“This recession will be unlike any other”


That’s the grim warning from Charles Hugh Smith.  He identifies five factors that cause and/or contribute to economic troubles:

1. The business cycle … In [a] confluence of greed and euphoria, people over-borrow and put the money into marginal investments and speculations that unravel. Defaults rise, credit tightens, the mood sours and profits tank. Speculations crash, layoffs boost unemployment, consumers trim debt and enterprises work off excess inventory.

2. High energy prices … As consumers pay more for energy, they have less to spend on other goods and services. Discretionary spending falls, triggering a slowdown that dampens borrowing, speculation and the general mood. The virtuous cycle reverses and the slowdown become self-reinforcing.

3. Inflationary pressures other than energy. Central bank stimulus (opening the floodgates of low-cost credit) and federal stimulus (free money) both tend to generate inflationary pressure as a flood of new money chases the existing supply of goods and services.

4. Excessive debt-funded speculation. Loose credit tends to invite excessive speculation which fuels a wealth effect as speculative gains make us feel we can afford to spend more now that we’re richer. But speculative excesses inevitably reverse and losses generate a reverse wealth effect, dampening both speculation and spending.

5. Secular shifts in the economy. There are many potential sources for secular shifts that play out over years or even decades. Examples include: new global competition (1970s); currency devaluations; costs of cleaning up decades of pollution (1970s); financialization (1980s to the present), geopolitical shifts in alliances, social disorder, demographics (aging of the workforce, mass retirement) and sea changes in the distribution of income and power to labor and capital.

. . .

If there was only one causal factor nudging the economy into recession, it might be a mild, brief recession. But with all five conditions in confluence, this recession will be unlike any other.

There’s more at the link.  It’s well worth reading.

Mr. Smith is far from the only economist predicting an imminent recession.  Yesterday I mentioned “Mish” Shedlock’s warning that we should “Expect a Deep Recession to Start This Quarter or Early Third Quarter“.  The warning signs are flashing all around us, and those who have not yet started to prepare for economic hard times are about to get a rude awakening.  This is going to hurt all of us, and hurt very badly.

Yet another reminder:  get together with like-minded friends and associates you can trust.  Work together, make what joint and several preparations you can for hard times, and be prepared to help each other through them in any and every way possible.  It’s going to be very difficult, if not impossible, to make it through this one alone.  In unity there is strength.



  1. Trump in 2020:

    "If Biden is elected, you're going to see $7, $8, even $9 a gallon gas …"

    “You’ll have a crash like you’ve never seen before."

  2. Peter I'd be real interested in how to protect your sensitive electronics from bad power and brown outs.

    Generators are nice if you have fuel, but equipment damaged by bad power is trouble.

    Uninterruptable power supplies are useful for computers but given how even my washing machine has computer chips and probably my fridge. Those are already hard to find replacements for and repairs? Forgettaboutit.

    Anybody out there have real world experience in this subject? Please speak up.

    Slow motion SHTF scenario in real time.

  3. @Michael: The military and secure civilian installations had this figured out years ago. You feed your incoming mains power into a battery bank. That remains fully charged from the external source, while feeding "clean", pure-sine-wave power to electrical outlets in your building. (Hospital emergency equipment plugs into such outlets – you've probably seen them, usually marked in red or red in color.) If the incoming power fails, the battery bank takes over on its own until emergency generators fire up and start charging it again. That way, your appliances and sensitive equipment never even know there's been a problem.

    One can build something similar, but it costs an arm and a leg to do it properly. Best I can do is ensure that all my computer equipment is on UPS power, to "clean up" the mains current. My emergency generator is also an inverter generator, producing clean power that can be used for computers and sensitive equipment without any problem. Again, more expensive than a "regular" generator, but indispensable if you rely on delicate electronics.

  4. That is how your laptop works. It runs on the battery at all times, the power supply just keeps it full. Same as a UPS does.

  5. Peter I've worked in civilian hospitals ever since I retired out of the Army Medical Corps. And generally, have been the Goto man working with Engineers and Maintenace in those hospitals.

