Is 2016 the year of the Godzilla recession?

January 10, 2016

Let me put it simply this way, if enough passengers on a cruise liner believe the ship they are on board is tilting. Even if it’s squarely dead level. Then it makes perfect sense to talk about how to survive the frigid waters of the Atlantic by drinking your own urine….then it makes perfect sense to go to bed with your life jacket strapped on….then it makes perfectly good sense to even draft your last will and testament on a paper napkin in the dinning lounge.

And should someone hear someone shout out ‘the band is shit! And mistake it for abandon ship….then it makes perfect sense for everyone who has always believed this ship to be tilting to run as fast as they can to chope (reserve) a seat on the nearest life boat….and when the people who have always insisted the ship has always been rock steady and has not tilted so much as one degree since the voyage see so many people rushing frantically to abandon ship – then it’s perfectly logical for them to also believe the ship is sinking – only for them to proceed to join the rest as well.

The question in my humble opinion has never ever been – whether 2016 is the year of the mother of all economic meltdowns that will make the Great Depression look like an accounting aberration…as it remains a question of HOW MANY people today can still continue to believe we are NOT already in a recession.

That is the question…the only question.

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‘Economist like to point to the four sins which they claim will enable the Great Recession to occur: greed, low risk management, inadequate regulation and of course Santayana’s famous aphorism, folk who simply don’t learn from their past mistakes.

Greed has always been there, it’s like nitrogen in air. Or sugar in Ribena. So it’s an oxymoron to believe you can ever get rid of it….to me greed has always been an indelible part of the financial psyche – so when people say markets should not be greedy, it’s very childish. As it’s like insisting vampires should settle for bloody Mary’s instead of the real thing etc.

As for risk management and regulation – those two terms has always been an abstraction to me, it’s like taking off my watch and asking me to watch a movie while I am puffing ganja and asking me thereafter? How long was the movie? the short answer is…anywhere between three to fifteen hours…its a term of relativity.

Besides managing risk and regulating what’s kosher and out of bounds is really only a function of how strong lobbyists and weak politicians and those who fund them are prepared to circumvent rules restricting what they can and cannot do.

Risk managers are no different. You can’t blame them for pushing the envelop of what they can and cannot do, whilst trying to figure out how to remain technically within the ambit of the term compliance. As again it’s childish to assume the profit motive does not feature strongly in the decision making process.

So long as high risk pays out the highest return on investment in the short term – then it’s good to go….so what if some people crash and burn…no one remembers those who didn’t make it.

As for voters…they will always continue to suffer from an incurable naïveté concerning the mechanics of politics and power of how vested interest and the elites use it to perpetuate the status quo ante in the name of a better tomorrow for all – again this has been a constant since the dawn of mankind.

So to me the four conditions which economist continue to insist have to be manifestly present before one can even moot whether there can be a recession has already been fulfilled. It’s conceivable this mythical point was reached two years back ago when the FED came out with new words like quantitative easing to describe printing money!

The last throw of the dice is HOW many people can continue to believe in the great lie that all is well and it’s business as usual….and the answer to that question is really shocking – as the short answer to me at least – is it’s pointless to debate whether we are in a recession when all the signs clearly indicate as far back as one half years ago that, that has already happened…to me when I talk to economist or anyone from the banking community about this term recession…they always seem to suffer from the idea, we are still heading there like a train…like we haven’t yet reached that station yet and that’s why I think they’re in denial …that is something that I don’t wish to discuss for the moment.’

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