I've been an entrepreneur through three major recessions - the early 2000s (8 months long), the great recession 2007 (18 months long), and the 2021 COVID recession (2 months long).
In each event I was significantly more impacted by the media salivating about the potential for a coming economic collapse than I was actually living through them.
Certainly my companies were impacted negatively at the outset of each, but emerged stronger to take advantage of the clear skies and sunny days that proceeded each event.
We've been playing on easy mode for the past 10 years in many ways - it's difficult to truly innovate without challenge, and today I embrace the potential for the board to shift, to find new opportunities to innovate, and to embrace change.
What worries me more is that it seems like the post-WW2 order is shaken. Large-scale war is back on European soil. Information and propaganda wars are intensifying. The defense architecture of the Western hemisphere now needs to cope with unpredictable dictators posing a nuclear threat.
The news media is addicted to economic doom stories IMHO. They generate a lot of viewer interest even when most people are barely affected. Even when times are good there are always stories about how it's all illusory and in fact we're all moments away from disaster.
I wonder whether having the media doomplay every crisis is part of the confounding or resorbing forces. Are they making it worse by persuading everyone that there is a crisis and that they should stop investing? Or are they helping decision makers anticipate and therefore smoothen the blow? I mean, the 2008 they talked so much about was way smoother than the 1995-1998 crisis, where managers were taken hostage in France in dozens of manufactures, where the Five Dragons fell in Asia and where Boris Yeltsin’s Russia came to an end?
The 1998 Russia crisis is particularly interesting:
- Russia was put under FMI (IMF) leadership with huge monetary injection,
- Financial games made that this money didn’t help the populace but only helped to create a new billionaire class in Russia.
- We have a dozen thousand Russian multimillionaires here on the French Côte d’Azur (Nice) coming from that period; and the other half of the oligarchs created the Putin regime.
Talk about a grave crisis, Ukraine is a ripple effect of the IMF stuffup.
There was a chilling effect from swarms a "you're praying for a recession" about 3 years ago but it certainly wore off. The real power players make money coming and going so real economic growth and wage growth is the last thing they and the executives at media companies want.
Our financial markets are basically casinos by now and highly influence by emotion. So negative press will inevitably have a real impact on the economy as sad as that is.
Same here. The last 30 years have given me a very steady growth. The last five or so have been insane. I took a hit when Putin decided to ruin his country, but, if we don't go up in a fireball, things will be good, afterwards (except, maybe, in Russia. I really hope that they don't go back to Stalin-era privation, after having a few years, experiencing Western decadence/freedom. I've really enjoyed working with Russians, and this is pretty depressing).
Having seen a small fraction of the tooling that the Fed uses behind the scenes, I am now convinced that there is a fairly big gap between the publicly available analysis + expertise v. the capabilities accessible to decision makers.
When the policy makers are running millions of simulations with real-time transaction data + inputs, what utility does all of the fretting and "analysis" in the media have?
The system has become extremely dense and opaque, and what is in the public realm seems to be decoupled from the policy making + expertise. At best, the public can learn from footnotes that the Fed intends to (and has) pursued simulations to track, forecast & calibrate its policies,
> 29 To facilitate analysis of settlement disruptions, systems may need to develop the capability to simulate credit and liquidity effects on participants and on the system resulting from one or more participant defaults, or other possible sources of settlement disruption. Such simulations may need to include, if appropriate, the effects of changes in market prices, volatilities, or other factors.
Tools are only as good as the people who use them. We need more transparency into the decision making aids, as well as greater access to help people understand how the economy is managed as a system.
But until then, all this media doom and gloom isn't helping.
I tend to trust the Fed as well. They saved us from total collapse in '08, and made the COVID recession the shortest one on record. I think after 40 years of practice we're starting to get pretty good at this MMT thing.
Lower-income people are also worried about the economy. In fact, if I'm reading that graph correctly, the brief period where high-income people were the only people not worried about the economy has now ended.
Not really surprising given the sharp disconnection of a large chunk of the world's economy and the blockading and shelling of a smaller part.
Russia’s economy isn’t a large chunk. It’s criminally small given their population, land mass, and strategic location between China, India, and Europe. They make as much money as the Netherlands plus Belgium, two tiny countries with small populations. They need serious reforms, pronto.
Granted, from a resource point of view, they are important.
