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mdman

History Rhymes - With Which Recession This Time?

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My money is on the stagflation 70s

The Fed has indicated it will swap whatever bad debt there is in the banking and shadow financial system (running into the ? trillions) with US-treasuries. Seems likely there'll soon be co-ordinated CB action to prevent a true collapse of the dollar.

The main fly in the ointment is the extent of leverage. If it's too much, banks are already insolvent and the ensuing market panic will ensure a deflationary depression with widespread deleveraging 1930s style. Anyone have any idea on how much leverage there is now compared to past financial crises? And what the effect of derivatives will be...

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I'm expecting a Japanese asset-deflationary scenario but with

- faster timescales due to banks having to be more open about losses.

- inflation in all imported material/products.

The demographic and long run up of overlending is similar IMO.

Savers dont do well in Japan due to the low interest rate but at least they are better off than the boom-time borrowers.

VMR.

Edited by VeryMeanReversion

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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