IMF Says Great Lockdown Recession Likely Worst Since Depression • Hacker News Board

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#91

Post by user5994461 » Tue, Apr 14, 2020, 2:20 PM UTC

sebazzz wrote: post #83

webbruce wrote: post #62

Based on some of these comments, the degree to which so many are out of touch is unbelievable. 17 MILLION people have filed for unemployment and I'm sure this week will be another 6M as companies don't keep this much cash on hand. Tech's been living in a bubble for a long time and reality is starting to hit. Get out and talk to real people, not your Slack buddies working in SF.

Those companies that fire people, do they also file for support money from the government? If that is the case, is that fair? Thinking from the perspective of a country which has actually good worker protection, so not as many people get fired and companies get support in paying their workers.

Speaking from a country that may have one of the best worker protection (France) in the world, it's all smokes and mirrors. If your small-medium business is in trouble, the only sane thing to do for your employees is to layoff as quickly as possible, so they can register to unemployment benefits (and count in statistics).

You think any government is going to give you money as a business owner? Maybe if you're lucky but how much time and paperwork is it gonna take? You're not guaranteed to see any of it or when. Meanwhile, you're accruing significant debt from each employees and suppliers day over day, with no end in sight.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#92

Post by treyfitty » Tue, Apr 14, 2020, 2:21 PM UTC

justinzollars wrote: post #31

This certainly feels real to me. Yesterday, I was laid off from my job at Easypost. We had a very big and very painful layoff because my company took on way too much leverage. The circumstances of COVID19 were tough to foresee but I really wish we hadn't taken on so much debt while times were good. I have experience in Go, Ruby, Python and I'm excited to hack again.

> It was no fault of our own because the circumstances of COVID were impossible to foresee.

This is one of the biggest fallacies in modern finance. COVID was merely the catalyst which exposed terrible finances. The idea of unforeseeable black swans has become nothing more than a trope of an excuse that it's lost all meaning. Sure, the pandemic itself is a "black swan" but the subset/collection of events that lend itself to economic disaster is actually not that rare. Case in point: 9/11, Tech Bubble burst, Financial Crisis, Covid-19. This was all in a span of ~20 years.

So let's revisit this: Is economic collapse really that rare? No. But people construct their businesses as if they are, and we always see these house of cards tumble. The other group of businesses who acknowledge the possibility of an economic collapse subscribe to the false pretense that THEIR company is immune because they're so "essential." In both cases, growth at all costs seems to be the mantra. How is this sustainable beyond the Fed Lottery? At this point, it hasn't become a Lottery anymore.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#93

Post by adequateness » Tue, Apr 14, 2020, 2:23 PM UTC

djohnston wrote: post #78

nl wrote: post #73

Earlier quoted context omitted.

hey, we were probably moving towards some recession anyway, That's a take that is gained from reading two many doom and gloom writers and not looking at the data. The data shows that economies - on average - expand and have done consistently, long term since the renaissance. Once you look at that, you see recessions as mistakes . Most large ones since the start of the 20th century have been caused by errors in the ca…

this is also different because there isn't an economic causal factor. we intentionally stopped everything. that didn't happen in 1929 or 2008 or the 70's, we collectively got together and said shut it down until we get a hold on this disease

The lockdown isn't the only reason for the current economic crisis. Look at what was happening in the repo market a few months back before Coronavirus was even a thing.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#94

Post by londons_explore » Tue, Apr 14, 2020, 2:25 PM UTC

Davidzheng wrote: post #72

londons_explore wrote: post #58

I think historians will look back at COVID-19 as a textbook way not to handle an emergency. They will point out that 99% of deaths were related to economic effects of our response, not the disease itself. Hundreds of millions will starve or die in failed states in an economic slowdown, while only hundreds of thousands die of disease.

Sorry what? Are your numbers the world or US? In either way I think it's just impossible, no? There can't be hundreds of millions of deaths in the US due to starvation after this I don't think I need to justify this claim. (if you disagree let me know) and I'm willing to bet that death from the disease in the whole world is more than a million easily. OK so the only possible interpretation is you're saying the shutdo…

My guestimates were indeed for the world and I expect most deaths to occur in less developed countries.

Economic slowdowns cause some states to fail, leading to civil wars, refugee cities, and famines and other diseases spreading. Thats where most of the deaths will occur.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#95

Post by jazzyk » Tue, Apr 14, 2020, 2:26 PM UTC

BjoernKW wrote: post #56

anilshanbhag wrote: post #3

Stock market doesn't seem to agree with this conclusion.