That small part is also a breadbasket and, together with the larger, makes up 1/3 of the worlds grain. That 1/3 is closer to 100% in some countries in the ME and Africa.
Higher-income people are business people. Business people are always worried, deep down, even when they won't admit it to anyone. The worst whiners I've ever met were wealthy shopkeepers and industrialists - they know it can all go in an instant.
Wonder if these are the same people as the 33% of home buyers who bought as investments. I too would be worried buying at the peak of a bubble realizing nobody can afford to buy the flip at the extremely inflated prices with mortgage rates increasing. Or that few people can afford to pay rent at the price of inflated mortgage + profit margin
I don't think this mentions anything about housing or mortgages. I think it's a bit simpler than this. Higher income people currently already have their basic needs met and have a good amount saved up for eventual retirement. When people's current needs are met, they think about the future, the economy affects it. Lower income people are currently struggling to make ends meet. You'd already be worrying about it everyday, the economy getting worse basically feels like noise that you don't have time to add to your worries.
I'm sure we'll find a way to keep inflating housing prices. I'm in my 30s and my entire adult life I've been thinking "no way it can keep going up" and it kept going up.
For my family, and probably many like mine, our concern is watching our savings evaporate. I lived through 08, so I remember massive recessions. But things are different when you're just starting out and watching your modest "retirement" account fall, than they are when you have a significant life that you've built. I know pragmatically that the markets will rebound, but it's still jarring to see your net worth move so dramatically in a matter of weeks.
I'm also not very concerned about housing. Even though I definitely overpaid, living through 08 gave me the mentality that houses are places you live, not investments you make.
Buying at the bubble only hurts short term flippers. If you bought at the peak of the last bubble in 2007 in markets actually worth buying in, you would have probably seen yourself back in the money in a few years and have been making money hand over fist on your investment since.
Bad title. Based on their own chart, higher-income people (defined as those earning more than $100k) have more confidence than any other group. That confidence just dropped more than the others'. This is a story about a derivative. Given the higher baseline, it may not be a story at all.
Even worse about the title, lower income people all had the same drop. They just did it earlier. Really bad analysis and narrative building by the author.
I lost 3/4 my money (it wasn't much) when I was 20 in 2008 since I decided it was time to start putting my savings into the market like a responsible adult (August '08 is when I did this).
The traumatic psychological fall out from that completely destroyed any innate faith I could have in markets and I still suffer from it today regardless of how illogical it is. I basically lived the "...And it's gone" meme.
About the same age, and I don't think there has been a point in my life where I didn't think the economy was on the verge of collapse. My whole life, even now, I think everything will be taken from me any second. Guessing it has to do a lot with the financial stress my soviet-immigrant parents experienced while I was growing up.
I just tune it out. There will always be negative headlines, reasons to sell stocks. Reasons to be pessimistic. Instead, I stay invested. What is supposed to be a crisis almost always comes to pass. What is supposed to be ww3 is just self-limited. Ukraine vs. Russia is not Germany vs Poland. We will get through this.
People I know who were recently unable to buy houses in California include a long-time staff engineer at Google and a heart surgeon married to a brain surgeon. I know this data is nationwide but the crisis in California has become so acute that even people with 98th-percentile incomes are looking around and saying how fucked up everything is.
I think of it as the "big two" and it's housing and healthcare :-/ No other one thing exceeds half of either one of those.
[EDIT] Necessarily exceeds, I guess I should say. My food budget exceeds half of either of those, but that's mostly laziness and luxury. I could easily cut that a ton and barely even suffer for it.
The most worrying thing is that congress has to drastically cut spending and/or raise taxes so the fed can raise rates while still allowing the government to service it's debt.
I believe the government absolutely blew its load propping up lots of entities during the early pandemic who actually did not need propping up at all (in retrospect). In an idealized case, the government would go around and ask everyone "Hey, if you didn't actually need that money, could you give it back?" and people would honestly return it.
Obviously not going to happen though.
Such an odd title. Clearly, as the article even suggests, it’s actually people that understand finance and economics that are the ones that are concerned. Wealth is only tangentially related.
Regardless of the semantics, I am very much of the opinion that we are in for some rough ass times.
Recession+inflation=stagflation. Not sure what you call it when you add in energy crisis, risk of WW3, a push for a new global hegemony, an increasingly hawkish Fed, extreme political divisions, a looming food/fertilizer crises, and a globe still snarled by covid.
associative thinking is great for learning, not great for thinking about major disaster.. tough times call for details and specifics, not "a list of everything that can go horribly wrong" .. its bad for mental health, literally, right?
