How The Next Recession Will Affect You
I feel all this talk of recession in the year 2020 is politically motivated. I know how that sounds so please just hear me out first. The reason why 2020 is such a big buzzword for financial predictions is that there is going to be the US presidential election.
That is so interesting because many outspoken Americans don’t like Mr. Tell-it-like-it-is. That is a delicate matter to talk about. But let me just say this:
If 95% of the opinions of the president (of your country) have to line up with you for you to consider the president competent, your problem is not the president
Now to the talk of recession. First, let us consider the last two recessions. They were both based on an industry that was overmarketed and overleveraged. The question now is that which industry is currently that way?
Sincere economists will tell you that there is none currently like that in the US. However, there are other countries in the world that have disturbing economic situations. Most of these problems where problems from the last recession that were not really resolved.
Therefore, the most likely trigger of a recession right now is to have a spill-over from the last recession that the economic powers are still trying to cover up.
Personally, I think the situation can be managed for as long as possible since we have the central bank system. All countries have that and they can make their problems literally disappear gradually. So for this recession-ghost to come back to haunt the world, there is a need for a trigger from somewhere else.
The Real Trigger
My only guess of the industry that will take down the financial system is EDUCATION. It is already obvious that education is a bubble. And not just in the USA, but all around the world.
People are not hiring based on qualifications anymore, people are hiring based on skills. And skills can be learned online for way less than schools charge
Also, there are lots of courses that do not really bring any value to the marketplace. And currently, schools all over the world are getting away with it. To add to that:
There is a growing number of people who would rather learn from an unprofessional teacher (who is a real-life doer) on the internet than someone with a bunch of degrees who haven’t really done it.
All of this is leading to a climax and an end.
In several African countries, creating a university is one of the most profitable ventures for a businessman. Even though the job market in most of those countries is horrible. But the older generation are still people that will compel their kids to go to school and will gladly spend their last dime to send their kids to school. In several of those emerging communities, even if you want to be a soccer player the parents put pressure on you to get a first degree from the university.
Today, more and more people are resorting to self-education. And rightly so because you can learn exactly the skills you want to learn and launch yourself into the marketplace. Meanwhile, in school, you get to learn all these stuff you didn’t sign up for just to be certified at what you want. And in many cases, you may now discover you don’t like what you want but because you have already dived in, you have to stick with it because of the amount you have spent.
I predict the self-education space is going to grow at an alarming rate in the next few years
The more it grows and the more successful people we have in that area, the demand for school education as we know it today will be drying up. There will be new kinds of schools created from the self-education movement. And the moment that becomes cool, problems start to arise with the old ones.
You might be thinking that there could be a smooth transition from the school we know today to the self-education system. The point is that it doesn’t matter. The recession is probably going to happen before then. I guess the recession (or depression) will give rise to these new kinds of schools.
What Will Trigger the Recession?
Student loans. Student loans are already a problem. In the first place, I see no reason where a person is given a loan to go to school. If you want to pay for the tuition, do that. But to give a loan is just pure heartlessness. There is too much uncertainty in the world to make that wild bet.
This is where I disagree with most of the recession predictions. A recession of this kind will not happen during the Trump Administration. Why? The number one priority of the US President is JOBS! He will do anything to protect that. He will go to any length to depressurize any attack on the job market.
The way the student loan scheme is going to fall out is when the job market suffers a significant blow
I don’t see that happening under the current US President. If he wins a second term, he will do everything in his capacity (and even trigger ones not under his capacity) to protect that job market. That is the only thing holding the US economy (and by extension the world economy) in one piece right now.
The moment the country elects a new president that does not prioritize the job market, it will just start to dwindle. And then after a while, it will fall so sharply that it will trigger a recession. Depending on how the citizens are prepared for it, it could be a depression.
Some will get insanely rich during this period of course. Especially those in the self-education space that are well-positioned
If the current US administration wins another term in 2020, I’m predicting that there will be downward spikes but no recession. But when they leave office and another administration that doesn’t have their job market tenacity comes in, the recession will show itself.
The signs of this were already showing during the Obama administration which made a lot of people think the recession will happen during the next administration. Unfortunately, Mr. Trump decided to focus on just the right thing to keep the pressure down. And I think they can be able to keep the pressure suppressed throughout their term whether they get a second term or not.
But I am guessing any new administration will not have such priorities and the system will overload and blow up during that time.
Can something be done to avoid it? No.
The problem is already too big for the motivation to solve it. The best thing a political government can do is to suppress it. A true solution from the people will take a few generations. And I doubt if the government can suppress it for that long even if the current US Administration remains indefinitely.
The World Impact
The moment it crumbles in the US, the ripples will go around the world. Just as it happened in 2009. Also, all the other problems that have been covered up will blow up along with it. It could lead to a depression. All those companies valued at millions that do not make profits and investors are patient with will suddenly feel the strain.
The central banks will probably try to come to the rescue. And that could be bitcoin’s moon moment
If I will give you any advice, it is to make sure that you have skills that are recession-proof (that will always be in demand). And if you have an investment portfolio, start preparing it for this recession. Make sure you have commodities and crypto assets to diversify your stocks, bonds, and real estate.
I rest my case