Recession predictions

KyussB

Wanderer78 wrote: »

I'm always extremely wary of forecasts, we generally tend to be absolutely crap at them, particularly if they're based on equilibrium models.

Great discussion above, thanks folks, very informative, always great to see people interested in such things, this affects us all

Ya I've been thinking the same. Probably more useful than the forecasts themselves, is having a graph of past forecasts, versus the actual reality encountered - to show just how inaccurate forecasts are.

To me, the most important forecasts right now, are not so much forecasts - but are critical analysis and estimation, of the stability/integrity of the banking system, and the accounting/loan books of the banks - because right now, that is the most important indicator for forecasting whether or not the shit is going to hit the fan anytime soon.

Unfortunately, determining the quality of the information on the banking system and their loan/accounting books and the stress tests placed upon banks etc. - is a lot more opaque than general macroeconomic forecasts about employment/GDP etc. - so it is incredibly hard to make good calls about that.

In the US, there are strong indications of accounting fraud stretching all the way from banks, up into the central bank - with political approval of this - in order to make the banking system look more stable than it really is - which there is a good article on, here:
www.nakedcapitalism.com/2020/09/how-bankers-hide-losses.html

Given how fragile the Eurozone is, and the economic imbalances inherent in the Euro (which have never been resolved), and the lengths gone to distort EZ economies to help prop up the 'on paper' stability of banks (the housing crisis can be considered an indirect example of this) - I would not be surprised at all if the same sort of accounting fraud with political approval, is going on to prop up the image of banks in the EU as well - in a system which is being severely stressed by the coronavirus.

So it's not clear at all where things are going to go in the next couple of years - whether we may see another banking crisis starting in the US and rippling through Europe, or vice versa (especially with Brexit) - neither do we know what the response to that would be (if it's another crippling increase in wealth/income inequality, followed by austerity, then we don't even know if political/social stability can be maintained after that).

Wanderer78

KyussB wrote:

So it's not clear at all where things are going to go in the next couple of years - whether we may see another banking crisis starting in the US and rippling through Europe, or vice versa (especially with Brexit) - neither do we know what the response to that would be (if it's another crippling increase in wealth/income inequality, followed by austerity, then we don't even know if political/social stability can be maintained after that).

This is exactly what I have been fearing, I'm somewhat aware of the mess that is our global banking system, this is truly disturbing stuff, and I'm not sure anyone truly understands the extent of it, let's just hope and pray the damn thing doesn't crack apart over the next few months, the last few months have been difficult enough for us all. The Italian banking system doesn't sound too healthy either, so I suspect, if one major element pops, within the global system, we could see contagion faster than covid, what a bloody mess.

Thespoofer

Anecdotal I know but few lads in work laid of this week ( construction ) and more to get chop next week.
Work beginning to dry up for us now, next few months will get tougher for our trade I reckon.

Wanderer78

Thespoofer wrote: »

Anecdotal I know but few lads in work laid of this week ( construction ) and more to get chop next week.
Work beginning to dry up for us now, next few months will get tougher for our trade I reckon.

dreadful news, im really sorry, what a fcuking sh1t experience

Thespoofer

Wanderer78 wrote: »

dreadful news, im really sorry, what a fcuking sh1t experience

Yeah it is I suppose, no one safe either I heard.

I think competition will heat up a bit now for alot of trades.

Timing belt

Thespoofer wrote: »

Anecdotal I know but few lads in work laid of this week ( construction ) and more to get chop next week.
Work beginning to dry up for us now, next few months will get tougher for our trade I reckon.

Sorry to hear that.

The construction industry will be hit hard as there is uncertainty of how long a recession will last and this will delay investment and decisions.

This is one sector where the government should help with stimulus and should start building houses on a large scale to solve the housing crisis. I would be very surprised if there was not an announcement like this in the budget,

The issue will be how long it takes to implement and work to begin on sites.

Timing belt

It looks like the price of uk manufactured cars will increase post Brexit which won’t help the motor industry at a time when they are already struggling with the sale of new cars down 37% already.

https://www.bbc.com/news/business-54345882

Timing belt

Shell to cut 9000 jobs globally

https://www.bbc.com/news/business-54351815

https://www.google.co.uk/amp/s/www.irishexaminer.com/business/companies/arid-40057394.html?type=amp

theguzman

Timing belt wrote: »

Sorry to hear that.