Well... I can consider myself in the "hi income/wealthy" of my country (Italian living in France), I'm worried not much about the economy but about society at a whole.
Being wealthy means just a probable less hard landing, the probable capacity of accepting new skyrocketing costs for a long period of time, still being able to access/source what I need for a more or less comfortable life and maybe also being able to invest in the meantime for a future perhaps not marginal profit, but even if all that happen respect of today I'll still get less because the whole society have less.
Just imaging being wealthy today in France and tomorrow being even very rich in Turkmenistan. Oh you are much more rich in relative sense but what can Turkmenistan offer? Perhaps in a far future with new technologies and space explorations things will change but that surely might happen far beyond my life expectancy.
That's is. That's the basic law of nature, no matter morality, no matter feelings, no matter what. We face a scarcity crisis that will led to social unrest and wars. The most optimistic scenario is bad so it's normal to being worried, because even the most optimistic scenario means at least a very bed decade, perhaps two or three decades, plus a not so quick recovery that probably still demand years.
If that is all they are worried about then they are not paying attention. There is a fairly large chance of a much larger war and the economy may well be the least of your problems.
People have been predicting nuclear war for 70 years. Maybe they need to give it a rest. Obviously it would be very bad, but it's not something to be preoccupied with.
They are totally aware of the stakes, but they don't care. In our world, the richer you get, the more you can escape the consequences that the poor, popular and middle classes have to endure.
The higher income class is de facto in power in our democracies. No conspiracy here, just a class phenomenon. The poor don't vote ; the popular and middle classes tend to elect people from the higher income class. Their economic success give them credits for handling things.
The higher income class doesn't care about
1/ the health of people
2/ if the wages are enough to have a modest but at leat descent life
3/ the environment
They care about
1/ their own wealth, health
2/ having no social constraints whatsoever (in the name of freedom, which is a right for all but they are the ones who have the means to act as free persons)
3/ order: they want a super policed society. So the poor are over-repressed by the police but they escape the law (connections, bribery, very good lawyers).
On climate disruption and biodiversity annihilation, our "elite" reveals that they don't even care for their grandchildren. The 0.1%, the top of the income elite, do care and buy large pieces of land in New Zealand with 100% self-sustainable houses and food production. And armed security and heliports.
The takeaway bullets seem almost non-sequitur. I don't know what those numbers mean for consumer sentiment index, but the absolute level of consumer confidence is still higher for higher income groups. The fact that it has dropped for everything, but more steeply for higher income, doesn't seem like it has to be related to any causal phenomenon beyond basic diminishing marginal utility. When you're down in the dumps already, you don't have as far to fall. You may as well draw a bunch of weird conclusions about mindsets and possible reasons when you find an MMA fighter at the end of a fight half passed out on the mat, kick him in the face, also kick a random bystander in the face, and find the random bystander has more of a reaction. The first hit hurts a lot more than the 100th.
S&P 500 is down 7% this year and inflation is running at 8%. Those compound so folks are seeing 15% declines in wealth in 3 months.
The Fed can only choose one of those "problems" to solve -- let asset prices fall and tame inflation, or prop up asset prices and let inflation run wild.
Um, duh...? The people making less don't have much in the market, and a large part of that will be in highly restricted accounts like (most) 401k plans with just a few funds to pick from.
It's so manipulative to 1) use income and 2) break society into those low brackets of <$50k, $50-100k, and $100k+... as of they aren't all working-class people.
That might be where people are starting to escape the working class and enter the middle class, but certainly not "rich" or "high" class, as the article suggests. If your family has a net worth of $2-4 Million and are making $100-200k/yr, then you might... own one Arby's franchise.
I like Arby's and kinda wish I had that for lunch, but folks who own one Arby's are not exactly major competitors in the world of capitalism (in an individual sense). They're the middle class (to the extent that one even exists). Those are people who - together with many other small businesses - could form a community that shapes the market and provides a strong stabilizing force... but they're still "consumers."
They should be, all the massive wage gains they've captured recently could turn into mass layoffs as companies can't afford to pay them, let alone the lower wage workers.
[+] [-] aresant|4 years ago|reply
In each event I was significantly more impacted by the media salivating about the potential for a coming economic collapse than I was actually living through them.
