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Great Depression II?

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  • Great Depression II?

    United States Federal Reserve analysts said the unemployment rate may soar past 32 percent and the coronavirus freeze on the economy could cost 47 million Americans their jobs.

    Economists at the Federal Reserve's St. Louis district estimated Monday that the coronavirus impact on the economy may lead to 47 million jobs lost, pushing the nationwide total to 52.8 million people when the estimated 5 million already without work are included. This would push the U.S. unemployment rate to 32.1 percent, which is significantly higher than the 24.9 percent rate of unemployment last marked during the worst stretch of the 1930s Great Depression, Forbes noted.

    Last week, a record number of Americans filed for unemployment benefits, 3.28 million - more than quadruple the previous record of 695,000 set in 1982. But the Fed analysis shows the worst of the novel coronavirus' negative effects on the U.S. economy are yet to come.

    The Fed's latest projection of a potential 32.1 percent unemployment rate is slightly worse than the estimate St. Louis Fed President James Bullard released last week of 30 percent. Both sets of data factored in the most at-risk jobs as a result of the government-induced economic freeze across the country which seeks to curb the coronavirus pandemic.

    The Fed analysis released Monday encouraged Americans not to stop looking for work and did not factor in any effects of the $2 trillion federal government stimulus passed last week. Previous Fed research showed that 66.8 million workers were in "occupations with high risk of layoff."
    https://www.newsweek.com/47-million-...s-says-1495139
    Or will it be hyperinflation?
    Remember that you are dust and to dust you shall return.

  • #2
    The Mortgage Bankers Association in a dire letter to regulators Sunday warned that the U.S. housing market is “in danger of large-scale disruption,” due to efforts by the Federal Reserve that were intended to help rescue the mortgage market.

    At issue are the Fed’s unprecedented $183 billion of purchases last week of mortgage-backed securities. The purchases were meant to drive down rates, and they did.

    But together with the storm that gripped financial markets from the coronavirus, they also effectively blew up a widespread hedge that mortgage bankers use to protect themselves against rate increases. The hedge pays them if the prevailing rate in the market is higher than the mortgage rate they locked in with the customer.

    The system works well unless mortgage rates are highly volatile. It is generally considered to be a safe trade: the hedge simply protects the lender against higher rates until the mortgage closes. But compounding the problem, many customers couldn’t close on their loans because of quarantines, leaving the mortgage lenders with only the cost of the hedge and no off-setting loan.

    The huge volatility in mortgage bonds created massive margin calls from the broker-dealers, who wrote the hedges, to their mortgage bankers.

    Some of these mortgage bankers are now facing margin calls of tens of millions of dollars that could drive them out of business, according to Barry Habib, founder of MBS Highway, a leading industry advisor who was among the first to publicly sound the alarm bell last week.
    https://www.cnbc.com/2020/03/29/mort...gin-calls.html
    Sometimes the cure is worse.
    Remember that you are dust and to dust you shall return.

    Comment


    • #3
      The 1930's event will be renamed "The Mini-Depression."

      This event will comprise both Depression and hyperinflation.
      Geislerminian Antinomian Kenotic Charispneumaticostal Gender Mutualist-Egalitarian.

      Beige Nationalist.

      "Everybody is somebody's heretic."

      Social Justice is usually the opposite of actual justice.

      Comment


      • #4
        Hard to say exactly what the effects will be because everything we've been doing, heck, everything the ENTIRE world has been doing (basically they're doing the same) has been unprecedented since 2008. 2008 was unprecedented, and now we just exceeded what we did in 2008. Though in 2008 we didn't entirely cease industry -- that puts yet another unique twist on it. I'm guessing a form of stagflation, maybe hyperstagflation (possibly the same effects around the world), though I'm sure it will go down as a very historical event.

        It will be ugly on a social level -- civil unrest -- that we know.
        Last edited by seanD; 03-31-2020, 08:52 AM.
        "I was the CIA director. We lied, we cheated, we stole, it was like... we had entire training courses. It reminds you of the glory of the American experiment." - Mike Pompeo, Secretary of State (source).

        Comment


        • #5
          Whatever happens just because things go bad doesnt mean we have to be bad.
          sigpic

          Comment


          • #6
            Nearly 10 Million Filed For Unemployment In Last 2 Weeks
            Remember that you are dust and to dust you shall return.

            Comment


            • #7
              Free Markets Are Dead: Fed To Start Buying Junk Bonds, High Yield ETFs

              But let's back up. A few days ago, we pointed out that the day so many credit bears had been waiting for had arrived, when a record $150BN in investment grade bonds were downgraded to junk, becoming so-called fallen angels, and sparking concerns about what will happen to the $1.3 trillion junk bond market as hundreds of billions of formerly investment grade debt is downgraded to junk and violently reprices the entire high yield space.

              Those concerns were answered this morning when as part of the Fed's expanded $2.3 trillion loan/bailout program, the Fed announced the expansion of its Primary and Secondary Market Corporate Credit Facilities, which will now purchase - drumroll - junk bonds, which were initially investment grade bonds but were downgraded after March 22.

              Why March 22? Because Ford was downgraded on March 24, and as a result its bonds are surging.
              https://www.zerohedge.com/markets/fr...onds-junk-etfs
              Things are escalating.
              Remember that you are dust and to dust you shall return.

              Comment


              • #8
                Originally posted by demi-conservative View Post
                Things are escalating.
                It's a very strange situation we're in. Personally, I think the stock market will crash (gradually if not suddenly) back to the pre-Obama era in spite of the trillions they're pumping to keep it up. No way can the Fed alone keep that going no matter how much they pump into it. But it's always possible the impossible will happen. The stock market will stay up (though with wild and violent peaks and dips), sustained by Fed direct interaction, while the rest of the economy rapidly deteriorates. Man, that would be really strange, and everyone would know that the markets are a complete sham if that happens.
                "I was the CIA director. We lied, we cheated, we stole, it was like... we had entire training courses. It reminds you of the glory of the American experiment." - Mike Pompeo, Secretary of State (source).