    I've never seen a civilian hospital with a battery bank. Our red plugs are the ones powered by our emergency generator.

    Even in several military fixed hospitals I've worked in we've never had a battery bank system. And in my decades of being in both styles of hospitals losing power was always a stressful event awaiting the generator to kick in.

    Never a good time to lose electricity in a hospital. Patients tend to get excited about it.

    I've a decent solar array with a battery bank and UPS systems for my computer and wife's CPAP and have had to replace UPS once for lighting damage. I also replace my power strips every two years because the lighting protection erodes from minor zaps.

    However, my washing machine, microwave and fridge are not on a power strip nor a UPS. I will probably now that I thought about it put microwave and fridge on one as they are not high draw units per say but the electric clothes dryer is hard to protect.

    With a slow moving SHTF situation for years to come protecting useful electronics from dirty power or brown outs like some of my friends in South America have had to do seems prudent.

    Thus my query if other folks have already done something like this. Your blog draws some wide expertise.

  6. One of my clients has a whole lot of electronics in his home, home automation and whole house video and audio system stuff. He is out in the country, has poor quality power with frequent lightning strikes to the lines, to the telco DSL line, and to trees near the house.

    Pretty much one of every type of lightning strike happened last year. We have had to replace gear directly after every strike, and have had to replace gear that later failed 'early'.

    Stuff with antennas failed from the nearby strike. Stuff connected to long wires failed too. And by long, a 35ft HDMI cable took out the input card on the projector, and the output card on the receiver driving it.

    The hit to the DSL line killed the DSL modem power supply and the part of the ethernet switch that it was connected to.

    We also had several wall wart switching power supplies die during or soon after the events.

    We've had other power supplies die soon after less severe outages, and random failures of gear in the rack ever since. Essentially I expect to replace it ALL as budget and supply chain allow.

    The house has a big gennie, that starts automatically. The rack, and most of the outboard equipment is on UPSs or at least surge protectors. There is a whole house surge protector at the main panel.

    The lightning, routine brown outs, and switches to generator power are very hard on electronics.

    At my house, after running on gennie power for 14 days of IKE, we ended up replacing the TV and the mainboard in our fridge. The gennie was a construction type, and when I scoped the power output, it was very dirty, spiky, not cleanly sinusoidal at all, and had a lot of frequency variation. Most of the UPSs here wouldn't even charge on it, seeing it as something they needed to protect the gear FROM…

    The honda inverter gennie I have now puts out very clean power and the electronics didn't mind it at all during our freeze last year.

    IN GENERAL, the electronics most affected by bad power, or power events have been the most cheaply made. The circuit boards are thinner, the traces are thinner, the components are lower spec, and their designs might not have any redundancy or headroom in them. The gear I was able to take apart and examine had scorch marks, exploded components, burn smell, and many had evidence of long periods of running very hot (design issues).

    Bottom line, do what you can to prevent or mitigate damage from strikes, surges, or over and under voltages. Hope the inexpensive power supply takes the brunt of the damage. Expect to eventually replace all the gear in the house if the events are repeated or dramatic.


  7. Nick you're exactly speaking what my South American friends deal with ever more common low-grade power and brown outs.

    We communicate but my technical Portuguese and their technical English are not up to the task of explaining well.

    As socialists continue to run equipment without proper Maintenace and lower quality workers more power issues show up.

    So will it go in America, already showing up with brownouts PLANNED for Western States.

    Thus, my query about how to protect as even Uninterruptable power supplies can refuse to charge on crappy power and often get fried themselves.

  8. Look up Monster Power HTS. I purchased a Monster Power AVS 2000 about 15 years ago to clean up the power for my home theater equipment after losing a tv and 2 receivers due to bad power. It's basically a large varister that cleans up the power for me and prevents brownouts from damaging my electronics. The HTS models are available on ebay for pretty cheap. I haven't had a problem since installing that into the circuit.

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