{"id":41322,"date":"2018-12-05T09:26:39","date_gmt":"2018-12-05T14:26:39","guid":{"rendered":"https:\/\/olduvai.ca\/?p=41322"},"modified":"2018-12-05T09:26:39","modified_gmt":"2018-12-05T14:26:39","slug":"empty-words-are-failing-a-timeline-for-what-comes-next","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=41322","title":{"rendered":"Empty Words Are Failing. A Timeline For What Comes Next"},"content":{"rendered":"
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Empty Words Are Failing. A Timeline For What Comes Next<\/a><\/h3>\n

A quick recap of the past couple of months:<\/span>\u00a0<\/span><\/p>\n<\/header>\n

\n

Stocks plunge.<\/p>\n

The politicians, bureaucrats and bankers who depend on artificially-elevated financial asset prices start to panic.<\/p>\n

The Fed\u00a0<\/a>announces that maybe it won\u2019t have to raise interest rates any more, and the president announces a temporary cease-fire in the trade war with China.<\/p>\n

The markets bounce, leading some to conclude that the worst is over and it\u2019s time to go back to buying the dip.<\/p>\n

A larger number of people conclude that the changes in policy were really just empty words. No actual actions had taken place.<\/p>\n

Stocks start falling again.\u00a0You are here<\/strong>\u00a0\u2014 as this is written on Tuesday Dec 4, the Dow is down about 300 points.<\/p>\n

What happens next?<\/strong>
Think of the past few months as the first act in a play that is performed in virtually every business cycle, with later acts following a predictable script. Here\u2019s how it\u2019s likely to go this time:<\/p>\n

Words give way to modest action (early 2019).<\/strong>\u00a0When the markets figure out that empty promises don\u2019t change the underlying reality of slowing growth, falling corporate profits and rising loan defaults, they return to panic mode. Governments are then forced to actually do things to try to stop the bleeding. In the current US case, that means the Fed will announce that it\u2019s done raising rates and will soon start cutting. Trump, meanwhile, will cut a trade deal with China that accomplishes little but removes the future uncertainty.<\/p>\n

This will be greeted with another few days of market euphoria, followed by the realization that, again, nothing substantive has changed. Stocks will resume their decline. Let\u2019s call this \u201c2008 revisited.\u201d<\/p>\n

\"DJIA<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Empty Words Are Failing. A Timeline For What Comes Next A quick recap of the past couple of months:\u00a0 Stocks plunge. The politicians, bureaucrats and bankers who depend on artificially-elevated financial asset prices start to panic. The Fed\u00a0announces that maybe it won\u2019t have to raise interest rates any more, and the president announces a temporary […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1726,3172,213,303,1849,431,7544,534,1577,3650],"class_list":["post-41322","post","type-post","status-publish","format-standard","hentry","category-economics","tag-asset-prices","tag-bankers","tag-dollar-collapse","tag-fed","tag-financial-markets","tag-interest-rates","tag-john-rubino","tag-monetary-policy","tag-politicians","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=41322"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41322\/revisions"}],"predecessor-version":[{"id":41323,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41322\/revisions\/41323"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=41322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=41322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=41322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}