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 Post subject: IMF Downgrades Global Economic Outlook Again October 2015
PostPosted: Tue Oct 27, 2015 2:54 pm 
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IMF Downgrades Global Economic Outlook Again
http://www.wsj.com/articles/imf-downgra ... 1444140016

According to IMF reports, in October 2014, global growth for 2015 was projected to be 3.8%
It has been revised several times throughout this year.

Currently, it stands at 3.1% which is 0.1% off what is classified by economists as a global recession.

"Downside risks to the world economy appear more pronounced than they did just a few months ago."

Could we be heading into another Global Recession?


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 Post subject: Re: IMF Downgrades Global Economic Outlook Again October 201
PostPosted: Tue Oct 27, 2015 3:23 pm 
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Posts: 2564
How big a threat is this to the Irish economy

A lot of commentators put the improved Irish economic data largely down to
- US and UK economies outperforming the Eurozone
- weakness of euro

or put it another way - not thanks to how great the current government is. Positive news is always good of course, but not if you base policy on assuming this will continue ad infinitum

Seeing as we framed an election budget based on the usual Disco Stu school of economics could this turn the milk sour in Ireland?

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Borrowers seeking mortgages have had to resort to saving deposits, forcing many to sit by and watch house prices tumble without being able to do anything about it. Sunday Independent - June 1 2008

I know a lot of them, like [Jimmy] Flynn, [Noel] O’Flaherty and the Baileys. You meet the Baileys at Croke Park every time you go there. You can’t avoid getting a slap on the back going in from them. Most of these guys lost their shirt. I feel sorry for them - Bertie Ahern


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 Post subject: Re: IMF Downgrades Global Economic Outlook Again October 201
PostPosted: Tue Oct 27, 2015 3:36 pm 
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Posts: 2506
If EURUSD hits parity then Ireland will be ok.
Watch the sectoral balances and ignore the other nonsense...
Trade Balance and Govt Deficit helping the Private Surplus for Ireland at the moment.

Almost impossible for Yellen to hike rates now --- the German 5Yr is negative 13bps today!! the US 5Yr is positive 135bps; if she hikes she'll blow that out to 175bps+ ... and that would push EURUSD inside parity.

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Profits = Investment – Household Savings – Government Savings – Foreign Savings + Dividends

(i.e. company profits are directly fed, in part, by government deficits)

BANKS DON'T LEND RESERVES
As confirmed by the Bank of England


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 Post subject: Re: IMF Downgrades Global Economic Outlook Again October 201
PostPosted: Sun Dec 13, 2015 5:52 pm 
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Low interest rates threaten solvency of pension funds and insurers - -> http://www.oecd.org/economy/low-interes ... surers.htm
24/06/2015

Quote:
24/06/2015 - The current low interest rate environment poses a significant risk for the long-term financial viability of pension funds and insurance companies, as they seek to generate sufficient returns to meet promises, according to a new OECD report.
<snip>
The report also cites a very real risk that the current trend for companies to return cash to shareholders via dividends and buybacks, in order to boost short-term returns, means that capital will not be reinvested in more productive activities. This will hurt innovative investment and productivity growth. There are also risks building up from greater leverage and riskier investment in higher-yield and complex products with poor liquidity.

Over the next five years, pension funds are expected to grow 26% from an estimated USD 28.4 trillion in 2014 to USD 35.8 trillion in 2019; insurance companies’ assets will grow 33% from USD 28.2 trillion in 2014 to USD 37.7 trillion in 2019; and mutual funds will expand by 38% from USD 33.4 trillion in 2014 to USD 46.1 trillion in 2019.

Pension funds and insurers could face issues as high-yielding bonds are replaced by low-yielding bonds in their portfolios. Lower interest rates will lead to lower returns for pension funds, which invest around 40% or more of their assets in fixed income securities, including lower yielding government bonds. If interest rates remain low into the future, funds and insurers may find their assets insufficient to meet their promises, unless they adjust their pension or payment promises.

there is more



Low interest rates have intended, unintended consequences - -> http://www.crainsdetroit.com/article/20 ... nsequences

Quote:
Private equity firms had $700 billion in assets in 2000; today, they have $3.5 trillion, Trennert said. And investors should be leery of hedge funds, which have grown from about $30 billion in 2008 to about $130 billion now. Despite their reputations, hedge funds have been getting beaten by traditional money managers.

"It's the cult of activist hedge funds," he said. "They used to be called raiders. Now they're called activists, which is great PR."

there is more



Low interest rates are the problem, not the solution - -> http://www.ft.com/cms/s/0/9ef4ab62-4d7a ... 77189.html

Quote:
But here’s the problem: we may be looking at it all the wrong way around. What if the malign effects of super low rates are so extreme that they are holding back the economy from recovery? What if low rates are more the problem than the solution?
Let’s look at some of these effects. There is the issue of capital misallocation. Low interest rates encourage people to borrow money to invest in things that aren’t necessarily good investments — global corporate debt has more than doubled from 26 per cent to 56 per cent of GDP according to McKinsey.