                Comment


                • #9
                  Remember that you are dust and to dust you shall return.

                  Comment


                  • #10
                    Update: 16.8 million in 3 weeks
                    Remember that you are dust and to dust you shall return.

                    Comment


                    • #11
                      Originally posted by seanD View Post
                      It's a very strange situation we're in. Personally, I think the stock market will crash (gradually if not suddenly) back to the pre-Obama era in spite of the trillions they're pumping to keep it up. No way can the Fed alone keep that going no matter how much they pump into it. But it's always possible the impossible will happen. The stock market will stay up (though with wild and violent peaks and dips), sustained by Fed direct interaction, while the rest of the economy rapidly deteriorates. Man, that would be really strange, and everyone would know that the markets are a complete sham if that happens.
                      So the illusion is being exposed. The illusion is that a booming stock market = a good economy. CNBC had an interesting article about it. They go through scenarios of why the market is booming (albeit very choppy) in spite one of the worst recessions/depressions we've had, only to show where those explanations still don't make sense, but they do include just a brief one sentence fact into the article...

                      Certainly, the trillions in Federal reserve asset buying has helped enable the rally in risk assets that has lifted equities off their lows and bolstered valuations.


                      No, it hasn't "helped." It's the MAIN driver behind the market/economy disconnect. And now this is evident for all to see. Even folks that know nothing about the federal reserve, what it does, and how its actions affect the markets know that it makes absolutely no sense the market continues to climb, in the midst of all this uncertainty, while the rest of the economy is biting the dust. Even an eight year old can figure out something is amiss.

                      And it's very easy to prove this. In 2018, the Fed begin raising interest rates and began to normalize their balance sheet, the most they had done since 2008. The market throughout that whole year stopped the upward climb and went sideways. Then once the Fed began backstopping the repo market (an important function of the market because it provides liquidity exchanges between financial institutions) in the fall of 2019, the market once again shot up and reached record highs.

                      Now the Fed is literally pumping trillions into the financial system, like a patient in triage on the brink of death being pumped with IVs, and it's BARELY keeping the market propped up. How much longer this will work is a mystery.
                      Last edited by seanD; 04-26-2020, 06:05 PM.
                      "I was the CIA director. We lied, we cheated, we stole, it was like... we had entire training courses. It reminds you of the glory of the American experiment." - Mike Pompeo, Secretary of State (source).

                      Comment


                      • #12
                        Originally posted by demi-conservative View Post
                        Or will it be hyperinflation?
                        Neither the Great Depression lased more than ten years. The Pandemic will be over in a matter of months like previous pandemics.

                        The 1918-20 pandemic kill over 50,000,000

                        The 1957 N2H2 pandemic killed more then a million worldwide, and 116,000 in the United States

                        The 1908 09 N1H1 pandemic:
                        Source: https://www.cdc.gov/flu/pandemic-resources/1918-commemoration/1918-pandemic-history.htm



                        50 million worldwide with about 675,000 occurring in the United States. Mortality was high in people younger than 5 years old, 20-40 years old, and 65 years and older. The high mortality in healthy people, including those in the 20-40 year age group, was a unique feature of this pandemic.

                        © Copyright Original Source



                        This pandemic is not even close.
                        Last edited by shunyadragon; 05-03-2020, 05:48 PM.
                        Glendower: I can call spirits from the vasty deep.
                        Hotspur: Why, so can I, or so can any man;
                        But will they come when you do call for them? Shakespeare’s Henry IV, Part 1, Act III:

                        go with the flow the river knows . . .

                        Frank

                        I do not know, therefore everything is in pencil.

                        Comment


                        • #13
                          I have to agree with shunyadragon that it will be neither depression or hyperinflation.

                          I think the economic impact will vary depending on state and economic sector.

                          For states, I think the factors will be how fast they reopen and how effectively they supported business through this. I'm not hopeful for my state or county as both are still working to roll out their small business programs.

                          For economic sectors, I think its going to be retail and restaurants will hurt the most. Look how many big retail chains have declared bankruptcy already. I saw a headline that major bankruptcy are at the highest rate since 2009. Locally, all Denny's have gone out of business.

                          For me the most surprising is how much medical facilities are being negatively impacted. One local facility that specializes in low income customers just announced they are laying off about 30 people. I would not have predicted this.

                          So how badly you're impact will depend on where you live and who you work for.
                          "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

                          "Theology can be an intellectual entertainment." Metropolitan Anthony Bloom

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                          • #14
                            For all intense and purposes, this is the economic collapse the doomsday preppers and the gold and silver stackers were expecting. The reason it's not as apocalyptic as it could have been (probably like 10x worse) is the Fed is printing trillions and trillions and trillions of dollars to keep everything propped up as best it can, including government debt. But this is basically it. Had the Fed not created all that money to prop everything up, it probably would have been Mad Max. Question is, where is it going to go from here?
                            "I was the CIA director. We lied, we cheated, we stole, it was like... we had entire training courses. It reminds you of the glory of the American experiment." - Mike Pompeo, Secretary of State (source).

                            Comment


                            • #15
                              Well, the unemployment rate made an unexpected drop. Let's not celebrate too much over one point of data. It is a good sign that the recovery may come quicker than currently expected.
                              "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

                              "Theology can be an intellectual entertainment." Metropolitan Anthony Bloom

                              Comment

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