There will be no V-, U-, W-, or L-shaped recovery. The recovery will be K-shaped. An initial drop straight down, followed by a bifurcation of the ascending “haves” gaining more wealth at the cost of the descending “have nots” losing their wealth. You have a short window of opportunity to choose which side of the bifurcation that you want to take.
If you understand “economic hitmen“, you’ll understand that people, companies and even countries are allowed to get over leveraged for a reason. There is no intention to save those over leveraged. The intent is to take assets they want – legally.
Whenever a company brings in an “optimization” company, you better start sprucing up that resume. I’ve seen it happen so many times. Prepare for the pinks, don’t ever be surprised by it.
Saw this same thing with Doctors offices in my area. These management services, rolled into town. They promised an increase in profits. The docs jumped in with both feet. Long time employees jumped ship because part of the restructuring double their workload. New computer systems did not delivery efficiency. Retraining new employees ended up being costly. The family atmosphere of the old practice disappeared and it quickly became a factory environment. Patients started going to other providers for better care. Some of the practices split from their partnerships due to bad blood caused by the ill treatment of long time devoted employees. End result was loss of profits and weakening relationships to the point that the local monster sized hospitals were able to come in a buyout those practices for a song. Here is the thing. All these docs were warned not to do this. Only a couple practices heeded the advice. They survived the other practices didn’t.
The writing appears to be on the wall. The Fed reports, NBER reports, and others are pretty damning. Kashkari has also mentioned he is concerned about banks being unable to absorb the coming wave of defaults he expects are very possible. Also now people are realizing the markets being propped up are creating a bubble if not keeping a bubble going and growing. Save your money people and pay off your debts. Very tough road ahead of us. It’s so unfortunate that our economy is failing so hard and people don’t seem to grasp the harsh reality that we are facing.
Housing: 20 years ago you could buy an average house 2x your average annual salary (in your location)…. now its 5x+. Think about it….
The one thing I learned in business: Any rumor about how bad a business youre working at is doing is always 100% true Any assurance your manager gives you about how youre bad business is gonna turn around is always 100% a lie
That’s why people like Warren Buffet is sitting on the sidelines and waiting.
