HSBC bullish over gold

20-May (Kitco News, via Metal.com) – The U.S. economy hasn’t completely recovered from its last recession – what some have called the biggest since the Great Depression – but another one could be just around the corner, according to one economist.

In an opinion piece in the Financial Times, Monday, HSBC chief economist Stephen King said that historical trends shows that recessions hit every eight or nine years and the last one in the U.S. ended six years ago. If history is any indication, the U.S. could be facing another recession in the next three years. What’s worse, he said, is that policy makers don’t appear to have the ammunition needed to fight another one.

King noted that there could be several triggers for the next recession; a collapse in “overvalued equity markets,” leading to an “implosion of demand;” a sizeable slowdown in the Chinese economy; systemic failures across the pension fund and life-insurance industries; even a premature tightening of interest rates from the Federal Reserve.

“Whatever the likely cause of the next recession, the recovery seen so far has not enabled policymakers to replenish their ammunition; growth has returned but policy has not “normalized,” he said in his op-ed. “The U.S. economy is like a ship sailing across the ocean without lifeboats. Other nations are following in convoy behind. For all their sakes, we must hope to avoid recessionary icebergs.”

[source]