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

I am of opposite opinion. Being a strange unprecedented political lifeform, the EU might be further defined in some of its instituions after this crisis. After the collapse of the USSR and German reunification they defined one piece, after the 2008 crisis some other piece, and so on.. maybe the EU can only be shaped crisis after crisis, being so particular a political entity. Look for example at how they are now discussing the Eurobond issue (means: moving a bit toward fiscal integration).

It seems IMHO that such a historically new process cannot proceed linearly but only via sudden accelerations determined by the occurrence of crises (and talking about crises, I guess that in the next decades there will be enough of those)

Or maybe not.

Yes.

The core of the issue is that there is neither a vaccine or a test, combined with asymptomatic carriers. Hence, the only way to combat this virus is a quarantine for the whole population, which causes severe economic damage.

Once you solve either of these issues (e.g. South Korea), there might be a fast recovery. Did South Korea enter into a depression?

In any crisis, it is easy to assume that the last crisis results will occur, but everything depends on the context.

> 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.

Though I'm by no means an economist, I'm with this. What's more I have the feeling the economy might come out even stronger here is my reasoning:

A lot of young people are confined to their homes at the moment. I'm talking about anyone in the 25-36-7-8-9 range(being a representative myself). Fair enough, take away the people who have families and children out of that group and you have a substantial number of people. And in that group are the most active members of society, which in normal circumstances, have plenty of entertainment in their lives outside their homes and work environment(contrary to popular belief). Yes, many spend too much time on social media, but plenty do not. In the additional spare time we have (at the expense of time spent at bars, restaurants, cinemas, shopping centers, etc.), many are occupying themselves however they can. Myself including - I'm almost out of books to read. I've enrolled at several online courses, I'm working on personal projects, including writing a book(which I intend to open source once complete).

My point is that in that additional time, plenty of people will have time to work on current and potentially future problems and open markets that currently do not exist. Sure, many will fail, as usual, but some will succeed. The truth is that multi-billion corporations started as black swans. Stephen King has a brilliant essay called "On being 19". I don't remember the exact quote but it went something along the lines of "When you are 19, you believe that the whole world is at your mercy and no one should mess with you". Which is rarely the case. Companies and entire industries around them(Facebook, Google) might have been started by 19 year olds but they are the Black Swans. The truth is when you are 19, regardless of how smart you are, you lack experience and by implications, adequate amounts of knowledge. Most people have tried multiple times when they were in that age group and 99.99999% have failed. Now people with experience have the time and nothing better to do then use it to the maximum. I'm not looking at it as a Black Swan phenomenon but the next step: Antifragility. If anything, I believe that now is the time to pay close attention and use your resources, knowledge and experience to capitalize on it.

I am willing to bet more than 50% of people have not enough saving for a crisis long 8-12 months

Some thoughts:

- Short term we need government to step in and avoid a large-scale meltdown of businesses that would be more catastrophic than the virus itself. This will likely involve taking equity stakes in airlines etc. Warren Buffet might also be willing to help here again, he has 128 billion USD saved up for times like these :)

- Stock market likely hasn't seen the bottom yet. There will be more deleveraging and panic selling. Long term (10+ years) it's still a good point to buy (perhaps with one third of the capital you do not need anyway)

- Western countries might lose some civil rights that are necessary to quickly control new outbreaks (e.g. analysis of cell movement data to locate all places an infected person visited)

- There will be long-term impact with regards to stricter controls necessary to quickly contain new outbreaks. This will increase costs for a few, potentially a lot of industries (everything travel, potentially logistics)

- I have some fear that some countries which are simply not able to get the virus under control will be disconnected from the rest of the world economy, since no one wants to risk importing the virus from them again.

I hope most of the countries go the way China went in Hubei: Take the most radical measures immediately - i.e. total lockdown, government backs the economy. This will make it possible to lift them after a very short time and affect the economy the least while controlling the spread of the virus.