The stock market is commonly considered to represent what the economy is expected to look like in 6-12 months. If we assume a sharp downturn in Q1 and Q2 of 2020 and a subsequent uptick and prolonged recovery in the second half of 2020 and continuing in 2021 that pretty much corresponds to how stock markets have been reacting over the past few weeks.

No, it is just helicopter money distributed (to some) by the Federal Reserve.

"Whatever it takes" to backstop the stock market is apparently working.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#96

Post by frockington1 » Tue, Apr 14, 2020, 2:27 PM UTC

dustingetz wrote: post #81

Dumblydorr wrote: post #74

Earlier quoted context omitted.

Nothing personal, but how is it not a company's fault to take on tons of leverage and not have cash reserves? I know this is typical SV growth mindset, but it isn't conventional financial wisdom. Seems to me companies need to get lucky if they go growth at all costs, because if you havent flipped the profit switch before a recession, your balance sheets are too red.

When one org takes on too much leverage it is the org's fault When every org, smb, landlord and individual takes on too much leverage, it is the macro economic system we exist in that is at fault

If you look at some of the biggest winners out of '08/'09 it was the institutions with large balance sheets and cash reserves. With earnings season just starting we are able to see the value of a strong balance sheet. Seems to me the macro economic system is rewarding those who bothered with risk management

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#97

Post by anonanon42 » Tue, Apr 14, 2020, 2:27 PM UTC

Ididntdothis wrote: post #90

webbruce wrote: post #62

Based on some of these comments, the degree to which so many are out of touch is unbelievable. 17 MILLION people have filed for unemployment and I'm sure this week will be another 6M as companies don't keep this much cash on hand. Tech's been living in a bubble for a long time and reality is starting to hit. Get out and talk to real people, not your Slack buddies working in SF.

I agree with you but the high number of unemployment claims is also a feature of the bailout plans. Let’s hope people will get hired back quickly.

My employer has just furloughed 30% of the company for 6 months. 6 freakin' months. And we were very profitable. This cut was not necessary to maintain neutral profit/loss...they want to keep profits up.

We're a software company backed by a brand name VC in SF. The board is in total meltdown.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#98

Post by watwut » Tue, Apr 14, 2020, 2:29 PM UTC

treyfitty wrote: post #92

justinzollars wrote: post #31

This certainly feels real to me. Yesterday, I was laid off from my job at Easypost. We had a very big and very painful layoff because my company took on way too much leverage. The circumstances of COVID19 were tough to foresee but I really wish we hadn't taken on so much debt while times were good. I have experience in Go, Ruby, Python and I'm excited to hack again.

> It was no fault of our own because the circumstances of COVID were impossible to foresee. This is one of the biggest fallacies in modern finance. COVID was merely the catalyst which exposed terrible finances. The idea of unforeseeable black swans has become nothing more than a trope of an excuse that it's lost all meaning. Sure, the pandemic itself is a "black swan" but the subset/collection of events that lend its…

Issue is that system in normal state favors "house of cards" companies. Both as simply value thing, but also in material financial terms.

In values, I have read a lot praise for risk taking over years and rewards for it. I have read comparatively less praise for prudent decision making or what happen when risk part of risk happen. People are said to get rich because they "took the risk" and are poor because they were either lazy or did not took risk. But the part when people take the risk and become poor is never said, as if we wanted to pretend it never happens.

In finances, companies that risk a lot and grow and now are about to fail are way more likely to be saved then a company that was more responsible.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#99

Post by frockington1 » Tue, Apr 14, 2020, 2:30 PM UTC

adequateness wrote: post #93

djohnston wrote: post #78

Earlier quoted context omitted.

this is also different because there isn't an economic causal factor. we intentionally stopped everything. that didn't happen in 1929 or 2008 or the 70's, we collectively got together and said shut it down until we get a hold on this disease

The lockdown isn't the only reason for the current economic crisis. Look at what was happening in the repo market a few months back before Coronavirus was even a thing.

I thought the repo market was mainly due to regulation drying up liquidity in that market. It didn;t seem to me like a larger concern. What are your thoughts on it?

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#100

Post by leesalminen » Tue, Apr 14, 2020, 2:30 PM UTC

m_mueller wrote: post #23

tyingq wrote: post #15

Earlier quoted context omitted.

I'm curious about the effects of all the consolidation. The top 5 retail giants will, for example, absorb more market share.

wouldn't be so sure. small businesses probably have a somewhat higher ability to go into a sleeper mode where operative costs are reduced to a minimum.

Minimum operative costs are still in the thousands of dollars per month for even the smallest of meat-space businesses. I don't know many hairdressers, nail stylists and massage therapists that can afford $1-3k/mo for the next several months with $0 revenue. Anecdotal, sure, but I have at least one of each of those in my family.