Get Busy at Work Today But Don't Ignore What's Coming
A quick re-cap of our recent posts:
We're all busy at work. What's going on in the world concerns us, but we don't always have time to stay on top of it all. That's OK because most of it really doesn't count for much. And that "most of it" consists of much of what the main stream media throws at us each day. Heck, a lot of it has come to be known as "fake news." And while the phrase can be politically charged, it has a basis in reality.
So we're not concerned with news like that.
But some events do need our attention. Besides personal matters that need attending, some matters in the wide world out there should command our attention. We gave examples. Then we settled on the coming recession as perhaps one of the most, if not the most important event lingering out there.
We need to be aware of it's coming just as we would if a hurricane were approaching. When it comes it may graze us, leaving us wondering what the big deal was. On the other hand, we could face a direct hit - or something in between.
Having looked at a number of prudent measures we should take to prepare ourselves for a recession somewhere south of the recent Great Recession of 2007-2009, we now consider the possibility of a "Greater Recession."
Now, I don't know about you, but some folks out there - known sometimes as "gloom-and-doomers" seem to always be expecting the end of the world as we know it (a/k/a TEOTWAWKI). I've been reading and hearing forecasts of the end of the world for years. Some people make a pretty good living pandering doom and gloom. We're not going to spend any time with such folks or their predictions of complete and utters collapse of our financial markets, our economy, our society.
Not that such an event is utterly impossible. Think: nuclear war. There are no guarantees. It's just that if such a collapse occurs, it's unlikely many of preparations will make that much of a difference. But back to the business at hand.
Short of nuclear war, or some other almost unimaginable but not impossible cataclysm, like an EMP that fries the electric grid, we may still face dire or scary times when the next recession comes. As we saw in past posts, most of us have likely forgotten just how unnerving things became in 2008.
We've forgotten how credit markets seized up in 2007-2008 and prevented the normal functioning of financial markets and threatened the normal functioning of our entire economy. Without getting into the weeds here, just know that our markets and our economy are, in a sense, fueled and greased by credit. If you drive a car, you know that you need gasoline for fuel and oil to lubricate your engine. If you lived through the OPEC oil embargoes of the 1970s and 1980s, you know what happens when you can't buy gasoline for your car. The same applies to our markets and our economy when it comes to credit. Without credit, everything grinds to a halt.
We bring up the seizing of credit because we got brief but scary whiff of this a couple of weeks ago. While it didn't get headline coverage, the "overnight" credit markets, while they didn't seize up, got sand in their gears. Overnight borrowing between banks - an essential component of our current banking system - edged nervously close to ceasing. The Fed intervened in a massive way. Their first attempts to calm the overnight credit markets failed. Eventually, though, the mini-crisis settled down.
(While the main stream media downplayed the event, you can find a detailed technical explanation of what occurred HERE. The author is offering what he believes occurred, and it does seem to make sense.)
Was this a "canary in the coal mine" event? Are credit markets on the edge of seizing up again? Right now, it's an open question.
Question: Did you follow the drama of the overnight borrowing mini-crisis? Were you even aware that it occurred? If you were, did you realize how serious it was, and how much more serious it could have become? The fact is, we who are busily engaged in our daily work don't always have time to follow such matters - the reason for our recent series of blogs. And even if we did notice the overnight credit kerfuffle, we may not have the knowledge or experience to understand its import. Most of the time, that's not an issue. But with a recession on the way, it will be.
A credit crisis of some sort may very well accompany or trigger the next recession. Some believe the Fed and the federal government, working together, can manage such a crisis - just as they seemed to manage the credit crisis during the Great Recession. Maybe. But a credit crisis may not be the only component of the coming recession. The fact is our banking system and financial markets are vulnerable. Any number of cracks could develop. We won't attempt to identify every possible scenario. But we will turn to a most interesting and informative book recently published to raise our awareness of both what's going on right now, and what may occur in the future: Aftermath by James Rickards. That's where we'll pick up our story next time.