Certainly my companies were impacted negatively at the outset of each, but emerged stronger to take advantage of the clear skies and sunny days that proceeded each event.
We've been playing on easy mode for the past 10 years in many ways - it's difficult to truly innovate without challenge, and today I embrace the potential for the board to shift, to find new opportunities to innovate, and to embrace change.
[+] [-] bluetomcat|4 years ago|reply
[+] [-] jandrese|4 years ago|reply
[+] [-] laurent92|4 years ago|reply
The 1998 Russia crisis is particularly interesting:
- Russia was put under FMI (IMF) leadership with huge monetary injection,
- Financial games made that this money didn’t help the populace but only helped to create a new billionaire class in Russia.
- We have a dozen thousand Russian multimillionaires here on the French Côte d’Azur (Nice) coming from that period; and the other half of the oligarchs created the Putin regime.
Talk about a grave crisis, Ukraine is a ripple effect of the IMF stuffup.
[+] [-] fundad|4 years ago|reply
[+] [-] altdataseller|4 years ago|reply
Now, there are less greenfield spaces, more competition, and less barriers to get started. Much much harder to start a successful business today.
[+] [-] raxxorrax|4 years ago|reply
[+] [-] ChrisMarshallNY|4 years ago|reply
[+] [-] black_13|4 years ago|reply
[deleted]
[+] [-] areoform|4 years ago|reply
All decisions made by the Fed are made using comprehensive and sophisticated simulation tools, including tools that I'm under NDA and can't talk about. (However, I can say that the Fed is a customer, as that is publicly available information) Only a small fraction of this tooling is available publicly in the form of, FRB/US - https://www.federalreserve.gov/econres/us-models-package.htm , FLARE - https://www.federalreserve.gov/econres/notes/feds-notes/test... and whatever ABBA is, https://search.usa.gov/search?affiliate=ofr&query=agent-base...
When the policy makers are running millions of simulations with real-time transaction data + inputs, what utility does all of the fretting and "analysis" in the media have?
The system has become extremely dense and opaque, and what is in the public realm seems to be decoupled from the policy making + expertise. At best, the public can learn from footnotes that the Fed intends to (and has) pursued simulations to track, forecast & calibrate its policies,
> 29 To facilitate analysis of settlement disruptions, systems may need to develop the capability to simulate credit and liquidity effects on participants and on the system resulting from one or more participant defaults, or other possible sources of settlement disruption. Such simulations may need to include, if appropriate, the effects of changes in market prices, volatilities, or other factors.
Tools are only as good as the people who use them. We need more transparency into the decision making aids, as well as greater access to help people understand how the economy is managed as a system.
But until then, all this media doom and gloom isn't helping.
[+] [-] ramesh31|4 years ago|reply
[+] [-] pjc50|4 years ago|reply
Not really surprising given the sharp disconnection of a large chunk of the world's economy and the blockading and shelling of a smaller part.
[+] [-] FredPret|4 years ago|reply
Granted, from a resource point of view, they are important.
[+] [-] gunfighthacksaw|4 years ago|reply
[+] [-] rbanffy|4 years ago|reply
Sure, but they always are - as they should: they are the first to be affected and the last to see the effects of recovery.
[+] [-] toyg|4 years ago|reply
[+] [-] vinyl7|4 years ago|reply
[+] [-] godot|4 years ago|reply
[+] [-] Aea|4 years ago|reply
[+] [-] mywittyname|4 years ago|reply
I'm also not very concerned about housing. Even though I definitely overpaid, living through 08 gave me the mentality that houses are places you live, not investments you make.
[+] [-] TomVDB|4 years ago|reply
I follow a couple of markets pretty closely and hardly see any houses that are bought and sold within a short time.
[+] [-] asdff|4 years ago|reply
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] nativespecies|4 years ago|reply
[+] [-] JumpCrisscross|4 years ago|reply
[+] [-] bobro|4 years ago|reply
[+] [-] tjr225|4 years ago|reply
[+] [-] Workaccount2|4 years ago|reply
The traumatic psychological fall out from that completely destroyed any innate faith I could have in markets and I still suffer from it today regardless of how illogical it is. I basically lived the "...And it's gone" meme.
