The next financial crisis will strike in 2020, says JPMorgan

[canetoad]

Source: The Age

By Chris Anstey
14 September 2018 — 7:32am

How bad will the next crisis be? JPMorgan Chase & Co. has an idea.

A decade after the collapse of Lehman Brothers sparked a plunge in markets and a raft of emergency measures, strategists at the bank have created a model aimed at gauging the timing and severity of the next financial crisis. And they reckon investors should pencil it in for 2020.

The good news is, the next one will probably generate a somewhat less painful hit than past episodes, according to their analysis. The bad news? Diminished financial market liquidity since the 2008 implosion is a "wildcard" that's tough to game out.

The JPMorgan model calculates outcomes based on the length of the economic expansion, the potential duration of the next recession, the degree of leverage, asset-price valuations and the level of deregulation and financial innovation before the crisis. Assuming an average-length recession, the model came up with the following peak-to-trough performance estimates for different asset classes in the next crisis, according to the note.

Read more: https://www.theage.com.au/business/markets/the-next-financial-crisis-will-strike-in-2020-says-jpmorgan-20180914-p503o7.html

[rpannier]

1. Because JP Morgan will likely help cause the crash

[regnaD kciN]

2. Bad news for everyone, I'd guess...

...but the Republican Party should be scared to death by this. We already saw how a crisis in 2008 turned what seemed like a horserace into a clearcut Democratic win. And, this time, the Republican would be an incumbent (seen as more personally-responsible for the economy) who had based his re-election on how well the economy was doing under his management.

[bucolic_frolic]

3. After QE 1,2,3 and sub-2% interest rates for 10 years, they complain about lack of liquidity?

Where do we find such bankers?

[Lucky Luciano]

8. They mean liquidity of securities that get traded...

...eg what happens when the algo traders step away from the markets in untested waters...then thing. Dan get illiquid pretty fast and everyone will want to go the same direction...that’s ugly.

Still - the economy is not as sensitive to short term funding drying up this time around, so won’t likely be as dlong devastating as 2008.

[elleng]

4. And Dems get to clean it up again.

Round and round we go.

[groundloop]

6. That is EXACTLY the issue

Repubs create a mess, Democrats come in and mop it up yet the electorate has a painfully short memory and puts repubs back in power so they can take credit for a good economy.

[elleng]

7. repugs are so good at propaganda, along with their BIG pockets

pay off 'media' to assure FACTS are obscured (as their absurd assertions are so 'catchy,') rational folks aren't heard by the lemmings.

[Initech]

11. Dems clean up the GOP's mess.

Then the GOP turns around and blames the Dems for not cleaning it up fast enough. It's a perpetual shit cycle.

[summer_in_TX]

13. My thought exactly.

Seems to me that we need to be prepared to avoid bailing out Wall Street and the banking system this time, and have a united front that most bailout money will take the form of infusions into the pockets of the middle class and the poor.

If it's in the party platform in 2020 and all the Dems run on the platform, maybe we can hold the line.

It would be an interesting economic experiment that would allow direct comparison of the two approaches, and if we talk it up before the next recession happens maybe we would gain the support of most economists on that basis. Perhaps that would help us with the media and the public.

[elleng]

14. I like it, but 'our' bankers probably won't.

Nothing like Citizens' United keeping us all in chains.

[turbinetree]

9. No Jamie Dimon, it started on Jan 2017.............................

when you had a congress led by "ayn rand" Ryan got working on your tax break, and then got it passed so that you tax would just continued to be frozen at the rate you got 21% at the end of the year, and you can off shore millions, while millions of others will have to pay for it...............and our taxes goes up to pay for the wall streets greed and other greedy entities.................nice try.....................

[Power 2 the People]

12. Matter of time before it all explodes

That tax cut sped up the crash by 3-5 years. Hopefully it happens in October and November like it did in 2008. Make that incompetent orange fucker a one term president.

[LandOfHopeAndDreams]

10. See...Drumpf Is Better Than Shrub!

It took 7+ years for Georgie to crash the economy. Drumpf is going to do it in under 4.

[bearsfootball516]

15. If that does happen, it's over for Trump in the 2020 election.

The only thing keeping him afloat right now is the economy. If that goes, he loses all independent support and we see another electoral wipeout like we did in 2008.

[JustABozoOnThisBus]

19. It'll be kept afloat until after the 2020 election.

And then it'll be blamed on Prez Biden, or Prez Warren, or ...

[Nitram]

16. If true, it means the GOP has exquisite timing.

[scarytomcat]

17. banks are already asking for a bail-out for bad stock investments

they can't wait to pick our pockets again
we need legislation to stabilize these markets

[sandensea]

18. They forget to mention that it'll be thanks to Cheeto

If it does happen, we'll have the Rotten Orange's efforts to rescind (and refusal to enforce) Dodd-Frank to thank.