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How This Ends

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Re: How This Ends

#61

Post by staticman2 »

freediver wrote: post #31
fny wrote: post #24

I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…

> that bond yields would never normalize. Now that they have, there is a risk free alternative to stocks. Treasury bond yields are 3%, inflation is 8.5%, so in real terms you are guaranteed to lose 5.5% annually if you hold bonds. Or basically instead of risk-free gain you are holding gain-free risk.

You are comparing treasury rates a bond will pay out over the next 10 years with inflation over the last year. This is apples and oranges.

Re: How This Ends

#62

Post by SV_BubbleTime »

starkd wrote: post #15
puranjay wrote: post #8

I wonder how much irreparable damage the lockdowns did to the economy as we knew it before the pandemic. The more subjective aspects of the economy are hard to map - are people motivated enough to work? Do they feel invested enough in the future to work? Have they been burnt out by the yoyo cycle of work/lockdowns? Was their industry severely damaged and they pivoted to other careers? Like there’s a massive pilot sho…

I fear they have not learned this lesson. Already ramping up fears of monkeypox. https://www.barrons.com/news/biden-warns-of-potentially-cons...

Why wouldn’t they?

Name a government or public sector institution that lost power during covid. It’s tough to do.

Re: How This Ends

#63

Post by PaulDavisThe1st »

I have a real problem with pieces like this that define "recession" in terms of abstract measurements of bits of the economy. Real recessions are about actual people and their lives, and although there's a definite correlation between the sorts of measures cited here and people's lives, it's much weaker than the article implies. We have very low unemployment right now, and most the features of a people-affecting recession are absent. Yes, the economic situation is really complicated and has some worrying signs, but calling it a recession based on the quoted numbers even when they are embedded in a not-seen-in-100-years context seems rash to me.

Re: How This Ends

#64

Post by bitL »

puranjay wrote: post #8

I wonder how much irreparable damage the lockdowns did to the economy as we knew it before the pandemic. The more subjective aspects of the economy are hard to map - are people motivated enough to work? Do they feel invested enough in the future to work? Have they been burnt out by the yoyo cycle of work/lockdowns? Was their industry severely damaged and they pivoted to other careers? Like there’s a massive pilot sho…

EU is going to irrelevance much faster than expected and it's going to be US vs China everywhere. That's going to be the main outcome/damage.

Re: How This Ends

#65

Post by omginternets »

fny wrote: post #5
omginternets wrote: post #2

I don’t have any good mental tools to distinguish between useful and useless economic predictions like this. How does HN navigate this kind of thing?

You need to understand more about macroeconomics, monetary policy, ad government, along with studying past how past markets behaved under similar conditions. History doesn't repeat but it rhymes becomes the mantra.

What are the must-read books in macroeconomics and monetary policy?

Re: How This Ends

#66

Post by chrisco255 »

freediver wrote: post #31
fny wrote: post #24

I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…

> that bond yields would never normalize. Now that they have, there is a risk free alternative to stocks. Treasury bond yields are 3%, inflation is 8.5%, so in real terms you are guaranteed to lose 5.5% annually if you hold bonds. Or basically instead of risk-free gain you are holding gain-free risk.

Risk-free loss? But maybe it's better than cash, the only other risk-free alternative? Perhaps you're paying for preservation of capital as the asset bubble deflates, and maybe that's not a bad deal?

Re: How This Ends

#67

Post by Forgeties79 »

freediver wrote: post #31
fny wrote: post #24

I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…

> that bond yields would never normalize. Now that they have, there is a risk free alternative to stocks. Treasury bond yields are 3%, inflation is 8.5%, so in real terms you are guaranteed to lose 5.5% annually if you hold bonds. Or basically instead of risk-free gain you are holding gain-free risk.

If inflation somehow keeps rocking at 8.5% for a decade straight we have a much bigger problem on our hands than the relative yield of a treasury bond. Technically anything is possible…but I’m willing to risk saying that won’t happen.

Re: How This Ends

#68

Post by tempsy »

The shock from the Target and Walmart earnings that caused the single largest drop since the 80s for both companies was not just the pain of inflation that is adding to their costs but also from rising inventories because consumers seem to be already sacrificing discretionary purchases.

Will be interesting to see if discretionary spend continues to meaningfully drop and whether we will actually start seeing price cuts/discounts eg deflation as retailers look to reduce inventory.

Re: How This Ends

#69

Post by cma »

puranjay wrote: post #8

I wonder how much irreparable damage the lockdowns did to the economy as we knew it before the pandemic. The more subjective aspects of the economy are hard to map - are people motivated enough to work? Do they feel invested enough in the future to work? Have they been burnt out by the yoyo cycle of work/lockdowns? Was their industry severely damaged and they pivoted to other careers? Like there’s a massive pilot sho…

> Like there’s a massive pilot shortage. I have friends who are pilots. They were already planning on retiring by 40 (pilots get paid very handsomely here) and starting a business. They just shifted their plans forward by 5 years instead of sitting at home and doing nothing. That’s two skilled captains the airlines will have to find replacements for.

> I really don’t think anyone really sat down and thought through these issues when the lockdowns were announced. You can’t expect people to go from 100 to 0 and back to 100 over two years. People are not resources that can be put to use or discarded whenever you want.

Didnt the paycheck protection program work towards this? We made a system to avoid unemployment strife and later inefficiency of rehiring everyone once it was over, by funding payrolls.

Re: How This Ends

#70

Post by puranjay »

jfengel wrote: post #40
puranjay wrote: post #8

I wonder how much irreparable damage the lockdowns did to the economy as we knew it before the pandemic. The more subjective aspects of the economy are hard to map - are people motivated enough to work? Do they feel invested enough in the future to work? Have they been burnt out by the yoyo cycle of work/lockdowns? Was their industry severely damaged and they pivoted to other careers? Like there’s a massive pilot sho…

Yes, they did sit down and think that through. That's their job. This is not the first epidemic. Public health departments, unlike people on the Internet, actually study the topic. You might consider sitting down and thinking about who is making these decisions and what their backgrounds are before you pronounce that they didn't take something into account. On what basis are you making that accusation? Do you have an…

Their complete bewilderment about the labor shortage and insistence that inflation was transitory suggests otherwise.
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