to best manage our politics in our best interests, which they never have and never will because show a person a line of zeros and they’ll do anything you want them to do.
Our politics is in self-serving chaos, we have no political steerage, we have no political management, we have instead, in short, fuck all.
We do have a beautiful and rich country with a highly skilled, first world, well resourced agrarian economy but the politicians who should be best taking care of that primary industry exports derived economy are far too wedged up the arseholes of the likes of Sniffer Hart, Gibb, Chandler, Fay, Richwhite etc who, it can’t be argued against, do nothing of lasting and significant substance for anyone else except themselves and while we have hungry kids, homeless people, and a rorting, cartel-like supermarket duopolies those useless scum bags are out there sniffing around our money.
The Banks. Fuck the banks. Get rid of them. They’re a drain on our economy and a scourge for our population of good people. A high school kid with an iPad could do as good a job as you rich fucks!
Fuck the RBNZ. It’s where money’s siphoned off and into private pockets once laundered by the various producer boards, privateer agri-firms and corrupt IRD practices.
Fuck the politicians. You bastards are management. That, is all you are, you lazy, corrupt fuckers! A wee sip of Latte and a bran muffin with your lobbyist buddies down in one of Wellington’s Haute mouse-shit cafe’s dahling? A little of the well rounded vowels? A polite re arrangement of the balls and fanny to let that fart out? Bit of a look-see to see who’s looking? There are hungry kids, you cunts! How fucking dare you! I can tell you how you dare. On six figures plus entitlements and expenses paid by us to you and will know who pays you. Those who earn the least. That’s who, and that’s on you, politician.
There was a dole office just down the road from our second hand shop. We could see mums and their kids pull up to go inside to beg for a little more money or to be interrogated and while they endured that disgusting and humiliating procedure a parking warden would often pull up and start writing tickets for no registration or WOF’s on their shitter cars. I’d go down to the office and shout in the door. “You got a traffic warden out there writing tickets !” and everyone would leap up and run outside to rescue their cars.
See that? See what I’ve just written? I’ve just done more for at risk people than the politicians we pay hundreds of thousands of dollars to do.
“…get that sucker fixed” More like burn that fucking sucker down.
‘You can smell where the money is’: Graeme Hart and his innate sense of commerce
https://www.stuff.co.nz/business/128825629/you-can-smell-where-the-money-is-graeme-hart-and-his-innate-sense-of-commerce?utm_source=pocket_reader
Graeme Hart, NZ’s richest man, makes $3.4b during Covid-19 pandemic
https://www.stuff.co.nz/business/124046498/graeme-hart-nzs-richest-man-makes-34b-during-covid19-pandemic?utm_source=pocket_reader
Now watch this. I dare you.
Someone else’s Country. And oldie but an enduring goodie. Just ask roger.
https://www.nzonscreen.com/title/someone-elses-country-1996?utm_source=pocket_reader
Well until you can rouse enough people to burn that sucker/system/bank down i suggest that people get their floating mortgage interest rates fixed.
What is your definition of recession if we have been in one since last year?
Too many housing investors spending up large on all that cheap money has screwed us all.
And a govt asleep at the wheel. That’s both Labour and National.
Investing in houses rather than business should never have been allowed to get started.
It has screwed this country.
There is always the GOP caucus threatening to move the US into a debt default scenario to lower the value of their currency and reduce the need for us to increase the OCR to protect the NZ dollar value.
Here’s a leaked conversation from …. the NZ PM to her Min. G Robertson from the Israeli spy network.
“Wutt! Stagflation!? WTF! Its a period of stagnant economic growth coupled with persistently high inflation and a massive surge in unemployment. Wutt the fuck Grant!”
Another conversation…” thanks to your wonderful fiscal and brilliant intellect, N.Z. is set to weather a difficult storm. We are in better shape than many countries Grant. But beware, there are many who are clueless and will throw uninformed comments on social media”
” Thank you and you are most welcome P.M.”
Too easy to get illegal workers specifically into NZ on $3 per hour while saying it is $15.50 per hour which is still less than minimum wages which is encouraging inflation in goods and accomodation while depressing the wages.
Woman came to NZ expecting $15.50 an hour, but got $135 for a week’s work, jury hears
https://www.stuff.co.nz/national/300785629/woman-came-to-nz-expecting-1550-an-hour-but-got-135-for-a-weeks-work-jury-hears
Should be prison for anybody doing this (deportation after if they are dual residents) and their assets seized and arrested for people trafficking. Too many profiting from the small fines and blind eyes to the practise of low paid illegal workers.
Local applicants applying for these seasonal, vineyard jobs are rejected because they are too expensive, and then they give up on applying for more genuine jobs.
It’s a joke, people come, get deported and then just change identities and come back! The big fines should be for the people giving out the visas, giving them advice/supplying work here about the visas and providing them jobs with out appropriate visas.
Many rich off this – why have a real job when you can get $30k payments and make the third world work for next to nothing in NZ with no taxes!
Auckland building boss charged with fraud after investigation into illegal labour
https://www.nzherald.co.nz/business/auckland-building-boss-charged-with-fraud-after-investigation-into-illegal-labour/GXAPRJOGDSR2LVQDS4ZZ66JRUI/?c_id=3&objectid=12005146
Even when workers are killed, nobody prosecuted and the worker families profit from ACC that they never paid, so that encourages more to come to NZ as we are such a soft touch for this practise – meanwhile if a genuine NZ company has a workplace accident they are prosecuted to the hilt and go out of business!
“Should be prison for anybody doing this (deportation after if they are dual residents) and their assets seized and arrested for people trafficking. Too many profiting from the small fines and blind eyes to the practise of low paid illegal workers.”
It’s been going on for years @SaveNZ – accelerated with the creation of that Stevie Joyce/Jonathan Coleman bugger’s muddle called MBIE – the Ministry for Everything.
It’s only really recently that the Labour Expectorant got off its chuff and started doing something – as pathetic as it is.
You’d have thunk it’d be a priority for someone like Michael Wood. So far not so much.
Lil ‘ole NuZull that punches above its weight has created a shitload of misery for genuine immigrants, and enabled – even encouraged this sort of shit.
It seems the harder the likes of Matt McCarten/ Anu Kaloti/ McClymont and a few others fight for justice, the harder the current crop of the polly class and senior and muddle management bureaucrats push back. (They always know best and are never wrong, despite ‘misspeaks’, unintended consequences and sheer stupidity)
Here! Get an education. You dont need anybody elses ‘hot takes’ on where the shit is about to hit.
Nouriel Roubini, Dr Doom. Who people didnt believe and listen to years before the GFC and then …
https://youtu.be/ADh6QTp8798
A short sharp shock may well be in order as New Zealand real estate, especially residential properties, are overpriced and it has been this way ever since the global financial crisis of 2008. We’ve only had minor slumps in property values since then.
100 points!
Time to back up the truck for the bond market bargains!
You could be right??
Back in March 2021 when Robo was loading his Bazooka with the RBNZs Eeee Orr and $100b of QE.
Orr said at the time, “we’ve got enough in the tank for another $100b”.
And there is a good reason to manufacture a recession, stagflation, depression Crisis to crack open the cash-Bazooka just before an election and watch the people go wild in the polling booth. They’ll be thinking,”should I take the money or the bag?”
Comments are closed.