COMMENT: The recession is certain, the crisis will be a teinka on the cake

Title according to economist Martin Mat prodv. That is why many economists and analysts have recently emerged, who know that not only the recession, but also the apocalyptic crisis is knocking on the door. Unfortunately, ignorance of facts and connection is not a problem. The main thing is to erase the emotions of fear, to lead your comment to the economist.

I agree, the recession is coming. Urit navtv some european states. Itlie is a guarantee and he knocks on the brno in Germany. However, the recession is such a technical terminus that it is about growing a diploma.

ecko avoided bravurn

Germany experienced a recession in the second quarter of 2012. GDP growth was the following quarter: + 0.3%, -0.5%, -0.3% and + 0.9%. Meziron then + 0.4%. However, I did not notice that the Germans would hesitate that, for example, they would start buying cheaper Peugeot cities in bulk instead of Audin.

In contrast, Greece was not in a recession with GDP growth of 0.0%, -2.2%, 0.1% and 0.4% (meziron -1.7%). That doesn’t mean anything. With an unemployment rate of over 25%, I would rather suffer in a recession hit Germany.

At the same time, the slowdown in growth to zero is miles away from the collapse of 2008 or even the great world crisis of the 1930s. It is a matter of reduced growth, as evidenced by high wage growth and zero unemployment.

So why the crisis? Inputs

He’s going to the US. And to whoever wants what he wants, it is the main economy of the world, and when he sneezes, the whole world gets a rum. The main argument for predicting a recession in the US is the decline in long-term bond yields below those short-term. And really, 10 year olds are under 2 years old. According to the graph, the recession (ed bars) is clear. A decrease in the input gap always means that there will be no inflation, there will be deflation, the economy will stop and the end of the world will come.

Graph v

Graph of the development of the difference between the rates of 2-year and 10-year bonds.

Rst pece nen normln

The kind of unbearable argument of the recession is a long-term GDP growth period. It is simply not normal for the economy to grow according to not 10 years.

The graph is equal

The graph compares the period of expansion of the US economy since the 2nd World Wolves.

The figure shows the number of months when the US economy grew in the given period. The US agency NBER found from the collected data that the current period of growth is the longest since the 2nd world of wolves.

Australia out in econometric tables

In fact, I see no reason why the economy could not grow. Economic fluctuations have been declining for a long time, inflation has been under control for many years, the effects of the crisis have been limited locally, and the globally interconnected world is smoothing out local problems.

In a way, it doesn’t matter if the economy grows for 2 years or 5 years, because of the poor economic situation and the surrounding conditions, whether growth will continue and even fluctuates. Colleagues from esk spoitelna discovered a beautiful place in Australia. It has not started a recession, ie 2 consecutive quarters with a growing GDP growth, since 1991. Australia probably does not even have statisticians in the recession models.

The only thing we can predict about the current expansion is that when we put the MS, we are about the MS at the end of growth. But how long it will be is in the stars.

Inverse curve distorted image of reality

Back to the first argument. US Treasuries deposits are qualitative and quantitative elsewhere than 10 or 50 years ago. The world has opened and the dollar is the main reserve currency. This means that US bonds are not only bought by domestic entities, but by a large number of foreign central banks and investors.

Thus, the loosened monetary policy of the Fed and its billion-dollar bond purchases in recent years, which have crushed their years, have increased demand above the usual limit. The European Central Bank will take a similar step from November and will buy more bonds worth 20 billion euros.

And first of all, this new, and moreover, enormous sales pressure compared to a situation where rational economic entities would trade with the US Treasuries. If the input is rational (compared to the risk and inflation), the central bank does not suffer, because they have full other duties.

It is estimated that the yield on US government bonds is about one percent, not under the standard situation with normal buyers. Central banks are thus behind the distortion of current deposits, even in a situation where long-term deposits are below short-term.

m del, tm m nesouc

How to imagine such a situation? You know that a term deposit for one year carries more than a term deposit for 2 years or 10 years. If central banks were to rest and not interfere in normal market relations, we would still be buying long-term bonds (or making deposits) with much more than a short-term return, which would be the normal situation.

The fact that before each recess saw an inverse curve, it is not a pin, but a logical breeding economy before approaching with a slowdown. Central banks usually try to support the economy in the event that they see a great slowdown.

esk deviation from normal and policy brake gas

esk centrln bank is in a slightly different situation. On the contrary, because it overcame its intervention experiment, it had to step on the brake, and therefore increased its basic rate of pigs to two percent. Unfortunately, in Germany and other European countries, it slowed down and in time the speech is fully felt in our country (the first signs are mainly in the automotive industry). Both of these influences (recession outside and short-term rates not long-term) can uncontrollably affect our entire economy.

This is what the financial markets are aware of, where, on the contrary, long-term rates have been falling for over a year, so we have a strongly sloping input curve for us. Long-term years should be the first part of the NB, which should affect the real basic rates for long years and the consequent price in the economy.

NB has long ignored this transmission mechanism and has been trying for years, but without a real connection to the financial markets. At a time when the NB brakes the economy by 2 percent, long-term rates are around one percent. The fact that the central bank communicates keeping the basic rate at two percent is, in a way, only a minor drilling dog, because bond yields behave completely differently, not the size and rate of central banks.

The recession is not the end of the world, but a new turn

At the same time, it happened that the economies avoided the recession (see Greece) even with the inverse curve, which showed a false signal. The marked difference in the yield of ten-year and two-year bonds is not a sign of a growing crisis and does not predict its depth or length at all.

Therefore, it is not necessary to put a shotgun in it. President Trump wants to be elected, so he did so in order for the boom to take a moment. So the governors of the Fed are experienced fighters and have to go full trump card. Last but not least, even a slight recession in Germany does not mean that we are going to live under a bridge.