All this borrowing can be deflationary in that it creates excess supply (the US oil boom and the consequent collapse in the price of oil being a case in point). Given that super low interest rates are supposed to be causing inflation, that’s something of a problem. All this borrowing also pushes equity markets higher than seems a good idea: the biggest buyers of shares in the US market have been not real investors but companies buying back their own shares with cheap borrowed debt.

The result? Not only, as Troy’s Sebastian Lyon puts it, do “equity valuations appear high at a time when the outlook for earnings growth is poor,” but in building up debt that will eventually have to be paid back — and not spending it on useful research and development or capital expenditure — “companies have created an uncertain outlook for their own long term profitability”. That seems a shame.

there is more



Eventually the Fed and others will have to follow the market and raise or become irrelevant, in the meantime they are sowing chaos.


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 Post subject: Re: IMF Downgrades Global Economic Outlook Again October 201
PostPosted: Sun Dec 13, 2015 8:10 pm 
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Joined: Sep 13, 2007
Posts: 31634
Location: Tullamore
Low interest rates deflationary? Sheesh, hoocudanode...

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 Post subject: Re: IMF Downgrades Global Economic Outlook Again October 201
PostPosted: Mon Dec 14, 2015 12:16 am 
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Posts: 2506
People slowly realising the cult of the central banker is just that: a cult.
Fiscal, not monetary, is the lever which best adjusts an economies demand.

_________________
Profits = Investment – Household Savings – Government Savings – Foreign Savings + Dividends

(i.e. company profits are directly fed, in part, by government deficits)

BANKS DON'T LEND RESERVES
As confirmed by the Bank of England


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 Post subject: Re: IMF Downgrades Global Economic Outlook Again October 201
PostPosted: Mon Dec 14, 2015 1:00 am 
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Posts: 1363
Lola14 wrote:
IMF Downgrades Global Economic Outlook Again
http://www.wsj.com/articles/imf-downgra ... 1444140016

According to IMF reports, in October 2014, global growth for 2015 was projected to be 3.8%
It has been revised several times throughout this year.

Currently, it stands at 3.1% which is 0.1% off what is classified by economists as a global recession.

"Downside risks to the world economy appear more pronounced than they did just a few months ago."

Could we be heading into another Global Recession?


How can 3% growth be called a recession. Sounds a bit implausible to me

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A housing boom is the economic equivalent of a tapeworm infection Tim Harford

"Those who yearn for the end of capitalism should pray for government by men who believe that all positive action is inimical to what they call thoughtfully the fundamental principles of free enterprise." - JK Galbraith


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 Post subject: Re: IMF Downgrades Global Economic Outlook Again October 201
PostPosted: Mon Dec 14, 2015 2:06 am 
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Joined: Feb 19, 2009
Posts: 2506
Carrot and stick wrote:
Lola14 wrote:
IMF Downgrades Global Economic Outlook Again
http://www.wsj.com/articles/imf-downgra ... 1444140016

According to IMF reports, in October 2014, global growth for 2015 was projected to be 3.8%
It has been revised several times throughout this year.

Currently, it stands at 3.1% which is 0.1% off what is classified by economists as a global recession.

"Downside risks to the world economy appear more pronounced than they did just a few months ago."

Could we be heading into another Global Recession?


How can 3% growth be called a recession. Sounds a bit implausible to me


two consecutive quarters of lower rate growth
so it's essentially a second derivative measure

_________________
Profits = Investment – Household Savings – Government Savings – Foreign Savings + Dividends

(i.e. company profits are directly fed, in part, by government deficits)

BANKS DON'T LEND RESERVES
As confirmed by the Bank of England


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 Profile  
 
 Post subject: Re: IMF Downgrades Global Economic Outlook Again October 201
PostPosted: Mon Dec 14, 2015 2:18 am 
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Joined: Oct 29, 2007
Posts: 11685
Location: Multiverse
Does anyone here think ZIRP will end without a bang ?


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 Post subject: Re: IMF Downgrades Global Economic Outlook Again October 201
PostPosted: Mon Dec 14, 2015 10:09 am 
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IMF'd

Joined: Sep 13, 2007
Posts: 31634
Location: Tullamore
mr_anderson wrote:
Does anyone here think ZIRP will end without a bang ?

You mean that it can't end without some shock, such as a war, to drive inflation?

I'm not sure, but it's not looking good. Looking back, the failure of high oil prices to drive inflation (wage demands) should have been a warning sign. High housing prices (e.g. in London/SE England) aren't working either. Even the wage demands of the successful economies (e.g. Germany) are pretty muted.

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"It is impossible to design a system so perfect that no one needs to be good."

So long and thanks for all the fish.


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