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IMF Says Great Lockdown Recession Likely Worst Since Depression

bloomberg.com

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Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#121

Post by squillesque »

ModernMech wrote: post #114
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

> this is also different because there isn't an economic causal factor. we intentionally stopped everything. Yes we intentionally stopped things, but that would have happened either way as the disease spread and people got sick. Look at the meat packing plant in SD where 1 case turned into ~300 and they had to shut down [1]. If we had not shut down things, that would be the story at workplaces across the country. Thi…

I can't find the studies at the moment but there's at least one looking at previous pandemics that supports your suggestion. They found that economies that instituted weaker public health responses had bigger casualties from illness directly, and longer times to economic recovery because of bigger losses in personnel etc.

I wonder if lack of public health infrastructure in the us will come to haunt it in the coming months as other countries recover faster and get a head start. That sort of economic opportunity cost from not having more public health infrastructure tends to have been left out of past discussions completely.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#122

Post by dustingetz »

watwut wrote: post #89
dustingetz wrote: post #81

Earlier quoted context omitted.

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

It is not case that every org, smb, landlord and individual took on too much leverage. Quite a few among those who are laying people off run out of money because their customers are not buying services now or because they were flat out closed. Which is something else then "my company took on way too much leverage".

Do you have a credit card, a car payment, a mortgage, rent or lease, or a student loan? Can you make payments for several months without a salary? Several years? Literally everything for the last 50+ years is financed with debt, labor doesn't own anything anymore, and it's not possible to opt out of debt and simultaneously compete, which is how we got in this Chinese finger trap in the first place.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#123

Post by watwut »

dustingetz wrote: post #122
watwut wrote: post #89

Earlier quoted context omitted.

It is not case that every org, smb, landlord and individual took on too much leverage. Quite a few among those who are laying people off run out of money because their customers are not buying services now or because they were flat out closed. Which is something else then "my company took on way too much leverage".

Do you have a credit card, a car payment, a mortgage, rent or lease, or a student loan? Can you make payments for several months without a salary? Several years? Literally everything for the last 50+ years is financed with debt, labor doesn't own anything anymore, and it's not possible to opt out of debt and simultaneously compete, which is how we got in this Chinese finger trap in the first place.

I can make payments for a year without changing lifestyle much. That was intentional, I had the option to spend all money.

I never pretended I am poor. I work as programmer and so does my partner. Most people on this forum are not poor. We are comparatively well paid group.

There is debt and then there is excessive debt or "leverage". Ans when management take on excessive leverage so that you fulfill your dream of being big and then company fails, yes it is management fault.

"We took excessive debt and then failed by no mistake of ours" is an oxymoron and illogical statement. That is not nearly the same as debt because your kid would die without it or something like that.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#124

Post by fallingfrog »

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

Good point. If I’m being fair I would have to say that the system that encourages individuals to live paycheck to paycheck and the system that encourages companies to leverage to the gills is the same system, and so maybe it is unfair to blame corporations for needing a bailout- they’re just responding in a rational way to their environment. I hadn’t thought of it that way.

But the downside to that is: if in fact you can’t pin this moralistically on bad actors, then you are definitely going to see the same behavior over and over, until policies change.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#125

Post by dustingetz »

watwut wrote: post #123
dustingetz wrote: post #122

Earlier quoted context omitted.

Do you have a credit card, a car payment, a mortgage, rent or lease, or a student loan? Can you make payments for several months without a salary? Several years? Literally everything for the last 50+ years is financed with debt, labor doesn't own anything anymore, and it's not possible to opt out of debt and simultaneously compete, which is how we got in this Chinese finger trap in the first place.

I can make payments for a year without changing lifestyle much. That was intentional, I had the option to spend all money. I never pretended I am poor. I work as programmer and so does my partner. Most people on this forum are not poor. We are comparatively well paid group. There is debt and then there is excessive debt or "leverage". Ans when management take on excessive leverage so that you fulfill your dream of be…

Sorry wasn't aiming at you individually. My point is that debt == leverage and every one of us is complicit in this insane and unsustainable system.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#126

Post by stephsmithio »

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 have to agree with this. People have focused the entire conversation on if/when the virus will slowdown (which is of foremost importance), but there are business fundamentals that have already been stretched. We are already in a recession.

To reinforce this concept, take a look at how unemployment now compares to previous recessions: https://twitter.com/stephsmithio/status/1250122624094490624

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#127

Post by vlunkr »

vlunkr wrote: post #28
fallingfrog wrote: post #18

The economy is basically a big network of relationships; employee relationships, business relationships, etc. Unfortunately such relationships tend to break quickly and in a self reinforcing cascade but can only be rebuilt slowly as businesses find that there is enough profit margin and demand to bring new people in, one at a time. That’s why recessions happen quickly and recovery time is proportional to how many peo…

It seems likely though that lots of people after the lockdowns will simply be re-hired once lockdowns are over.

Boy I wish I could edit that for grammar now.

Re: IMF Says Great Lockdown Recession Likely Worst Since Depression

#128

Post by twomoretime »

ironSkillet wrote: post #70
twomoretime wrote: post #22

Earlier quoted context omitted.

I don't know how anyone can trust the stock market right now. We're living in unprecedented uncertainty and on top of that, [literally] everything's closed and no one is buying anything, how can the economy possibly be growing like the market right now? Hot air that will crash eventually.

I don't disagree with you that the stock market is inflated, but remember that stocks should be valued by looking at the estimated sum of their future cash flows, not just their current cash flows. And this is relative to a riskless cash flow, like e.g. treasuries, which are controlled by interest rates.

How long are people expecting these companies to stay in business?

I think people are just buying in now while things are cheap and that's leading to a "recovery". Particularly given the longer the run the more risk averse cash you attract while prices are discounted. I bet there's another "crash" coming.

I'm not sure enough to short my money where my mouth is though, so to speak.

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