[dissident]

http://www.zerohedge.com/news/2015-10-1 ... -plunge-25

India is not some small market of irrelevance.

There is lots of talk about a glut of oil on the world market. This is nonsense. The oil price drop is driven by collapse in demand and not by oversupply. The same thing happened in late 2008 and early 2009 as a major recession hit and oil prices collapse from $147 per barrel down to under $50 per barrel.

[GregT]

$this->bbcode_second_pass_quote('pstarr', 'E')ven the current $40/barrel oil is actually quite expensive in historical terms.

[onlooker]

This is all following the predicted pattern. Fluctuations in the oil price. Demand destruction rebound with successive weaker periods of recuperation if any. For those of us who understand what is going on the drama is almost anti-climatic. Shale has bought some time , so has pretend and extend QE. Yet these are stop gap measures. As economically recoverable oil becomes more problematic economies will strain ever more. For oil truly is the lifeblood of the economies.

[AgentR11]

pish posh... recession. no.

This is the Final Depression. We're gonna monetize the heck out of the system, go to war at any opportunity, push and pull it in every way possible to keep the base appearance of inflation and growth, and absolutely nothing may interfere with moving grain from field to grocery store shelf; but this goose is cooked. be comfortable while you can, for as long as you can; most of the world is not, and will not become comfortable.

And yippee, those responsible will be the last to go hungry. Ain't that a grand justice?

[onlooker]

Very very well said Agent, their is a order and in the US we may last longer then other countries but as you said this goose is cooked.

[Sixstrings]

Good post by dissident, informative, that import / export down 25% chart.

I'd wonder what an import / export graph like that would look like for the other major economies -- europe, china, us, throw Russia in too.

And Australia, I think I read they're down too.

As it stands, about the only major economy that's growing at all is the US. It's like 2%, not enough but compared to europe and china we're better off.

The federal budget deficit in the US is also the smallest since 2007. The economy has gotten a bit better, and tax receipts are up by $40 billion so that's why the deficit is down.

So.. yeah I think we're in a global recession.. question is, when and if it will pull the US down into recession too.

[dolanbaker]

Ireland is currently "recovering" from the crash of 2008 that followed the Celtic Tiger boom, the tax regime here is favourable to many multinationals who have placed their headquarters here. The short term future is still looking good, but I am very fearful about the medium to long term future due to our high dependency on imported fuel as the population is dispersed around the country and most of the jobs are in Dublin. Many people commute long distances to get to work and as the public transport is relatively inadequate, most local people drive to work as well. The extra expense in paying staff to do these commutes (plus the generally high costs of living here) mean that there is a real risk of these multinationals pulling out at any time should the tax system ever be successfully challenged by other countries.

[AgentR11]

Six, China's growth is currently at about 6-7%. Ours at 2%.

The real story on this though, is that I think since the crash '09; the numbers have been artificial; turns out that while you can't get away with cooking the books as it were; you *can* get away with cooking the definition of the numbers that the books are written in. And for quite a long time if your computers and trading mechanisms are fast enough and your balance sheet maximums large enough. And sure nuff, the Federal Reserves computers are fast enough; and their trading connections are fast enough; and the cap on their balance sheet is infinity.

Now, this doesn't make things perfect; from the smell of things, the model solution becomes more stable as interest/inflation approach zero; which is mediocre-ok, but not good. Good would be 3% inflation and 6% interest; or 2&4 at least; but my opinion is that the model gets rapidly unstable as it grows outside of 3%, so as much as they'd like to monetize into 3% inflation/6% interest, they just can't get there; at least not yet. The question then becomes, will there ever be a model that is fast enough and granular enough to let them QE their way to 3/6 even in the face of modest real economy contraction as a result of peak'ed resources.

If that ever happens; they will have created a working communist control system that works to funnel ALL the wealth and productive output of the worker into the hands of a few dozen humans.

The charts I'd watch aren't the dollar value of trade charts; I'd watch a pair of charts, exim balances of food calories; and exim balances of energy normalized across types.

[Cog]

Doesn't feel like a recession.

[AgentR11]

$this->bbcode_second_pass_quote('Cog', 'D')oesn't feel like a recession.

[kublikhan]

Yes higher oil prices resulted in lower oil demand than what we would have seen with low oil prices. But those same higher prices also resulted in higher oil supply than what we would have had with low oil prices. In the 40 years between 1973 and 2012 we averaged about half a million barrels of new supply a year. Since 2013, we have added more than triple that amount of supply per year. You should not ignore what is going on on the supply side. Demand is only half the equation.