[+] [-] dntrkv|4 years ago|reply
[+] [-] paulpauper|4 years ago|reply
[+] [-] jeffbee|4 years ago|reply
[+] [-] lkxijlewlf|4 years ago|reply
How does anyone think anyone except those of us making high wages can make it? People are treading water at this point.
[+] [-] brimble|4 years ago|reply
[EDIT] Necessarily exceeds, I guess I should say. My food budget exceeds half of either of those, but that's mostly laziness and luxury. I could easily cut that a ton and barely even suffer for it.
[+] [-] yellowcake0|4 years ago|reply
[+] [-] currycurry16|4 years ago|reply
[+] [-] Workaccount2|4 years ago|reply
I believe the government absolutely blew its load propping up lots of entities during the early pandemic who actually did not need propping up at all (in retrospect). In an idealized case, the government would go around and ask everyone "Hey, if you didn't actually need that money, could you give it back?" and people would honestly return it. Obviously not going to happen though.
[+] [-] sudden_dystopia|4 years ago|reply
Regardless of the semantics, I am very much of the opinion that we are in for some rough ass times.
Recession+inflation=stagflation. Not sure what you call it when you add in energy crisis, risk of WW3, a push for a new global hegemony, an increasingly hawkish Fed, extreme political divisions, a looming food/fertilizer crises, and a globe still snarled by covid.
[+] [-] mistrial9|4 years ago|reply
[+] [-] kkfx|4 years ago|reply
Being wealthy means just a probable less hard landing, the probable capacity of accepting new skyrocketing costs for a long period of time, still being able to access/source what I need for a more or less comfortable life and maybe also being able to invest in the meantime for a future perhaps not marginal profit, but even if all that happen respect of today I'll still get less because the whole society have less.
Just imaging being wealthy today in France and tomorrow being even very rich in Turkmenistan. Oh you are much more rich in relative sense but what can Turkmenistan offer? Perhaps in a far future with new technologies and space explorations things will change but that surely might happen far beyond my life expectancy.
That's is. That's the basic law of nature, no matter morality, no matter feelings, no matter what. We face a scarcity crisis that will led to social unrest and wars. The most optimistic scenario is bad so it's normal to being worried, because even the most optimistic scenario means at least a very bed decade, perhaps two or three decades, plus a not so quick recovery that probably still demand years.
[+] [-] jacquesm|4 years ago|reply
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] paulpauper|4 years ago|reply
[+] [-] deburo|4 years ago|reply
[+] [-] FrenchAmerican|4 years ago|reply
The higher income class is de facto in power in our democracies. No conspiracy here, just a class phenomenon. The poor don't vote ; the popular and middle classes tend to elect people from the higher income class. Their economic success give them credits for handling things.
The higher income class doesn't care about 1/ the health of people 2/ if the wages are enough to have a modest but at leat descent life 3/ the environment
They care about 1/ their own wealth, health 2/ having no social constraints whatsoever (in the name of freedom, which is a right for all but they are the ones who have the means to act as free persons) 3/ order: they want a super policed society. So the poor are over-repressed by the police but they escape the law (connections, bribery, very good lawyers).
On climate disruption and biodiversity annihilation, our "elite" reveals that they don't even care for their grandchildren. The 0.1%, the top of the income elite, do care and buy large pieces of land in New Zealand with 100% self-sustainable houses and food production. And armed security and heliports.
[+] [-] aftbit|4 years ago|reply
>They also tend to be older, and may remember living through inflation decades ago. "Young people don't know, and they'll soon find out."
How has consumer confidence been affected in older middle and lower class folks?
[+] [-] nonameiguess|4 years ago|reply
[+] [-] nostromo|4 years ago|reply
The Fed can only choose one of those "problems" to solve -- let asset prices fall and tame inflation, or prop up asset prices and let inflation run wild.
[+] [-] giantg2|4 years ago|reply
[+] [-] goodluckchuck|4 years ago|reply
That might be where people are starting to escape the working class and enter the middle class, but certainly not "rich" or "high" class, as the article suggests. If your family has a net worth of $2-4 Million and are making $100-200k/yr, then you might... own one Arby's franchise.
I like Arby's and kinda wish I had that for lunch, but folks who own one Arby's are not exactly major competitors in the world of capitalism (in an individual sense). They're the middle class (to the extent that one even exists). Those are people who - together with many other small businesses - could form a community that shapes the market and provides a strong stabilizing force... but they're still "consumers."
[+] [-] candiddevmike|4 years ago|reply