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

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

#51

Post by rdthree »

Way too early to tell what’s going on but worse than 2008. Everyone is too busy writing bullshit about covid to see the 2nd and 3rd order effects. Italian and Spanish banks have been near insolvent for a good part of a decade they are going to completely blow out. A lot of other Banking institutions will fail as well because levered bets got blown out and we had a 3 or 4 sigma event nobody headges for not to mention lack of payment that will show up on balance sheets 4-6 months from now.

I doubt anyone is going to be super keen on investment in that money loosing miracle startup now money will dry up soon it’s just been so sudden people haven’t really adjusted yet. I don’t think it will be as bad as the depression of 29 though. There is plenty of food available and some limited safety nets will keep people from starving. The gears of forclosure are so slow many will stay in “free” houses for 2-3 years. The real question is jobs, will Americans work the fields? Or Will they just sit on government benefits? Will manufacturing come back? How do we deal with global labor and ecological arbitrage. Honestly I don’t think trump or Biden are going to be capable of addressing these Structural issues so we’re gonna loose 4 more years and risk a second smarter and more dangerous Trump in 2024

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

#52

Post by KineticLensman »

impendia wrote: post #9
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.

> Also historically plagues allow for great upward social mobility which is kick-start for the economy. This certainly happened with Europe in the Black Death. I would argue, however, that the present is not a good analogy. My knowledge of history is a bit sketchy, but from what I understand -- prior to the Black Death, times were rough for ordinary working people. Subsistence farming, in particular, was stretched to…

> The Black Death caused a truly massive number of fatalities. Afterwards, when the same total amount of natural resources were available, people had breathing room and the economy was able to expand.

The number of fatalities appears to have increased the bargaining power, wealth and social mobility of the remaining agricultural workers [0], amongst other things.

[0] https://en.wikipedia.org/wiki/Consequences_of_the_Black_Deat...

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

#53

Post by andrepd »

glofish wrote: post #38
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.

I think it will fundamentally reshape a few aspects of life - and not all is bad. Needless, gratuitous (business and other) travel for one - which in turn will lead to much better housing prospects for young people. Treating a house as investment was the most damaging trend of the last two decades. The loss of accumulated wealth also reduces inequalities. Wasteful practices will be affected more in all walks of life.…

>the loss of accumulated wealth

If only. I but I think wealthy individuals and companies with huge cash war chests are going to be just fine.

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

#54

Post by l33tbro »

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.

How will capital be reallocated exactly? How will the new supply chains be created? We're heading into a long depression. The remaining wealth goes to bailing out and ventriloquizing the failed system until its next crisis iteration.

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

#55

Post by hef19898 »

chollida1 wrote: post #32

Well the stock market is now down below what it was when Trump took office, so we've already lost 3 years worth of gains in one month, which is pretty poor. Goldman put out a note saying the GDP would dip about 9-10.5% over the first quarter of the year, which is almost the worst we've ever seen. And that's a single quarter, a single quarter. US GDP maybe down 20% by the time this is over. And keep in mind no doctor…

No economist, so take that as my personal opinion.

I see two extremes, a restart without to much issues. Laid of people are hired again quick. And after some time of rebuilding savings people start spending again. I would say that is not the most likely outcome, unemployment in the US is rising, this will impact the world economy. Remember, all it took 2008 was mortgage defaults in the US and Lehman Brothers to send world economy into a downward spiral.

On the other extreme, the crisis shows all the cracks in our global economy. Some of them fail. Basic dynamics change, and there is no way of predicting what will happen.

The only constant seems to be cheap money. No idea if that is a good thing...

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

#56

Post by 0xfaded »

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…

What will it take to get the ECB to print money?

For better or worse, most of the medical costs are going to be spent on the older generation. More debt will become the burden of the current taxpayers and then the next generation.

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

#57

Post by incompatible »

chollida1 wrote: post #32

Well the stock market is now down below what it was when Trump took office, so we've already lost 3 years worth of gains in one month, which is pretty poor. Goldman put out a note saying the GDP would dip about 9-10.5% over the first quarter of the year, which is almost the worst we've ever seen. And that's a single quarter, a single quarter. US GDP maybe down 20% by the time this is over. And keep in mind no doctor…

The US stock market always seems wildly optimistic. It was still near its all-time highs while it was already seeming quite likely that the virus would be a serious problem. The Australian stock market is now at 2013 levels.

On the other hand, once there's a sign that the end of the pandemic may be in sight, I expect that the US markets will overreact on the side of optimism, regardless of the actual economic damage that has been done. Bear in mind that governments are adding to the vast stockpile of paper "wealth" that's already out there, and that tends to cause asset inflation.

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

#58

Post by qubex »

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.

To be honest, it seems that the basic tenants of inflation have been violated since the 2007/8 crisis and the subsequent massive influxes of liquidity (primarily through the various quantitative easing programmes), so I really cannot say with any certainty.

There’s an enormous amount of money already sloshing around in the systems, and it seems to be pooling at the top (hence all the inequality).

On one level, somebody could argue that all the typically ‘renter’ activities (rents, licenses, et cetera) should be suspended during the period of crisis to prevent those who “profit from standing still” to absorb more liquidity and boost their wealth whilst the scurrying masses are bled white, but I don’t think that’s practical.

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

#59

Post by tyingq »

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 believe in a bounce back also, but I don't think we will bounce back to the same state. A couple of examples...

Many companies will have figured out how to run leaner. So post recovery, they may not bring back everyone that was laid off. Lean is good, of course, but unemployment isn't.

Competition will go down. Not every company in every space will survive. So things will consolidate down to the survivors. This probably hits small businesses especially hard. Again, Darwinism isn't inherently bad, but it could, for example, drive wages down.

In short, whatever emerges will not be what we had, and will take some time to adjust to.

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

#60

Post by take_a_breath »

impendia wrote: post #16
qubex wrote: post #7

Earlier quoted context omitted.

Oh yes, that’s a great example: “so many people died that the two-thirds that survived enjoyed benefits for generations”. Yes, it’s accurate... but I think it also somewhat misses the point. The unexpected consequences of a mass culling several years down the line probably is of the “extremely bad” persuasion.

According to some historians, OP is right about the Black Death. For example, it has been suggested that it led to the Renaissance. See for example here: https://dailyhistory.org/How_did_the_Bubonic_Plague_make_the... The Black Death was horrific, but had what I would argue were some very positive long-term consequences.

And how long was the period between the Black Death (1347-1350) and the Renaissance? That’s what matters to the people alive today.
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