Are We Falling into the Next Great Depression?

http://profitabletradingtips.com/profitable-trading-tips/are-we-falling-into-the-next-great-depression Are We Falling into the Next Great Depression? By www.ProfitableTradingTips.com Why didn’t the 2008 market collapse lead to another Great Depression? And are we rather falling into the next Great Depression now with rock bottom commodity prices? The Globe and Mail discusses the great depression in commodity prices. The focus is on the Canadian economy but the lessons learned apply across the world. To understand the perils facing the Canadian economy today, think about the plight of prairie farmers in the 1930s. They were selling their crops to markets at rock-bottom prices - it was the great depression in commodity prices that gave the era its name - and they could not earn enough to pay their bills. As prices for their goods continued to sink, the burden of their debts increased absolutely. That is why price depression, or deflation, is a recipe for hard times. The good news about falling prices in the 1930s was that food became very cheap at the grocery store - just as gasoline is now very cheap at the pump. All well and good for those of us with jobs and steady incomes; no help at all to those whose livelihood is being erased. If the script stays true to form, the next two scenes are, first, attempts by countries to achieve competitive advantage by devaluing their currencies - watch China; and second, the development of financial pressures as producers are unable to meet their debt obligations. Then we have bankruptcies and repudiations. In 2008 it was the failure of private corporations, such as Lehman Brothers, that caused a global crisis. What will happen when whole petro countries, such as Venezuela and Nigeria, slip toward chaos? In his poem, The Hollow Men, T. S. Elliot finished by saying, this is how the world ends, not with a bang but a whimper. If we are falling into the next great depression it is not with the bang of another Lehman Brothers bankruptcy but rather with whole nations sliding out of the world economy and into social disruption. The Third Leg of the Global Financial Crisis The Financial Times writes that the global economy is teetering between a continued slow recovery and a slide into a third leg of the global financial crisis. The sharply contrasting outcomes highlight the uncertainties surrounding the global outlook in 2016 amid fears of a slowdown in China, plunging commodity prices and high levels of corporate US dollar-denominated debt in emerging economies. Economists said the instability threatens to exacerbate the vulnerability of households and companies, which are already responding to disruptive technological changes. However, what has hitherto largely gone unnoticed in this debate is that digitization will also wipe out jobs in emerging markets countries such as China and India. And UBS’s economists argue that this displacement could be more - not less - intense in the developing world since their economies rely more heavily on low-skilled work that can most easily be replicated by robots. Are we falling into the next Great Depression? There are many problems besides slower growth in China, depressed commodity prices and war in the Middle East. Recently we posed the question if defensive stocks are really safe. If worse comes to worse the best refuge will probably be cash as Euros, British pounds, Swiss francs, American dollars or yen. https://youtu.be/9DB5rSqG92g