Profile image
By Political Calculations (Reporter)
Contributor profile | More stories
Story Views
Now:
Last Hour:
Last 24 Hours:
Total:

Predicting the Next Debt-Bubble Pop Recession

% of readers think this story is Fact. Add your two cents.


Last week, economist Steve Keen went on record to predict that Australia’s economy would fall into recession in 2017.

In doing that, Keen made a back-of-the-envelope calculation linking changes in the rate of private sector debt growth available with real economic growth available via an Excel spreadsheet.

We were intrigued by the math, so we’ve converted the spreadsheet math into the simple tool below, in which anyone can play with the numbers to predict how a nation’s economic growth might change over the next year based on just a handful of factors.

The default numbers apply for the years 2016 and 2017 for Keen’s Australia example, but you’re more than welcome to substitute the numbers that apply for other nations or years of interest. If you’re reading this article on a site that republishes our RSS news feed, please click here to access a working version of this tool!

GDP and Private Sector Debt Data
Input Data Values
Current Nominal Gross Domestic Product
Current Nominal GDP Growth Rate [%]
Current Total Private Sector Debt
Current Nominal Credit Growth Rate [%]
Projected Nominal Credit Growth Rate [%]
Inflation Rate [%]
Projected Future Economic Conditions
Calculated Results Values
Nominal GDP Growth Rate [%]
Real GDP Growth Rate [%]

In the tool above, “Current Nominal Credit Growth Rate” is the rate at which private sector debt increased from the previous period to reach its current value. The “Projected Nominal Credit Growth Rate” is the rate that would apply in the future period under consideration.

The reason why changes in the rate at which private sector debt grows would have predictive power for future economic performance comes down to why people in the private sector of the economy take on debt in the first place. It is because they reasonably expect to have sufficient income in the future where they will be able to make payments without significant problems.

As such, the forward-looking expectations that influence decisions to take on debt in the private sector is to economic growth serves a similar role to what the expectations for earning dividends in the future are to projecting the future value of stock prices. The math involved is certainly very similar.

As for Steve Keen’s recession call for Australia, we should caution that he has been famously wrong before, particularly with respect to Australian housing prices, yet at the time he made that ill-fated prediction, the impact of China’s massive economic stimulus on the strength of Australia’s resource-exporting economy was an unknown factor. China’s stimulus worked to significantly boost Australia’s economy in 2009 and 2010, helping the nation to avoid falling into recession at that time, which in turn, also helped sustain housing prices.

The rapid deceleration of China’s economy today as the remnants of that previous stimulus effort evaporate provides a good argument in support of why a recession in Australia’s future has become increasingly likely at this time.

It will be interesting to see what factors might intervene to either forestall or accelerate that scenario. Having gone 25 years without an official period of recession, Australia certainly has lived up to its reputation as the “Lucky Country” through this point in time.

Previously on Political Calculations



Source: http://politicalcalculations.blogspot.com/2016/03/predicting-next-debt-bubble-pop.html

Support BeforeitsNews by trying our natural health products! Join our affiliate program
Order by Phone at 888-809-8385 or online at
www.mitocopper.com


Get our Free Ebook, "Suppressed Health Secrets"  with  Natural Cures THEY don't want you to know!

APeX - Far superior to colloidal silver! Destroys Viruses, Bacteria, Pathogens with Oxygen plus Silver!

Supreme Fulvic - Nature's most important supplement! Vivid Dreams again!

Ultimate Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen! 
Organic Hemp Extract (CBD) - Full Spectrum high CBD (3300mg) hemp extract eases stiff joints, relieves stress and more!
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover -  Reduces Smart Meter radiation by 96%!  (See Video)


FINAL WARNING!  Diseases are EXPLODING!  Watch this Video about APeX and You'll THROW AWAY Your Colloidal Silver!  APeX destroys Viruses, Bacteria and other Pathogens with the power of Oxygen PLUS Silver!  Nobody else has a product like THIS!   See why the inventor hasn't been sick in 16 years and why you'll never hear about it on the FAKE NEWS!  Get some now and tell your friends about it too so we can reach more people!  


APeX Interview - Superior to Colloidal Silver from Lee Canady on Vimeo.


Learn about APeX Here and Get the 50 Page Report in PDF format.   Call us at 888-809-8385 to order by phone.



Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
Report abuse
Loading...

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    Loading...
    MOST RECENT
    Loading...
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.