Could we be heading towards a Great Depression?

Thrugelmir

Similarity that the depression followed a period of cheap credit (the cause of Japan's crash) . With people buying on the margin. Why pay your mortgage off when investments were returning far higher ? 

EdGasketTheSecond

tropic_of_Username015 said:

EdGasketTheSecond said:

Have a look at the 2008 crisis you will see the same. Initially there is a dash for cash to cover margin and Repo commitments, any sort of asset gets sold to raise cash. Once that is over gold should rally strongly.

If it were that obvious, the smart money would be buying gold in anticipation, and as a result there would be no initial dip in the gold price after all.

The way you are convinced that you can explain short-term price moves, and be confident what the next move will be, is simply delusional. Nobody has that ability. Certainly not you.

Doubtless when it goes wrong, you'll be blaming somebody for "fixing" the markets.

You're not going to listen to me, but I think it's worth warning other people not to listen to you.

In the end we all have to back our own judgement and take responsibility for that.

This is a discussion board and its fair that all viewpoints are heard; please don't get so angry when somebody expresses a different opinion to yourself.

Sebo027

spiritus said:

I just read a casual throw away remark on another forum and it stopped me in my tracks.
Are our savings better protected now than they would have been in the 1930's (I'm thinking worst case scenario)?

I was listening to the Economist podcasts today (worth checking out) and I done a bit of reading on this subject online. Loosely summarising, what seems to be common:

• The general consensus seems to be roughly that investors are heading for cash and withdrawing from the market, at the moment. 
• The fact that interests are at an all time historic low, are worrying, it's no longer in the governments toolkit to keep capital flowing through the economy.
• The fact that the oil price is at a historic low, is worrying, and compounds the economic misery brought on by COVID-19, which, worryingly, is also an unprecedented economic crisis.  
• There's a very high probability of a contraction of the US economy up to 5%.
• Provided the fiscal measures (massive cash injections) are successful and the European countries get on top of the COVID-19 outbreak in a few months, there is a strong case to expect a the beginnings of a recovery in 3Q-2020. 
• A depression is certainly possible but it's too early to tell.

Also, RE the gold discussion. If you go onto macro trends and plot the historic gold price, and the S&P500 Index, and overlay them across the same time period (1927 to present day) you see a very clear correlation. As markets fall, gold rises and vice versa. See the attached picture:

Username999

Brido88 said:

• The fact that the oil price is at a historic low ....

It's not.

Thrugelmir

Username999 said:

Brido88 said:

• The fact that the oil price is at a historic low ....

It's not.

A major boost to the UK economy. As we are net importers. 

Sebo027

Username999 said:

Brido88 said:

• The fact that the oil price is at a historic low ....

It's not.

What's "not"?

bowlhead99

Brido88 said:

Username999 said:

Brido88 said:

• The fact that the oil price is at a historic low ....

It's not.

What's "not"?

Did you just literally quote someone quoting you saying the oil price is at a historic low and replying that it's not, and then wonder what was 'not'??

For the latter half of the 80s and all through the '90s the average annual Brent oil price was in the $12-$18 range. Today it's $28.

Does it really 'compound the economic misery' if energy price and raw materials costs for plastics are reduced? It's misery for oil drilling towns, but not so much for the end user, which is most Brits.

The high probablility of 5% contraction you mention in the US is a projection for Q2, not for the year as a whole - Q3 and Q4 are expected to bounce back, with the equivalent period a year later expected to be a very positive period given the low comparative against which it would be measured. Of course it remains to be seen how output and productivity come back. Retail sales in China were 20% down in Jan and Feb over prior year and the fact that the number of new cases has fallen off does not mean people are back working and buying again yet - the knock on to supply chains has not been fully seen. Yesterday, Tencent reported 25% YOY growth for the fourth quarter of 2019 but people pricing assets don't know how the numbers will look for 2020, particularly for the companies operating with workers on the ground rather than tech in the cloud.

parcival

Could be a lot worse than an economic depression. Whilst at present the Government has the majority of the population onside, in a couple of months when thousands have lost jobs and many businesses have gone bust we could see major civil disobedience. Unless the measures in place start to work within a few months I think the mood of the nation will turn very ugly.

Thrugelmir

parcival said:

Could be a lot worse than an economic depression. Whilst at present the Government has the majority of the population onside, in a couple of months when thousands have lost jobs and many businesses have gone bust we could see major civil disobedience. Unless the measures in place start to work within a few months I think the mood of the nation will turn very ugly.

We are more pragmatic as a people than say the French 

parcival

Pragmatism only goes so far.........but watching France with interest.