As for whether or not we are in a global recession, I would caution you to read anything from zerohedge with a grain of salt. They distort the facts to present a sensationalist point of view. You should probably look at a more balanced source like the IMF. By their definition, we are not in a global recession:

$this->bbcode_second_pass_quote('', '[')b]DEFINITION of 'Global Recession'
An extended period of economic decline around the world. The International Monetary Fund (IMF) uses a broad set of criteria to identify global recessions, including a decrease in per-capita gross domestic product worldwide. According to the IMF’s definition, this drop in global output must coincide with a weakening of other macroeconomic indicators, such as trade, capital flows and employment. While there’s no official definition of a global recession, the criteria established by the IMF carries significant weight because of the organization’s stature across the globe. In contrast to some definitions of a recession, the IMF looks at more than a decline in gross domestic product (GDP). There must also be a deterioration of other economic factors, ranging from oil consumption to employment rates.

According to the IMF, there have been four global recessions since World War II, beginning in 1975, 1982, 1991 and 2009, respectively. This last recession was the deepest and widest of them all. Since 2010, the world economy has been in a process of recovery, albeit a slow one.

[onlooker]

I do not think so Kublikhan. IMF is one of the pillar institutions of this planet. They like the others are only interested in continuing business as usual. These fringe sensationalist sites are in fact painting the more accurate picture of the predicaments facing humanity.

[kublikhan]

At one time I felt so too onlooker. I used to read zerohedge articles and expected their predictions to come true. Yet time after time, their predictions failed to materialize. This did not stop the constant drumbeat of doomer porn however. They just keep dishing it out. But if you like getting your news from tabloid quality websites don't let me stop you.

$this->bbcode_second_pass_quote('', 'Z')ero Hedge is a batshit insane Austrian economics-based finance blog. It has accurately predicted 200 of the last 2 recessions. Multiple seemingly unrelated subjects to point towards a consistent theme of economic collapse any day now.

[Cog]

Same situation here as on ZeroHedge. The drumbeat of doom of various sorts never stops and also never comes to fruition.

[onlooker]

Actually good points guys. I think the reason is two-fold. First to attract attention these sites I think tend to jump the gun and get the timeline wrong. Second and more profound I think these doom forecasters have underestimated the resiliency of the system. Yet only in respect to the privileged rich countries. Not in respect to the rest of the world who you could safely say are already collapsing at least by some definitions of the word. What is even more important is to discern the trend and the trend worldwide is downward. Or does anybody wish to refute the downward trend politically, economically and socially of most countries?

[dissident]

Talk about shooting the messenger. To the clown who fobbed off my post because I linked ZeroHedge, why don't you prove the data for India is false. This sort of pinheaded, denialist reflex "thought" is exactly what is wrong with the world today. You don't get to dismiss the data this easy, sunshine.

[kublikhan]

Pstarr we could debate definitions of oil until the cows come home. I think the more important point is the price point: higher price = higher supply growth, lower demand growth. lower price = lower supply growth, higher demand growth. And behind it all the ever ticking clock of depletion running down our reserves causing us to reach for ever more expensive oil to meet demand. Eventually, the price required to grow supply will reach the point will consumers say no and demand falls.

About the IMF, they don't sound out of their mind to me Pstarr. Their latest outlook sounds pretty gloomy in fact:

$this->bbcode_second_pass_quote('', 'S')ix years after the world economy emerged from its broadest and deepest postwar recession, a return to robust and synchronized global expansion remains elusive. The revised forecasts in this latest World Economic Outlook report underscore the challenges all countries face. Despite considerable differences in country-specific outlooks, the new forecasts mark down expected near-term growth rates marginally, but nearly across the board. Moreover, downside risks to the world economy appear more pronounced than they did just a few months ago.

The ongoing experience of slow productivity growth suggests that long-run potential output growth may have fallen broadly across economies. Persistently low investment helps explain limited labor productivity and wage gains, although the joint productivity of all factors of production, not just labor, has also been slow. Low aggregate demand is one factor that discourages investment, as the last World Economic Outlook report showed. Slow expected potential growth itself dampens aggregate demand, further limiting investment, in a vicious circle. Aging populations further restrain investment in a number of countries; in some others, institutional shortcomings or political instability are deterrents. In its more extreme forms, political conflict has created a large global stock of displaced persons, both within and across borders. The economic and social costs are immense.

Recessions may have a permanent negative effect not only on trend productivity levels, but on trend productivity growth. This mechanism would make current low productivity forecasts look in part like products of the post-2007 turbulence. Some economic historians advance the idea that the postwar global growth experience largely reflects diminishing returns along the extensive margin of technological innovation, punctuated temporarily by the entry of China and the former nations of the Soviet Union into the global market economy and by the information and communications technology revolution.

Commodity exporters in particular have seen sharp depreciations of their currencies, but a general trend of reduced financial inflows to emerging markets has resulted in more generalized depreciation against the U.S. dollar, euro, and yen. Past attempts by emerging markets to fix their exchange rates in the face of large financial outflows had quite negative consequences for global financial stability.

In an environment of declining commodity prices, reduced capital flows to emerging markets and pressure on their currencies, and increasing financial market volatility, downside risks to the outlook have risen, particularly for emerging market and developing economies.