How to predict the next recession


#1

As recessions are accompanied first with oil shocks, it shouldn’t be too hard if we know when the next oil shock is due
https://www2.theoildrum.com/files/Figure%202.png
netenergy.theoildrum.com/node/6121
These guys think they know
https://www.crudeoilpeak.com/wp-content/gallery/aspo2009/next_oil_price_shock.jpg


#2

I worry about charts that show regular intervals (unless they are ECGs).

To me, the consequences of an oil shock depend on the severity and the duration of the shock, the length of preceding period of low prices (i.e. how much ‘uneconomic at a higher price’ usage is there?), and the effects of the previous low prices. If part of the effects were other asset price bubbles (e.g. construction, shipping, air travel etc.) then the subsequent deflation of demand is going to last longer as the period of turbulence is going to last longer. No?


#3

Simple. Do what your average conventional economist does.

Wait until there is a broad consensus that we are in a period of real and sustainable growth and then five minutes later produce a paper predicting a recession. easy-peasy BD


#4

Yes I would have thought. Unfortunately demand has resumed immediately almost triple-ing prices since last year, although presumably there was some undershoot from the previous bubble. The question is has $80 caused another plunge?


#5

The airline industry is largely unprofitable above $50 for leisure travel. Business travel hasn’t recovered yet.

The chinese seem to be buying magical cars - ones that don’t use any petrol as refining figures (the only proxy that seems to be available for oil imports) are still well down on boom oil years.

Who knows!


#6

China is probably more like India or Russia in that the car is just a status symbol rather than a mode of transport intended to be used day to day.

Do you seriously expect a Chinese traffic cop on $100 a month to properly process traffic violations committed by businessmen who can hand over three times that amount to him?

Accordingly, do you expect the type of Chinese person who can afford a car to bother obeying traffic laws?

The average length of time before an Indian car is involved in a fatal traffic collision is only 5 years. That’s without even counting the maimings and comas.


#7

I reckon transport will continue to be train-based in those nations, even for the super-elites, who will pay for private booths.


#8

Don’t get you on the legal bit? What’s the relevance with car sales or petrol usage?

And yes, in China they are law abiding, while being terrible drivers. Perhaps the driving standards have improved since I was there… India was a free for all, with the only saving grace that everything was old and slow (you had time to dodge). I hate to think how families of five on a scooter are faring in modern traffic.


#9

I remember travelling through india and the amount of cars and trucks in ditches was unreal. that was nearly 10 years ago. I’d imagine the place is a right quagmire now they’re travelling around in these


#10

Put one of those in a ditch and you might as well leave it there, at least with the old Oxfords etc you could pull them out and knock out the dents!


#11