If a prediction of a recession causes the market to crash, can it be said that the prediction itself is part of the cause of the recession? Like a self-fulfilling prophecy?
In: Economics
the rates are a result of other predictions, which is generally that everyone is always preparing for the next recession. Its generally good game theory to always be more prepared than your competitors, so when the recession hits, your Ford, and not GM. (poor example, as in this case, bankruptcy turned out to be a real boost to GM’s long term profits).
The central banks primary job is to try and temper the swings by inducing some incentive to make spenders (mostly corporations) not go too far into prepper status that they create the thing they are prepping for.
anyway, the yield curve is well down the road on the signal, as at this point, things have already progressed to the point that yields are flipped.
basically, there were things that previewed the yield curve, and the yield curve is just another event in a string of events before the cycle repeats. Of course, things could reverse too, history does not dictate the future, everything is true until it isnt.
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