As others have said, this is largely a guessing game right now. How swiftly and how boldly governments act is going to determine a lot. In 2008 you had people like Paulson and Bernanke who studied the Great Depression and desperately wanted to avoid the mistakes of the past. They saw those mistakes largely as a failure to act quickly. I’m not an economist, but in my humble opinion what we need is cash in the hands of working people who are losing work at an alarming pace. What I’m seeing is too much feet-dragging, means-testing, and timidity. This is a situation where every second counts, so for the best sense of how this all resolved, once again, pay close attention to how swiftly and how boldly governments act to provide stimulus to help people weather the next 18 months.
Ask HN: How bad will the 2020 economic crisis be?
91–100 of 174 posts
Re: Ask HN: How bad will the 2020 economic crisis be?
#92It's going to be bad for the following reasons:
1) Governments are not shutting everything down fast enough. Many countries are in the phase of "oh, we only have 200 cases, not a problem, look at Italy". They are just a few weeks behind Italy.
2) Some people, especially young ones, are not following quarantines. All it takes is one super-spreader to start another wave of infection.
3) People will run out of money soon. Governments will have a choice of either
a) printing money
b) distributing food and meds to everyone
c) letting people work in masks / googles / gloves
5) Most countries are not ready for thousands of patients requiring an ICU. No country is ready for a million ICU patients.
I think our only hope at this point is one of the drugs works very well. People suck.
Re: Ask HN: How bad will the 2020 economic crisis be?
#93I have no expertise in any area, but I would like to put down my thoughts for posterity (and feedback). I think we will see governments in the coming week or two start doing broad randomised samples of the population for antibodies and realise that many many more people have been infected than previously thought. Meanwhile fears for the economic consequences will grow larger. Also (hopefully) countries like Germany a…
> A litmus test for the general economy will be sales of new iPhones this fall.
I actually would go with the sales numbers for the new PS5 because:
- People who already have a console and are stuck home will not buy a new one because the cash is not there.
- PS5 is a nice to have but not a necessity. Though the iPhone is in the same category but at a much higher price. The PS5 is estimated to be sold at $470-$499 while the new iPhone is much more expensive $799 up to $999.
- People who don't own a console will likely put this off and buy it next year and focus on more necessities.
- The entertainment industry is hit massively by this crisis, and this will be a good indicator of where things are going.
Going back to the main subject, I believe the economy may well bounce back. The issues that may arise may be more related to security and politics. If things go on like this, there could be worldwide riots, or even revolutions in some places.
Let's just hope a vaccine is found quickly.
Re: Ask HN: How bad will the 2020 economic crisis be?
#94Earlier quoted context omitted.
Don't think that will happen. China will clean up the root cause of the virus quickly (wild animal markets). They seem to have the outbreak under control now, are ramping up production again and are in excellent position to help other countries dealing with the crisis now, which is exactly what they are doing: https://edition.cnn.com/2020/03/16/africa/jack-ma-donate-mas... https://www.wsj.com/articles/chinese-doctors…
The Chinese have apparently quit testing, so naturally it seems they have it 'under control' since they report zero new cases (detected). And the live-animal markets have produced disease before, every year in fact for decades, and not been 'cleaned up' so far. I have little confidence in any of that happening. I have no problem with the Chinese as people, but their current government is not to be admired.
I'm also a bit surprised by the low number of reported cases (there were some, but apparently only from foreigners - which was heavily publicized)
Certainly there are new infections but I'm optimistic that they can and will be contained. They simply have too much to lose here to just "manipulate the numbers"
Re: Ask HN: How bad will the 2020 economic crisis be?
#95Chance 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…
You've called it a war, which is just an analogy, but aren't actual wars sometimes good for the economy in certain ways, like generating economic activity? Is there a chance that could apply here?
Though maybe the work of fighting a medical war is more narrow and specialized than the work of fighting a literal war. For example, you cannot institute of draft and make people into doctors in time to fight this. Whereas with an actual war you can stick people on the front lines with a few months of training or put them to work in a factory.
Re: Ask HN: How bad will the 2020 economic crisis be?
#96Earlier quoted context omitted.
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…
> accumulated excess workforce "If they would rather die," said Scrooge, "they had better do it, and decrease the surplus population."
Being fired is not a death sentence.
Re: Ask HN: How bad will the 2020 economic crisis be?
#97It 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.
Through inflation from real estate into productive economy for example.
Re: Ask HN: How bad will the 2020 economic crisis be?
#98Earlier quoted context omitted.
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.
In that case, it seems like they should be debit cards with a 6-month expiration date rather than checks.
Granted, it's still possible to cash those out and save the money, but there's a little more friction involved.
Re: Ask HN: How bad will the 2020 economic crisis be?
#99Earlier quoted context omitted.
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.
The Fed could drop a bag with a million freshly-printed FRNs in it on my doorstep, and I'd simply take the bag and put it in my bedroom. A significant number of people aren't going to spend the money no matter how much it is.
Re: Ask HN: How bad will the 2020 economic crisis be?
#100The individual countries of the EU have not coordinated on this whatsoever and I can't see it remaining in its current form post-crisis. We're probably looking at a more loosely-defined trade union and a trend away from further integration. I'm not sure if this will be good or bad for the European economy, but it will certainly affect it in the short-term.
I see it more of a restatement of the status quo. For all the talk in the UK of an EU superstate etc, each member state remains a sovereign country and can unilaterally shut its borders if it wants to. Yes it’s probably clipped the wings of the federalists but they never spoke for the whole EU.