Hey Everyone!
Bit of a different one this week but super important. We’re pretty much going to go into a recession but this recession will be worse than 2008. I’ve given 3 reasons why it’s going to be BAD!
You can check the video out here - YouTube
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In short, tiimes will change, but not all the changes will be bad ones. Certainly the future just got a lot more interesting and you all havve a ringside seat for the most spectacular financial event in this planet’s history. 
tl;dr - I think it’s going to be worse and again it will be those with the least who get hit the hardest.
That’s not a positive thing! - Bring on the Wikipedia exerpt…
" May you live in interesting times " is an English expression that purports to be a translation of a traditional Chinese curse. While seemingly a blessing, the expression is normally used ironically; life is better in “uninteresting times” of peace and tranquility than in “interesting” ones, which are usually times of trouble.
…but back to the @m-getinvesting’s question of will it be worse than 2008, I think that very much depends on how the government handles it. The recovery last time (and I really don’t think there has been one for a lot of people) was strangled by the post 2010 election winner’s ideological use of austerity as an excuse to dismantle as much of the state as possible under the guise of “the country’s credit card is full” and other economically illiterate nonsense and political soundbites.
Will they do it again? Hopefully not. With the right government stimulus aimed at the right sectors, we could see a great recovery with employment rebounding and huge boosts to various industries - eg a green revolution giving UK hydrogen/renewables companies a massive advantage and foothold in the global market or maybe fibre internet to every household in the country, improving the country’s infrastructure with long lasting positive benefits and literally following they Keynesian idea of “The government should pay people to dig holes in the ground and then fill them up (whilst replacing the telephone lines at the same time).” The government furlough scheme has been a fantastic achievement, I really didn’t see that coming but unless there are some plans to extend or replace it then I think it’s just put off the inevitable. Anyone with the Yahoo Finance app will have been getting notifications this week about the job losses - 4000 at Boots, 1300 at John Lewis, 3000 applications for redundancy at Rolls-Royce and Moody’s saying the UK economic downturn is the worst in the G20.
Sadly it’s all going to come down to politics, which I’m loathed to drag on to forums, but with the utter disaster that is Brexit looming in the next 4.5 months, £10bn wasted on the Track & Trace app fiasco already and cronyism like “Firm with links to Gove and Cummings given Covid-19 contract without open tender”… well I’m just not sure that there are sensible people steering the ship.
Sorry for the rant. As an elderly millennial that graduated in 2006, I’m frustrated by the continued, at best stagnation and at worst continued undermining of opportunities in this country for people to get ahead. It feels like it’s been 1 step forward, 10 steps back for nearly 2 decades
I am embarrassed at the size of that post. I got carried away but I’ll leave it up as a monument to my frustration, however misguided some might think it is.
I agree with a lot of your post. In 2008 it was the risk of exploding debt defaults which forced governments into the QE life support system, and I think that is the same threat as today. Mortgage and credit defaults in personal credit are one thing, but business defaults are a magnitude more worrying and I feel like the UK has made the right noises and supported people to some good degree. However, the furlough tapering will cause many to lose their jobs and many businesses will collapse. One factory I know of has furloughed most of the staff, but hired in agency staff on top to cover the orders which is laughable; they’ve taken the government bailout and carried on regardless. Anecdotal of course.
So I think the state of defaults is where to watch for. Rising defaults leads to bank withdrawals, which leads to runs and bank crashes. If cashpoints close as was likely in 08 and only averted at the last moments you will not be far off from disorderly banking. Online banking is now standard so maybe you won’t get physical runs, but the amount of digital banking crashes in recent years is worrying.
That’s my two pennies. I’m quite optimistic generally
2009 had a -4.2% GDP for the UK. I am hearing on the news that we will have -10% GDP forecast. So it would appear to be considerably worse.
It’s a time to be in the right stock. This is capatlism the minnows and the sickly business will perish and the big entities and the adaptive firms will fill the gaps. The world now is very different to 2008 hopefully we will see less prolonged pain
https://outline.com/ Enjoy !
Absolutely not a good analysis. What happened in 2008 was the opposite of capitalism. There was enormous black holes in several large bank balance sheets, and those same banks obfuscated their paper trails by using for example the Caymans in HSBCs case. The bank essentially was using the Caymans as a stop-off for bank transfers which is quite normal, but not sending correct paperwork to the end users in NY and London and because it’s a tiny island jurisdiction nobody went down there to check the numbers were correct. When a black hole appeared in the credit crunch (using the ‘when the tide goes out you see who’s wearing shorts’ analogy) it was impossible to accurately find the holes and repair them. The banks in some cases did this on purpose, and were in such bad straits they had to be bailed out; they had failed as a business and were saved - what’s known now as too big to fail. This is not how capitalism should work, at all. Debt and money issuance by a central authority is core to all political systems, and what happened in 08 was proof that failed businesses will be propped up with money printing. There is no capitalist model for this, it’s a strange hybrid of state financing across jurisdictions. So the state is more important than any business. Pretending otherwise will lead to misallocation of funds.