Having more knowledge on economics and finance can sometimes be worrying. That old saying, 'if you don't read the news, you are uninformed and when you read the news you are misinformed'. sounds true to some point and I will also like to add, 'if you read financial news, good for you, if you don't read them, also good for you: both come at a cost; either economically ignorance or fearful'. Trust me, when I caption this article 'what's coming?' I actually mean it out of study and research. I am talking of a pending recession, is your heart melting already? The challenges of financial safety is mostly tagged to global economy.
Keep your riches in paper notes and inflation depreciates it over time, so you see why you'll definitely need other options. That is where the risk comes in more. world expert are giving out red flags of a possible recession. When the list of recession possibilities can full a 1000 page journal, you'll have to consider and also reconsider. Have you heard of the Lehman Brothers collapse in 2008? Before we get there, maybe we should do a brush up of recession and what can possible trigger it.
source
So what's recession? We are talking about economic downtrends that occur over a certain period of time, mostly attributed to span for months or years. This surfaces as a result of a contracting GDP( Gross Domestic Product) for more than a quarter. Its negative impact is always threatening; increased unemployment, high level of forgone alternatives which shrinks cash flow, stock market price crash and other related markets, reduction in business investment and so on.
Many were still in doubt until Lehman brothers filed for bankruptcy in September 2008. It has been the last experienced global recession with many believing the ground was not well swept. I know someone will be saying please don't tell me the economy is getting worse soon. Looking at everything in general, is the world getting better and better or Vice versa?. It's better one prepares for the worst while praying for the best. The issue of debt is strangling economic giants like the US and many believe it will soon explode. A dollar crash will indeed have global financial impact. The last recession started in the US we must note. The Lehman crash took series of steps in the US from 2007 before exploding in 2008 and lasted till 2009. A three year melting market shows indeed the damage was globally severe.
As we still in the recession aftermath or long recession as economists would say after 25 years? If this be true it will be like a tornado merging with an earthquake. Boom! Are we doomed? Didn't I tell you reading economic news is acquiring financial knowledge at the cost of depression? Lehman Brothers was one of the largest investment banks even climbing to become the fourth largest in the entire US. It's one of the questions of why are we still trusting the bank? These guys may repeat this process again in a decade or less and the government will always have their back. There may be a lot of saying regarding how corrections were made to tighten the economy. What are we to say, why is the one year investment returns larger than a ten year investment returns as I saw in a recent financial post in the US? Maybe I will say, they are very uncertain about the market behavior within a decade.
source
The Great Depression of the 1930's still sprouted from the US economy. This is signaling enough red flags already. I never knew why many financial authors kept preaching about 'dollar market crash' but I am getting more glimpses recently; the debt pile in the US is a big threat to the world economy and one possible ways to easen it will be through a general market crash for a relief. money is not safe, global assets are not also safe, it seems we are living daily with crossed fingers. During the 1930's depression, international trades dropped to 50% with high unemployment. While the US unemployment rate was seen to reach 25% several other countries faced up to 33% and more.
We are in the post pandemic era which we know the pandemic led to a lot of money printing to salvage life and meet up global demands. Those who study numbers know truly well that numbers cannot be dubbed. With too much in circulation it's likely to rebound. We are seeing crashings already in several countries with adjustments to meet up. It's difficult or impossible to adjust a big leg into an old small shoe meaning you'll have to cast it out. Redefine this parable with financial numbers and you'll agree with me that something is definitely boiling up.
To conclude, let me add, we need to be prepared as individual investors to avoid being wiped out by any pending recession. These TOP guys have their ways of hedging as long as they are close to those in power house. I see a need for both local and global investment practices to curb pending financial threats. It all has its risks, what other choice do you have? share them, I am all ears. The world is becoming more scary. At one end you are trying to create wealth and at the other future possibilities of recession need to be well tackled. Whether one chooses to accept it or not, something is definitely coming.
Posted Using InLeo Alpha