We're all busy at work. What's going on in the world concerns us, but we don't always have time to stay on top of it all. That's OK because most of it really doesn't count for much. And that "most of it" consists of much of what the main stream media throws at us each day. Heck, a lot of it has come to be known as "fake news." And while the phrase can be politically charged, it has a basis in reality.
So we're not concerned with news like that.
But some events do need our attention. Besides personal matters that need attending, some matters in the wide world out there should command our attention. We gave examples. Then we settled on the coming recession as perhaps one of the most, if not the most important event lingering out there.
We need to be aware of it's coming just as we would if a hurricane were approaching. When it comes it may graze us, leaving us wondering what the big deal was. On the other hand, we could face a direct hit - or something in between.
Having looked at a number of prudent measures we should take to prepare ourselves for a recession somewhere south of the recent Great Recession of 2007-2009, we now consider the possibility of a "Greater Recession."
Now, I don't know about you, but some folks out there - known sometimes as "gloom-and-doomers" seem to always be expecting the end of the world as we know it (a/k/a TEOTWAWKI). I've been reading and hearing forecasts of the end of the world for years. Some people make a pretty good living pandering doom and gloom. We're not going to spend any time with such folks or their predictions of complete and utters collapse of our financial markets, our economy, our society.
Not that such an event is utterly impossible. Think: nuclear war. There are no guarantees. It's just that if such a collapse occurs, it's unlikely many of preparations will make that much of a difference. But back to the business at hand.
Short of nuclear war, or some other almost unimaginable but not impossible cataclysm, like an EMP that fries the electric grid, we may still face dire or scary times when the next recession comes. As we saw in past posts, most of us have likely forgotten just how unnerving things became in 2008.
We've forgotten how credit markets seized up in 2007-2008 and prevented the normal functioning of financial markets and threatened the normal functioning of our entire economy. Without getting into the weeds here, just know that our markets and our economy are, in a sense, fueled and greased by credit. If you drive a car, you know that you need gasoline for fuel and oil to lubricate your engine. If you lived through the OPEC oil embargoes of the 1970s and 1980s, you know what happens when you can't buy gasoline for your car. The same applies to our markets and our economy when it comes to credit. Without credit, everything grinds to a halt.
We bring up the seizing of credit because we got brief but scary whiff of this a couple of weeks ago. While it didn't get headline coverage, the "overnight" credit markets, while they didn't seize up, got sand in their gears. Overnight borrowing between banks - an essential component of our current banking system - edged nervously close to ceasing. The Fed intervened in a massive way. Their first attempts to calm the overnight credit markets failed. Eventually, though, the mini-crisis settled down.
(While the main stream media downplayed the event, you can find a detailed technical explanation of what occurred HERE. The author is offering what he believes occurred, and it does seem to make sense.)
Was this a "canary in the coal mine" event? Are credit markets on the edge of seizing up again? Right now, it's an open question.
Question: Did you follow the drama of the overnight borrowing mini-crisis? Were you even aware that it occurred? If you were, did you realize how serious it was, and how much more serious it could have become? The fact is, we who are busily engaged in our daily work don't always have time to follow such matters - the reason for our recent series of blogs. And even if we did notice the overnight credit kerfuffle, we may not have the knowledge or experience to understand its import. Most of the time, that's not an issue. But with a recession on the way, it will be.
A credit crisis of some sort may very well accompany or trigger the next recession. Some believe the Fed and the federal government, working together, can manage such a crisis - just as they seemed to manage the credit crisis during the Great Recession. Maybe. But a credit crisis may not be the only component of the coming recession. The fact is our banking system and financial markets are vulnerable. Any number of cracks could develop. We won't attempt to identify every possible scenario. But we will turn to a most interesting and informative book recently published to raise our awareness of both what's going on right now, and what may occur in the future: Aftermath by James Rickards. That's where we'll pick up our story next time.
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