Ask HN: How bad will the 2020 economic crisis be? • Hacker News Board

Re: Ask HN: How bad will the 2020 economic crisis be?

#41

Post by apinstein » Sun, Mar 22, 2020, 1:09 PM UTC

apinstein wrote: post #36

My view is that this isn’t an underlying financial crisis. However, of course the temporary disruptions will be of such magnitude that they will create one. Worst case IMHO is that it could be way worse than the Great Depression due to the very tight coupling, high leverage, high overhead and JIT nature of the global economy today. There will be a huge cascading failure effect. That said, interventions can have a hug…

I realized I didn’t answer your specific q. Whatever impact you see in your business, assume it will continue for at least 3-4 months. If that is unsustainable then the sooner you deal with it the better.

Not sure how unemployment insurance works in your country but in the US I spoke to restaurants and they just terminated people so that they could collect unemployment at a higher level than the business could provide income (salary or tips). Do what you have to do fast, and do it empathetically and in a way that preserves your options for restarting / re-hiring when things eventually improve.

Re: Ask HN: How bad will the 2020 economic crisis be?

#42

Post by gmuslera » Sun, Mar 22, 2020, 1:09 PM UTC

It may depend on the time frame. The markets were inflated, with a lot of voices telling how unsustainable things would be soon enough, and then this black swan happened.

The current situation will last at least a month (and how bad it will be while it lasts is yet to be seen), and after that keeping social distances, and closed borders will remain for many months.

The rules will be just different. It may be very bad for some old industries (travel, tourism, are easy ones), and good for some of the emergent ones.

Re: Ask HN: How bad will the 2020 economic crisis be?

#43

Post by Mountain_Skies » Sun, Mar 22, 2020, 1:10 PM UTC

jawns wrote: post #15

I've heard economic forecasters predict that the economy will spring back once the crisis is over. Their reasoning is that the crisis is an external issue, not a problem with the economy itself, as with the housing crisis. Once it becomes more contained and controlled, there will be work for people to do, and people available to do that work, and the economy will just start humming along again. I'm more pessimistic.…

During the Great Recession my employer at the time laid off a large percentage of our staff that they had wanted to layoff for a long time. Due to the nature of their industry, the appearance of stability was very important so they never did layoffs before. Any accumulated excess workforce had to be reduced through attrition or gross misconduct excessive enough for warrant being fired for cause. During the recession though, banks were failing left and right, unemployment was going up, mass layoffs were happening every day, and total economic collapse didn't seem out of the question. While the layoff did make the newspaper that day, it was considered a minor story with no follow up. During good times it would have been the top news story of the week and scared many of our clients. I wonder if this current crisis will allow for similar workforce reductions by companies seeing it as a good opportunity to reduce labor expenses without eroding public confidence in their company.

Re: Ask HN: How bad will the 2020 economic crisis be?

#44

Post by boudin » Sun, Mar 22, 2020, 1:11 PM UTC

dntbnmpls wrote: post #18

chewz wrote: post #3

It doesn't have to be bad, on the contrary. Black Death in XIV century have invigorated European economy. Think of it as much needed reset on multiple levels. New supply chains will be created, new business opportunities. Capital re-allocated. It is going to be wonderfull times. Also historically plagues allow for great upward social mobility which is kick-start for the economy.

> Black Death in XIV century have invigorated European economy. So did the spanish flu. Everyone forgets that we had the roaring 20s ( one of the great economic, societal and cultural growths ) right after the spanish flu.

There was also WW1 at the same time.

Re: Ask HN: How bad will the 2020 economic crisis be?

#45

Post by idlewords » Sun, Mar 22, 2020, 1:12 PM UTC

The crisis is tied to an ongoing pandemic whose scope and consequences are global, but not predictable. No one can credibly claim to know the extent of the disruption, other than the simple observation that large parts of the economy have stopped and might not come back for a while. Anyone who claims to know more is guessing.

Re: Ask HN: How bad will the 2020 economic crisis be?

#46

Post by Dumblydorr » Sun, Mar 22, 2020, 1:12 PM UTC

nopinsight wrote: post #39

qubex wrote: post #13

I’m an economist and I wish I had some guidance to offer, but unfortunately I have none. I’m struggling to get a grip on this situation. Firstly, though I have not worked there for six months or so, I am Italian (from Milan, in the north, the worst-hit area). The economy there has basically shut down. Consumer spending has collapsed, production has collapsed, and logistics are increasingly untenable. What can we expe…

Enormous liquidity injected into the system along with lower production suggests high inflation in the future after the crisis is over. Do you think that will likely happen? Note: Above is not a value judgement. The measure is necessary to prevent the system from completely breaking down.

I second this concern. We haven't had much inflation for years in the US, and I wonder if this crisis will turn it up?

Re: Ask HN: How bad will the 2020 economic crisis be?

#47

Post by jeremyjh » Sun, Mar 22, 2020, 1:12 PM UTC

jawns wrote: post #15

I've heard economic forecasters predict that the economy will spring back once the crisis is over. Their reasoning is that the crisis is an external issue, not a problem with the economy itself, as with the housing crisis. Once it becomes more contained and controlled, there will be work for people to do, and people available to do that work, and the economy will just start humming along again. I'm more pessimistic.…

I agree. There is substantial economic damage being done and it won't just undo itself. Lots of businesses are going to fail, those people will not find work so easily as they would have before the crisis. Also, I think this is going to last longer than most people realize. Countries that use this time to get their act together so that they can use South Korea style controls maybe will get their economies restarted sooner. Places where the only strategy is to shelter-in-place until there is a vaccine will see economic disruption for 9-12 months. The damage from that will be staggering.

Re: Ask HN: How bad will the 2020 economic crisis be?

#48

Post by brown9-2 » Sun, Mar 22, 2020, 1:12 PM UTC

Why are you posting this question as if anyone here knows the answer?

Re: Ask HN: How bad will the 2020 economic crisis be?

#49

Post by User23 » Sun, Mar 22, 2020, 1:12 PM UTC

rntksi wrote: post #23

jawns wrote: post #15

I've heard economic forecasters predict that the economy will spring back once the crisis is over. Their reasoning is that the crisis is an external issue, not a problem with the economy itself, as with the housing crisis. Once it becomes more contained and controlled, there will be work for people to do, and people available to do that work, and the economy will just start humming along again. I'm more pessimistic.…

What you are saying, basically, is that due to money flow halting, we will enter a deflationary period?

This is why fiscal stimulus in the form of checks to every citizen is a brilliant idea. It doesn’t matter if they “need the money” it matters if they spend it and productive capacity can meet the demand.

Re: Ask HN: How bad will the 2020 economic crisis be?

#50

Post by nopinsight » Sun, Mar 22, 2020, 1:13 PM UTC

Chance of 1929-style Economic Depression: ~60% (Recession chance: >95%)

Make sure you have the cash to live properly and satisfy urgent needs if necessary over the next 6-12 months or longer. Only invest the remaining in highly-rated bonds or great stocks with long-term resilience.

The world is facing a liquidity crisis, along with both demand & supply shocks that can’t be easily fixed by governments.

We are in a war with the virus and, in most of the world, we are losing.

Global economy can be rescued only if we can mostly mitigate the virus impact. The other 40% is for the case where we found a way to do that and the liquidity injection & fiscal measures are sufficient.