When you look at history, people stored their wealth in many ways. Owning property, stocks, gold, silver and cash in the bank, etc. When there was a downturn in the economy, some areas did better than others. This time there are so many factors coming into play. I think, the housing bubble is like a fuse that will set this bomb off. The amount of debt worldwide is out the gate, have a look at the US Debt Clock. I started watching this some years ago. In 2007, the debt then was around 9 trillion dollars, today its heading for 31 trillion. The amount the government owed per citizen was about $30,000 dollars. Today that’s climbed to $92,500 per citizen. Whereas a country, like Russia, has very little debt, at around $410 billion.
Looking at oil as another area, that’s having a big effect on the world food situation. In New Zealand, our farmers and growers are heading into troubled waters with fast rising on farm costs, fuel, fertilizer, etc. On top of that, we have Labour and the Greens pushing for control over some of the best production in the world, with their global warming puppet show. There are ways to do our bit without spending a fortune, that is going to send many farmers and growers to the wall and make our food too expensive for us and kill our exports. It’s my intention to list some ideas in coming posts. We, as a country, need to follow our own way using common sense and innovation.
We could be looking at clean ways to use coal, which we have plenty and maybe sell that technology to the world. I am totally on board for renewables but there are downtimes, no wind no rain, no sun and the problems with storing energy for those times, you would need batteries beyond belief.
We have a government with their head in the ground following the world that’s going back to coal because of lack of supply of oil at a price we can live with. Sanctions against Russia are hurting the world economy, the full effect of which has not been fully felt yet.
TO BE CONTINUED (THE US DOLLAR AS THE RESERVE CURRENCY)
Negative economic growth in the year’s first half may be a foreshock to a much deeper downturn that could last into 2024.
Stephen Roach, who served as chair of Morgan Stanley Asia, warns the U.S. needs a “miracle” to avoid a recession.
“We’ll definitely have a recession as the lagged impacts of this major monetary tightening start to kick in,” Roach told CNBC’s “Fast Money” on Monday. “They haven’t kicked in at all right now.”
Roach, a Yale University senior fellow and former Federal Reserve economist, suggests Fed Chair Jerome Powell has no choice but to take a Paul Volcker approach to tightening. In the early 1980’s, Volcker aggressively hiked interest rates to tame runaway inflation.
“Go back to the type of pain Paul Volcker had to impose on the U.S. economy to ring out inflation. He had to take the unemployment rate above 10%,” said Roach. “The only way we’re not going to get there is if the Fed under Jerome Powell sticks to his word, stays focused on discipline, and gets that real Federal funds rate into the restrictive zone. And the restrictive zone is a long way away from where we are right now.”
Despite the Fed’s sharp interest rate hike trajectory, the unemployment rate is at 3.5%. It matches the lowest level since 1969. That could change on Friday when the Bureau of Labor Statistics releases its August report. Roach predicts the rate is bound to start climbing.