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Few thoughts on the recession
1) Being in markets full time can make most look at the economic cycles as a bunch of numbers
2) A not so uncommon view is that the recession of 2008 didnt correct all excesses, the monetary policy has done is kick the can (mea culpa) 1/n
1) Being in markets full time can make most look at the economic cycles as a bunch of numbers
2) A not so uncommon view is that the recession of 2008 didnt correct all excesses, the monetary policy has done is kick the can (mea culpa) 1/n
3) Thus several in market who are of bearish tilt call for a sharp correction of assets( which may or may not happen this recession).
4) Recession on other hand hits the marginal a lot , which is more relevant as median real wages have stagnated/ fallen over past 3 decades (2/n)
4) Recession on other hand hits the marginal a lot , which is more relevant as median real wages have stagnated/ fallen over past 3 decades (2/n)
5) Marginal doesnt necessarily mean poor, but also young who are starting out
6) The asset inflation last decade has actually priced out many people out of quality of life, thus you hear many a people complain of inflation in their basket while central banks' doesnt move (3/n)
6) The asset inflation last decade has actually priced out many people out of quality of life, thus you hear many a people complain of inflation in their basket while central banks' doesnt move (3/n)
7) Monetary policy support which should have been temporary instead has been permanent made things worse, increased inequality
8) Ideally something like 2008 should have seen a debt write off. Reprice the credit risk and some capital destroyed for wrong lending/investing (4/n)
8) Ideally something like 2008 should have seen a debt write off. Reprice the credit risk and some capital destroyed for wrong lending/investing (4/n)
9) Productivity would have increased but people would have been hurt. This is where Keynesian dig the ditches comes in. It coul just be UBI. This buffers consumption and prevents 1929 IMHO
10) Thus unproductive capital would be destroyed (asset deflation), asse-less do ok (5/n)
10) Thus unproductive capital would be destroyed (asset deflation), asse-less do ok (5/n)
11) I think it would also reduce inequality in contrast to current status where asset inflation is expected to trickle down, but lack of growth due to unproductive assets created a status quo ( and a Martingale Process of wealth). (6/n)
12) In summary short term monetary boost while fiscal planned its action was ideal plan. Instead lack of bipartisan leadership meant that fiscal policies never took off and central banks bore a burden they shouldn't have and net made things worse for future (7/n)
13) Bulls and bears might get what they want and its pigs who are away from markets who will get slaughtered.Having a fiscal policy that boosts (and removes that support) income requires political establishment to have prudence and sense, sadly lacking in vote bank politics(8/n)
14)And sadly the whole set of events creates an event where we elect politicians who are even more partisan as pie shrinks thus creating a Gordian knot. This is one of reasons why markets are behaving the way they are , Z/NIRP and policies driven singularity .End.(n/n).