The construction industry will be hit hard as there is uncertainty of how long a recession will last and this will delay investment and decisions.

This is one sector where the government should help with stimulus and should start building houses on a large scale to solve the housing crisis. I would be very surprised if there was not an announcement like this in the budget,

The issue will be how long it takes to implement and work to begin on sites.

Why the Government be building housing for useless people who won't contribute anything only all I want I want I want, a selfish generation of self entitled gits.

What should happen is a minimum 100k public and civil sector employee be laid off and alot of these quangos and public sector overbloated departments be got rid of and outsourced. There should be major tax cuts and abolishment of inheritance tax, incentivise investment into private housing stock and have a bonfire of regulations and government bureacracy, start with the HSE and move towards a full private healthcare system, overhaul the legal system and judiciary, bring back proper law and order also. Socialism is the problem and not the solution, let the market sort it out is my view.

Wanderer78

theguzman wrote:

What should happen is a minimum 100k public and civil sector employee be laid off and alot of these quangos and public sector overbloated departments be got rid of and outsourced. There should be major tax cuts and abolishment of inheritance tax, incentivise investment into private housing stock and have a bonfire of regulations and government bureacracy, start with the HSE and move towards a full private healthcare system, overhaul the legal system and judiciary, bring back proper law and order also. Socialism is the problem and not the solution, let the market sort it out is my view.

Thank God, we dont live in a socialist state then!

Funnily enough, most, if not all public infrastructure is done by the private sector!

Timing belt

theguzman wrote: »

Why the Government be building housing for useless people who won't contribute anything only all I want I want I want, a selfish generation of self entitled gits.

What should happen is a minimum 100k public and civil sector employee be laid off and alot of these quangos and public sector overbloated departments be got rid of and outsourced. There should be major tax cuts and abolishment of inheritance tax, incentivise investment into private housing stock and have a bonfire of regulations and government bureacracy, start with the HSE and move towards a full private healthcare system, overhaul the legal system and judiciary, bring back proper law and order also. Socialism is the problem and not the solution, let the market sort it out is my view.

You assumed that its for social housing stock and not private or a mix of both.

Whether it is the gov building itself or incentivise building they need to pull there finger out and do something ASAP. They have an opportunity now that they did not have pre covid as they can say they are stimulating the economy.

I will agree to disasagree on the tax cuts but will agree on overhauling the legal system and the judiciary so that there are no more lean sentences for stupid excuse like "I had a tough up bringing but have 100+ previous convictions"

Wanderer78

Timing belt wrote:

I will agree to disasagree on the tax cuts but will agree on overhauling the legal system and the judiciary so that there are no more lean sentences for stupid excuse like "I had a tough up bringing but have 100+ previous convictions"

Continual offences shows multi system failure of our most critical of social services, including our health care system

neutral guy

Thespoofer wrote: »

Anecdotal I know but few lads in work laid of this week ( construction ) and more to get chop next week.
Work beginning to dry up for us now, next few months will get tougher for our trade I reckon.

Well,the timber frame homes factory working overtime at the moment.But I am pretty sure just because they behind the schedule due with Covid quarantine.

Timing belt

Wanderer78 wrote: »

Continual offences shows multi system failure of our most critical of social services, including our health care system

No it doesn’t they are scumbags simple as who have milked the system and don’t give a ****t about anyone else in society. If they haven’t learned after x amount of convictions

neutral guy

My own opinion
Recession starts when we have less cars on motorway
And plenty Garda check points
When taxes rising
And when property agents start say it is Best time invest to property

Timing belt

neutral guy wrote: »

My own opinion
Recession starts when we have less cars on motorway
And plenty Garda check points
When taxes rising
And when property agents start say it is Best time invest to property

That’s happening now

Wanderer78

Timing belt wrote:

No it doesn’t they are scumbags simple as who have milked the system and don’t give a ****t about anyone else in society. If they haven’t learned after x amount of convictions

Not at all, there's loads of research showing that most individuals that end up in the prison system, have complex psychological issues, many undiagnosed, therefore untreated, many of these issues would have been noticeable, by trained professionals, at an early age, but all of our critical services would have simply ignored or failed to react to their needs, and continue to do so, and in many cases, our critical services would have in fact exasperated their issues

Mongfinder General

theguzman wrote: »

Why the Government be building housing for useless people who won't contribute anything only all I want I want I want, a selfish generation of self entitled gits.

