Possible Recession?
I am currently an incoming 2019 summer analyst for a BB.
Due to the cyclical nature of IB and news of a possible recession in the next 3-5 years, how worried should I be about the impact an economic downturn could have on me should I pursue a FT role in IB after the 2019 summer? What were the typical cuts seen in 2008?
Recession starting in the next 3 to 5 months, but not as bad as 2008
Even if stocks are overbought we should not forget our Federal Reserve Managers that so strongly believe in their ability to save the world, that they do not understand that all they do is create a much larger monster as a result of non-stop printing of money. They are so arrogant that they can not even call their actions an honest name. What they do is nothing more than printing money (MP). But instead they call it quantitative easing (QE). This absolutely ridiculous title is designed to hide the inadequacy of their policies, and also to deceive people. Nobody understands what QE means, and this, of course, was done deliberately. They simply confuse the public and mislead it, forcing people to think that their hocus-pocus is in fact an alchemical formula that creates eternal prosperity.
These central bank executives are now so confident in their control over the situation that they are replacing QE with QT (quantitative tightening). And in this fact we can see their absolute arrogance is manifested. The QE program did not work. All she did was turn a fragile financial system into the biggest bubble in human history. Even with zero or negative interest rates combined with a large-scale MP, real GDP does not grow (if you calculate this figure using real inflation figures). In addition, it takes several dollars, euros or pounds of credit expansion to create only one dollar, euro, etc. GDP growth. Because QE, MP, or whatever you call it, did not work, why the hell does it appear that QT will work? You seem to take away the drink from a chronic alcoholic who is about to die from drinking, or he will die because of a hangover. This is happening to the world economy. It will collapse either due to the continuation of QE or due to QT. So, both QE and QT mean the end of the game. Most luckily the recession will be greater than ever and mostly touch US economy, we will see a recession that will go for years, meanwhile it will probably touch countries with their own Central Bank's very badly as well. But still maybe they will still figure something out, I dunno.
What I am wondering is would cryptocurrency market rise in such case scenario, as this can be a very good start for crypto usage worldwide. Just my 2 cents.
English? This is wild conjecture
Central banks don't care about markets. They're academics. Period. They only look at economic data and respond on that. Politics has nothing to do with monetary policy, and neither do markets. Both are merely small components to very in-depth models central bankers use.
And I should add, I think central banks do the "noble" work of banking that private banks no longer care about as they focus on appeasing shareholders. Not saying it's wrong, but providing liquidity and securing a community's funds is the pure function of banking in its origin, not driving up transaction income. Governments and policy drive financial collapses.
First day on the job? In a very very very simplified way, all the government did was issue bonds to expand the money supply given the liquidity crunch. Now that the economy is moving fast enough for their liking, they've been issuing less. When those bonds expire as they're paid off, POOF, less money floating around. Problem solved.
Crypto is an accounting tool, like SAP reports....you wouldn't buy and sell those, you shouldn't waste your time with crypto.
Ciao
What this guys says. Your desk must love you. Very cleanly put. The Fed issued bonds bought by the Treasury to pump cash into the market by buying up bank assets (a lot of securitized souring loans).
The crypto description is a real nice touch.
Thanks. I moved over to the consulting side a while ago, so I no longer belong to a desk.
Curious what you see the fate of the loans being? I haven’t paid too much attention to that lately. You seem well informed, so I must ask you
The loans have been maturing, and the Treasury has been making a profit. That’s what’s happening. I don’t know what will happen in the future.