tag:blogger.com,1999:blog-1527766217650773141.post4538964172103933651..comments2023-07-12T06:12:30.772-07:00Comments on Demand Side Transcript: Transcript: 420 Forecast 1: Recession of 2011Alanhttp://www.blogger.com/profile/07323700324276425194noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-1527766217650773141.post-56345120479631771242011-01-22T13:11:38.815-08:002011-01-22T13:11:38.815-08:00Yes the housing market will play a part in two way...Yes the housing market will play a part in two ways. It will further erode family wealth. Leading to more bankruptcies and a bigger bank losses. State cutbacks will push some states into recession again. With the President being accused of being anti-business even while big business has had an excellent year I can see <br />the Presidents new financial advisor, cutting more business regulations with disastrous consequences only discovered years down the line. Many might impoverish workers still further. <br /><br />The european financial issues are one thing but do not ignore the revolution in Tunisia. This was about jobs and prospects. If these do not improve in a number of countries in the middle east then watch for problems elsewhere in the middle east. Saudi Arabia could be vulnerable with its high unemployment. If that happened, there would be a oil price surge that would plunge the world back into recession. <br /><br />No matter what happens the too big to fail banks will become a burden on the tax payer again at some point, though probably not this year. In the meantime the median wage will fall while the transfer of wealth from the majority to the top 1% continues and slowly dissolves the American dream still further. <br /><br />The rise of inflation on food energy and staples will be ignored because of asset deflation yet as inflation erodes what is left of the average american standard of living the wealthiest will not notice. The one in seven on food stamps will become one in six, or even one in five, before any efforts are made to address the problems. Watch for inflation in China. China needs growth to remain stable. Anything that upsets that will bring chaos to world trade. <br /><br />Longer term the cuts to state pensions will mean that the economy will not be that vibrant, with much poorer growth prospects. With the rich getting richer the political system will be even more corrupt. I personally expect that the US will have another major crisis by 2020 which is not even being avoided by the lack of any meaningful bank reforms. So far every policy has been to paper over the cracks and kick the can down the road. Hence my pessimism. <br /><br />Ten years out the US will be a spent force on the world stage, much like the UK in 1919. What makes it worse is that it does not have to be that way.David Lazarusnoreply@blogger.com