What Will Trigger Economic Collapse / Recession?

We all know the economy goes up and down. The economy moves rather slowly, so most people don't really see/feel when things start going wrong as the time horizon is too long. However, it seems there are triggers that seem to really make the excrement hit the oscillating instrument and all of a sudden the economy just craters really quickly.

The economy has been doing well, so it really has no where to go but down. So what is going to trigger it this time?

I've lived through a few bubbles/recessions as an adult now. I remember the first dot com boom. I was at a top tier business school finishing my MBA and the job market was nuts. This was 1999 or so. The internet had started growing legs and companies were forming to take advantage of this new market channel. Money was so good, that I remember a lot of my classmates dropping out of school to take jobs with start ups. The big investment banks were handing out $100,000 signing bonuses. One bank guaranteed $1 million over three years to new associates they were so desperate for talent.

Anyway, I remember the wheels starting to come off around summer of 2000. Cracks started showing up in the equity markets. Then it all imploded when 9/11 hit. The companies the previous year that were handing out $50k signing bonuses to new MBAs started rescinding job offers.

The Fed started cutting rates to try to spur the economy....

The rate cuts spurred a massive boom in the housing markets and refinancing as mortgage rates begin to fall dramatically. While all this was going on, mortgage products aided by technology and loosening underwriting also started financing all kinds of garbage borrowers....

The demand for housing and flush liquidity caused the economy to continue to boom.... then around 2006, things started getting shaky again. The fed started raising rates and the housing market started to implode on itself because of all the shady speculation/fraud that was occurring. This contagion spread and again the economy was in a rut...

Govt bailed out banks and to some degree, homeowners...

The recovery was somewhat lackluster between 2008 and about 2012, but the economy has really been on fire as of late.

Anyway, it is starting to feel like we are on a cliff again. Facebook cratering. We got Telsa looking worse by the day. Trump putting up tariffs. Mortgage rates rising choking off refinancing. Housing market seems like it is starting to falter again. Subprime car loans are out of control. Student loan balances the size of mortgages...

Just curious are we at the beginning of another implosion or recession. What is going to trigger it?

government spending and the Fed create/ pop bubbles through currency manipulation (like China)

if the government backed off it's regulations, cut out the social welfare programs (corporate and personal) the market would correct itself

also, speculative lending and banking causes most of the real collapses, this problem is made worse by government bailouts. if the government stopped bailing out the bankers at every turn we would have emerging markets that made sense

else debt to income ratio is causing a serious problem

government spending and the Fed create/ pop bubbles through currency manipulation (like China)

if the government backed off it's regulations, cut out the social welfare programs (corporate and personal) the market would correct itself

also, speculative lending and banking causes most of the real collapses, this problem is made worse by government bailouts. if the government stopped bailing out the bankers at every turn we would have emerging markets that made sense

else debt to income ratio is causing a serious problem

a reply to: Edumakated

In my opinion, the collapse will happen as the Fed continues to try and normalize rates. When the free money ends and the companies no longer use this easy money for buybacks, this fake recovery will collapse in epic ways. I dont believe it will be the end of it all, but it will be an end of fiat currency as we know it and my guess is a move towards a more sound monetary system.
I'm prepared for the worst and hope for the best.

a reply to: wholetone

totally agree, since the economy is currently built on debt the Fed raising rates doesn't make sense because it's cutting everyone off of the debt train

since very few people are actually liquid what are people going to buy with if it's not debt???

Raising rates will hurt the housing market. I'm starting to see it now. People seem to be throttling back their price point as mortgage rates are much higher. As the housing market goes, so does construction and other trades.... then it trickles down to retail... then it affects cars...

Higher rates will also start showing up in credit card payments too.

The fed left rates too low for way too long.

What Will Trigger Economic Collapse / Recession?

If the current president is removed.

We haven't talked bout the economic impact that impeachment would have to the markets and everything else.

a reply to: Edumakated

Well, this would definitely NOT be a good sign.

Southern California home sales crash, a warning sign to the nation

“Sales below $500,000 dropped 21 percent on a year-over-year basis, while deals of $500,000 or more fell about 3 percent, marking the first annual decline for that price category in nearly two years,”

Reported two days ago.

a reply to: Edumakated

Raising rates will hurt the housing market. I'm starting to see it now.

+1

I live in SWFL and prices have reached and surpassed the last housing bubble. Honestly I think what is keeping the economy booming down here right now is hurricane IRMA. Construction industry has 5 years or work before they even get caught up and that tricles down to real estate,restaurants,cars and other industries.

With the interest rate going up and the housing market slowing down a bit and people no longer being able to extend themselves by living of their HELOC is a recipe for disaster. IMO If it wasn't for IRMA i think we would be starting the pop already down here.

a reply to: toysforadults

For one I think instead of lining the pockets of investors with these spectacular "beats" due to their buybacks, they should be investing in new equipment, employee training, and reasearch/development.
Let's face facts; The job recovery is b.s. as most jobs created are service industry or part time and wages are low. There are many jobs available that lack qualified candidates and believe these companies would benefit by training the right people instead of looking to our universities to create the debt slaves who will accept any modest position.
I may be rambling, but I'm on pain meds for a broken hip. I'm only 43 lol

a reply to: Edumakated

The amount to residential we have done this summer has been flatlined

Laat year residential was good but I've been working commercial all year minus a custom hardwood job in still waiting to finish

Damn good paying job though

Commercial is good though.

a reply to: Edumakated

State and city pension fund bankruptcy.

a reply to: wholetone

People gotta start getting paid 40% of the econony if inflation continues at its current rate wont be able to afford survival by the end of next year

In predicting Trump Crash if we don't see any reasonable wage growth

In not talking 2% either I'm talking substantial

a reply to: Bluntone22

CALPERS is going to get nailed

Unfunded pension liabilities is going to be a disaster

a reply to: toysforadults

And they will be screaming for one of those evil government bailouts.

originally posted by: Bluntone22
a reply to: Edumakated

State and city pension fund bankruptcy.

Yup. Forgot about the pension tsunami.

a reply to: Edumakated

Lots of alarms being sounded about the housing market recently and getting way louder just in the last week or two it seems. Last month I was reading in Bloomberg that we shouldn't worry as long as housing showed slow & steady growth.

a reply to: Edumakated

Faith in the dollar will expedite the collapse. We are seeing it with the rapid growth of crypto even on top of the other close rate money markets.

We're standing on a glass floor with multiple cracks.

a reply to: Bluntone22

hope they don't get em, let the boomers get a taste of their own medicine for once

a reply to: theantediluvian

how can housing grow when people aren't making more money?

it doesn't make any sense