What should happen is a minimum 100k public and civil sector employee be laid off and alot of these quangos and public sector overbloated departments be got rid of and outsourced. There should be major tax cuts and abolishment of inheritance tax, incentivise investment into private housing stock and have a bonfire of regulations and government bureacracy, start with the HSE and move towards a full private healthcare system, overhaul the legal system and judiciary, bring back proper law and order also. Socialism is the problem and not the solution, let the market sort it out is my view.

Bring in the IMF, that will sort us out. Oh, hang on.

The IMF were given carte Blanche in this country and did fcuk all except lend us money in return for a few Cosmetic changes.

If the IMF didn't bother "fixing" how this country is run then there's no chance of an Irish government changing course.

The 100k you'd like to see fired are for the most part top rate tax payers many of which are unemployable in the private sector - they'd have a heart attack within 10 minutes of starting a new job. They will end up on social Welfare along with their redundancy money. The cost of firing them may outweigh the benefit.

Wanderer78

Mongfinder General wrote:

The IMF were given carte Blanche in this country and did fcuk all except lend us money in return for a few Cosmetic changes.

Lent us money to fix the country! It was a bit more complicated than that now, public finances were actually doing okay before the crash, private sector financial institutions on the other hand, we're actually completely fcuked!

Timing belt

Wanderer78 wrote: »

Lent us money to fix the country! It was a bit more complicated than that now, public finances were actually doing okay before the crash, private sector financial institutions on the other hand, we're actually completely fcuked!

Before the last crash the government relied on the tax take from the construction boom as they thought would never end and that is why public finances looked good. That disappeared at the same time unemployment went through the roof.

This time around the government are reliant on corp tax which could dry up quickly. This risk has been highlighted for the past few years so hopefully we don’t make the same mistake again.

Geuze

Timing belt wrote: »

Sorry to hear that.

The construction industry will be hit hard as there is uncertainty of how long a recession will last and this will delay investment and decisions.

The GDP recession will last six months approx during 2020.

It is over now, we are in the recovery phase now.

The recovery to previous employment levels will take much longer.

Timing belt

Geuze wrote: »

The GDP recession will last six months approx during 2020.

It is over now, we are in the recovery phase now.

The recovery to previous employment levels will take much longer.

GDP growth does not directly translate to the domestic economy. How much benefit has been derived by the state for the increase in pharmaceutical exports that helped boost the GDP figure. There was a minimal increase in jobs and all profit left the state. The real economy(I.e. the domestic economy) is only starting its recession and this is what effects the man on the street and the domestic economy is what the government need to help stimulate to reduce unemployment levels.

neutral guy

Geuze wrote: »

The GDP recession will last six months approx during 2020.

It is over now, we are in the recovery phase now.

The recovery to previous employment levels will take much longer.

Recession started before Covid actualy

Germany was in technical recession in november 2019
The new cars sales in China went down 18 per cent in september of 2019
The property market in Dublin started stagnating at May 2019
The economy did not recover since 2009 crisis.The ECB interest rate went to zero when
it was 3.6 per cent in 2008
China/USA market crashes was covered by them central bank intervention in 2017/2018
We far way from recovery !

Geuze

A fair point, yes, the hit to employment is really bad.

However, unemployment is falling, not rising, the recovery is happening.

https://www.cso.ie/en/releasesandpublications/er/mue/monthlyunemploymentseptember2020/


Total UN plus COVID unemployment

June = 564k

July = 407k

Aug = 358k

Sep = 343k



Although, the drop in UN is slowing.

Geuze

Timing belt wrote: »

GDP growth does not directly translate to the domestic economy. How much benefit has been derived by the state for the increase in pharmaceutical exports that helped boost the GDP figure. There was a minimal increase in jobs and all profit left the state. The real economy(I.e. the domestic economy) is only starting its recession and this is what effects the man on the street and the domestic economy is what the government need to help stimulate to reduce unemployment levels.

Yes, MDD is maybe a better indicator

And employment.

neutral guy

Unemployment levels will be succefully reduced by emigration No worries !
The thing is when ellections will come FF/FG/FS will tell
We Did Great Job reducing unemployment lads !
Other words it will be
We did great job get rid of unemployed people !

