posted on Jul, 26 2018 @ 03:20 PM
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
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?