A friend of mine and a reader of my blog spoke to me recently about the coming recession. He thought “moving assets to cash” would be the right thing to do.
We hear much about “fake news” in the political sphere, but the term is less often applied to the financial world, where the term would also be very apt. Financial cable news and much – a great deal! – of free, web-based investment advice is, at least to me, fake. It’s filled with people who are sure of their predictions that are meant to scare you to death. And they’re wrong!
I read a few stories on Seeking Alpha every day. In fact, I get their morning news feed, highlighting their top stories. They are, morning after morning, largely and very negative, sometimes hysterically so. Negative news grips the human mind heart far more deeply and quickly than does good news, let alone neutral news (which is what most of life is).
And that’s one of the problems. If we’re really honest, we don’t know what’s ahead. And most times, what’s ahead is hardly worth reporting. It’s little stuff.
So, is a recession ahead?
But as to when, that is far more problematic. Wouldn’t we all like to know when! Alexandria Ocasio Cortez can tell me that we have only 12 or 13 years left on this planet.
How does she know? She doesn’t. But the posturing that she takes and her biases get attention. And AOC is, if nothing else, a showman – or a show woman – an actress every bit as consequential and honorable as Jussie Smollett.
I know this post is supposed to be about the “coming recession,” but fake news isn’t just undermining the journalism of politics or finance. Here are some fun, fake predictions on climate, population, and environment – fortunately, failed ones – from not-so-long-ago geniuses who got plenty of air time – fear-mongering air time – back in 1970, with the first Earth Day. This list has been compiled from Mark Perry at AIE. (Skip to the bottom if you just want my concluding thoughts on the “coming recession.”)
- “We are in an environmental crisis which threatens the survival of this nation, and of the world as a suitable place of human habitation,” wrote Washington University biologist Barry Commoner in the Earth Day issue of the scholarly journal Environment.
- The day after the first Earth Day, The New York Times editorial page warned, “Man must stop pollution and conserve his resources, not merely to enhance existence but to save the race from intolerable deterioration and possible extinction.”
- “Population will inevitably and completely outstrip whatever small increases in food supplies we make,” Paul Ehrlich confidently declared in the April 1970 issue of Mademoiselle. “The death rate will increase until at least 100-200 million people per year will be starving to death during the next ten years.”
- “Most of the people who are going to die in the greatest cataclysm in the history of man have already been born,” wrote Paul Ehrlich in a 1969 essay titled “Eco-Catastrophe! “By… some experts feel that food shortages will have escalated the present level of world hunger and starvation into famines of unbelievable proportions. Other experts, more optimistic, think the ultimate food-population collision will not occur until the decade of the 1980s.”
- Ehrlich sketched out his most alarmist scenario for the 1970 Earth Day issue of The Progressive, assuring readers that between 1980 and 1989, some 4 billion people, including 65 million Americans, would perish in the “Great Die-Off.”
- “It is already too late to avoid mass starvation,” declared Denis Hayes, the chief organizer for Earth Day, in the Spring 1970 issue of The Living Wilderness.
- Peter Gunter, a North Texas State University professor, wrote in 1970, “Demographers agree almost unanimously on the following grim timetable: by 1975 widespread famines will begin in India; these will spread by 1990 to include all of India, Pakistan, China and the Near East, Africa. By the year 2000, or conceivably sooner, South and Central America will exist under famine conditions….By the year 2000, thirty years from now, the entire world, with the exception of Western Europe, North America, and Australia, will be in famine.”
- In January 1970, Life reported, “Scientists have solid experimental and theoretical evidence to support…the following predictions: In a decade, urban dwellers will have to wear gas masks to survive air pollution…by 1985 air pollution will have reduced the amount of sunlight reaching earth by one half….”
- Ecologist Kenneth Watt told Time that, “At the present rate of nitrogen buildup, it’s only a matter of time before light will be filtered out of the atmosphere and none of our land will be usable.”
- Barry Commoner predicted that decaying organic pollutants would use up all of the oxygen in America’s rivers, causing freshwater fish to suffocate.
- Paul Ehrlich chimed in, predicting in 1970 that “air pollution…is certainly going to take hundreds of thousands of lives in the next few years alone.” Ehrlich sketched a scenario in which 200,000 Americans would die in 1973 during “smog disasters” in New York and Los Angeles.
- Paul Ehrlich warned in the May 1970 issue of Audubon that DDT and other chlorinated hydrocarbons “may have substantially reduced the life expectancy of people born since 1945.” Ehrlich warned that Americans born since 1946…now had a life expectancy of only 49 years, and he predicted that if current patterns continued this expectancy would reach 42 years by 1980, when it might level out. (Note: According to the most recent CDC report, life expectancy in the US is 78.8 years).
- Ecologist Kenneth Watt declared, “By the year 2000, if present trends continue, we will be using up crude oil at such a rate…that there won’t be any more crude oil. You’ll drive up to the pump and say, `Fill ‘er up, buddy,’ and he’ll say, `I am very sorry, there isn’t any.’”
- Harrison Brown, a scientist at the National Academy of Sciences, published a chart in Scientific American that looked at metal reserves and estimated the humanity would totally run out of copper shortly after 2000. Lead, zinc, tin, gold, and silver would be gone before 1990.
- Sen. Gaylord Nelson wrote in Look that, “Dr. S. Dillon Ripley, secretary of the Smithsonian Institute, believes that in 25 years, somewhere between 75 and 80 percent of all the species of living animals will be extinct.”
- In 1975, Paul Ehrlich predicted that “since more than nine-tenths of the original tropical rainforests will be removed in most areas within the next 30 years or so, it is expected that half of the organisms in these areas will vanish with it.”
- Kenneth Watt warned about a pending Ice Age in a speech. “The world has been chilling sharply for about twenty years,” he declared. “If present trends continue, the world will be about four degrees colder for the global mean temperature in 1990, but eleven degrees colder in the year 2000. This is about twice what it would take to put us into an ice age.”
These are horrifyingly, laughable predictions that were given serious voice by the press and media, just as much as Ocasio Cortez’ nonsense is given honorable hearing today, just as more recent Al Gore and Michael Mann predictions on ice melts, temperature, and flooding are today.
But as for these, above, as with guesses about recessions, almost all are wrong.
Here’s what we do know about recessions. They, typically, are accompanied or preceded by: commodity spikes (high oil prices, for instance), nasty, unexpected, geopolitical events (think 9/11), rising interest rates, aggressive FED tightenings, extremely-high asset valuations, or asset bubbles (excesses that need to be worked off).
What does the above list – look at it again – have to do with facts on the ground, economically, today? Not much. Yes, debt is increasingly getting out of control. There is long-term trouble brewing there. But we are increasingly living in a post-fact, post-logic world. What scares people sells or what demonizes the positions or beliefs of your political enemies gets print or air time.
As I say, there is a recession ahead. I don’t know when, but the laws of economics have not been repealed. Nor is the fact that a recession has not descended upon America since 2009 – ten years ago – sufficient reason to believe that one is “around the corner.” Oh, for sure, one is closer. But the fact that US economic growth since the last recession has been so disbelieved and sluggish, and the hatred for Trump so pronounced that many in media, journalism, and academia will say and do foolish things to avoid any credit being assigned to our odd and highly unorthodox president.
Yet there is much credit to assign – in stocks, employment, economic growth, business confidence, deregulation, tax policy, and more
So whether we are talking about predictions about the next recession or the end of life on this planet as we know it, be skeptical.