Geuze

MDD peaked in 2020 Q1 at 49,464m.

It dropped to 41,456 in Q2.

A drop of 16.2% nominal, 15.7% real.

Will Q3 see MDD back up at 50bn? I don't think so.


https://www.gov.ie/en/press-release/4b5e5-minister-donohoe-publishes-economic-forecasts-that-will-underpin-budget-2021/

the Department of Finance’s Budget 2021 forecasts show that both COVID-19 and a disorderly end to the ‘transition period’ will have a significant impact on the Irish economy
modified domestic demand – proxy for domestic economy to fall by -6.5 per cent this year

employment set to fall by 13.8 per cent this year this with an annual average unemployment rate of just under 16 per cent this year, and 10.7 per cent in 2021

KyussB

It's unacceptable and inhumane to have any level of lasting long-term-unemployment - doubly so given we barely just got out of that from the previous decade.

A significant portion of upcoming generations are being completely screwed by this - and rewarded with astronomical costs of living to go with not having a job.

A policy of Permanent Full Employment needs to be enacted, with workers transitioning into a government 'employer of last resort' Job Guarantee program when the private sector can't provide for them. There is no end of useful work to be done, and for people to be trained up into doing - with housing being the most immediately obvious and often mentioned example (with plenty more besides that needs doing, still).

Involuntary unemployment must become a thing of the past. Even the Universal Declaration of Human Rights states that people have the right to protection against unemployment - so arguably it's a breach of human rights to allow involuntary unemployment (particularly long-term/very-long-term unemployment) to continue.

Timing belt

Geuze wrote: »

A fair point, yes, the hit to employment is really bad.

However, unemployment is falling, not rising, the recovery is happening.

https://www.cso.ie/en/releasesandpublications/er/mue/monthlyunemploymentseptember2020/


Total UN plus COVID unemployment

June = 564k

July = 407k

Aug = 358k

Sep = 343k



Although, the drop in UN is slowing.

Yes that drop is due to the economy opening up again and will vary based on the foot print of the virus. My concern is that sectors of the economy will start to see large scale redundancy due to exports slowing due to uk and other European countries As they will be focusing on domestic economies. And I think these are already in the pipeline and will hit Q1 next year.

Timing belt

paragraph from KBRA rating agency on irish economy published 9th September:


Dual Economy Operating at Different Speeds

Ireland’s dual economy balances an internationally focused and dynamically performing MNE sector that was able to circumvent the pandemic with minimal disruption versus domestic-focused industries that bore the brunt of the lockdown, with demand well below pre-pandemic levels in many sectors. The pandemic’s impact on the labour market is evident, with the upper bound of the CSO’s COVID-19 adjusted unemployment rate at 15.4% in August (albeit much improved from April’s peak of 28.2%) versus the official headline unemployment rate of 5.2%. But the reality of Ireland’s unemployment rate lies somewhere in between. The country’s economic recovery is well underway, but strong performance in the MNE sector and its important contribution to economic activity will minimise the scale of the GDP contraction in headline terms, as the downturn is more pronounced in domestic-focused sectors. The pace of the recovery will be susceptible to the virus progression, global growth performance given Ireland’s small and export-oriented economy, and whether other potential shocks (such as a disorderly no-trade deal Brexit) arrive in the months ahead. MNE performance will be a key factor underpinning Ireland’s economic recovery and, over the medium term, consolidation of the public finances. KBRA’s approach to sovereign credit focuses on the evolution of key credit metrics over a medium-term perspective rather than point-in-time economic performance.

Conclusion

Ireland’s economic model, supported by the significant presence of the MNE sector that was able to adapt quickly to the pandemic with minimal disruption, helped to minimise the scale of the real GDP contraction and positions Ireland as one of the better-performing sovereigns amongst its European peers. However, excluding the MNE sector, Ireland’s performance reveals the impact of a very strict lockdown with negative consequences for employment and demand. KBRA’s approach to sovereign credit incorporates a medium-term perspective on how a country’s key credit metrics are expected to evolve, rather than point-in-time economic performance. KBRA continues to monitor all macroeconomic metrics that impact Ireland’s creditworthiness, including and excluding the vital MNE sector.