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A Long Time Until the Economic New Normal

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Re: A Long Time Until the Economic New Normal

#171

Post by AznHisoka »

AriaMinaei wrote: post #79
sremani wrote: post #21

Earlier quoted context omitted.

A Global Pandemic is NOT A BLACK SWAN. As matter of FACT, it was predicted by Taleb and according to him it is a WHITE SWAN. The true problem here is the so called Risk "experts" do not understand Risk, and that is the core problem.

Exactly. This is the furthest thing from a black swan. A global pandemic was always a matter of when, not if (still is). That, by definition, is not a black swan. Plus, we in EU/NA had plenty of notice since January to prepare, and we chose to bury our head in the sand instead. Prominent people call this a black swan just to deflect responsibility, and perhaps to get a bit of bailout money on the side.

Indeed. A black swan is something you never thought could exist before because you've only seen white swans. We've had pandemics in the past, though not as serious as this one. This is not a black swan, and calling it a black swan just undermines what a black swan is.

Re: A Long Time Until the Economic New Normal

#173

Post by IAmEveryone »

nostromo wrote: post #168
throwaway_USD wrote: post #84

It seems people don't realize how much $6T is and the effects of that kind of money being injected into the economy. Consider the 2008 housing bubble and financial crisis which was ultimately corrected with two stimulus packages totaling less than $2T...that money turned the economy around, put the economy into the longest bull market in history, resulting in a record stock market and corporate profits. Now its not t…

$6T has been created, but an unknown $X trillion has also been destroyed by a sharp and sudden decrease in economic activity, including a contraction of credit. So... who knows. Maybe it's enough, maybe it's too much, or maybe it's too little -- it's too early to say.

What’s been destroyed is not some amount of $, but of productivity as measured in $.

Re: A Long Time Until the Economic New Normal

#174

Post by downerending »

TrainedMonkey wrote: post #152
throwaway_USD wrote: post #84

It seems people don't realize how much $6T is and the effects of that kind of money being injected into the economy. Consider the 2008 housing bubble and financial crisis which was ultimately corrected with two stimulus packages totaling less than $2T...that money turned the economy around, put the economy into the longest bull market in history, resulting in a record stock market and corporate profits. Now its not t…

I've been bombarded by a popular "stimulus for the rich" from everywhere. Please describe what would happen if stimulus did not pass and there was no assistance from the government.

As analogy, drain all of the oil from your car's engine. Start it, put it in neutral, and floor the accelerator until morale improves.

Re: A Long Time Until the Economic New Normal

#175

Post by alistairSH »

throwaway_USD wrote: post #84

It seems people don't realize how much $6T is and the effects of that kind of money being injected into the economy. Consider the 2008 housing bubble and financial crisis which was ultimately corrected with two stimulus packages totaling less than $2T...that money turned the economy around, put the economy into the longest bull market in history, resulting in a record stock market and corporate profits. Now its not t…

This was done through cooking the unemployment books ...

That's patently false. BLS reports 6 different "unemployment rates" (1). The media has historically reported U-3. You can argue that U-6 is more meaningful in light of recent economic trends. But, no books have been cooked.

1 - https://www.bls.gov/news.release/empsit.t15.htm

Re: A Long Time Until the Economic New Normal

#176

Post by ttul »

nostromo wrote: post #168
throwaway_USD wrote: post #84

It seems people don't realize how much $6T is and the effects of that kind of money being injected into the economy. Consider the 2008 housing bubble and financial crisis which was ultimately corrected with two stimulus packages totaling less than $2T...that money turned the economy around, put the economy into the longest bull market in history, resulting in a record stock market and corporate profits. Now its not t…

$6T has been created, but an unknown $X trillion has also been destroyed by a sharp and sudden decrease in economic activity, including a contraction of credit. So... who knows. Maybe it's enough, maybe it's too much, or maybe it's too little -- it's too early to say.

Thank you for pointing this out. Secondly, just what the hell is the central bank supposed to do? Had they not intervened hard in debt markets, we would have seen bank runs and mass chaos in financial markets, making things we take for granted (such as paying for stuff at the grocery store) totally fail over night.

I am wayyyy less worried about the magnitude of the Fed’s intervention than I am about what might have happened otherwise.

Re: A Long Time Until the Economic New Normal

#177

Post by proverbialbunny »

JackFr wrote: post #9

The points made are fine insofar as they go. At the same time, the current economic situation is, very literally, unprecedented. It has aspects of a war, a natural disaster and a secular recession. Economists should try to estimate its effects, but in this case their predictions need to be taken with an extra large grain of salt.

If you look at stock market data from the 1910s, when spanish flu ripped everything and everyone apart, the economy then dropped in a similar way today, well, until the Fed started pumping trillions into the market, and now the market is looking different then than today.

The economic collapse from the Spanish Flu was so devastating it was used as a selling point to create the Federal Reserve, which was sold to help a situation similar to today. Today, the Fed's marketing is on the line.

Re: A Long Time Until the Economic New Normal

#178

Post by zaroth »

ipnon wrote: post #94
SimeVidas wrote: post #44

My stupid country just went back to pre-2008 levels, and now this. My entire adult life is basically one long period of stagnation.

The US spends $7 for seniors for every $1 they spend on minors.[0] [0] https://www.brookings.edu/wp-content/uploads/2016/07/1_how_m...

To be fair, they’ve paid a bit more into the system at that point in order to gain those benefits.

Re: A Long Time Until the Economic New Normal

#179

Post by bigmanwalter »

londons_explore wrote: post #18
vikramkr wrote: post #10

Earlier quoted context omitted.

I also think a lesson people might have learned on the business side is that theres almost no point planning for something like this - how is a small business supposed to have enough cash on hand to make it through something like this? This is just so bad for so many restaurants/small businesses etc that it's not really something you can overcome with some planning if you own a small margin small business

The same is true of a fire in your small restaurant. Yet people buy insurance for that. Pandemic insurance could exist, and a massive fund could be built up over many decades to pay out when a pandemic does occur. It would be expensive though. If a pandemic occurs every 100 years, and cuts revenue to zero for 6 months, that means the average cost is 0.5% of revenue...

Pandemic insurance doesn't really make sense. Fires are isolated events, and it is incredibly unlikely that every insured business catches fire all at once.

On the other hand, the very nature of a pandemic is that all insured businesses will make their claims at the same time. It's impossible to actually make it work.

Re: A Long Time Until the Economic New Normal

#180

Post by scott_s »

nostromo wrote: post #168
throwaway_USD wrote: post #84

It seems people don't realize how much $6T is and the effects of that kind of money being injected into the economy. Consider the 2008 housing bubble and financial crisis which was ultimately corrected with two stimulus packages totaling less than $2T...that money turned the economy around, put the economy into the longest bull market in history, resulting in a record stock market and corporate profits. Now its not t…

$6T has been created, but an unknown $X trillion has also been destroyed by a sharp and sudden decrease in economic activity, including a contraction of credit. So... who knows. Maybe it's enough, maybe it's too much, or maybe it's too little -- it's too early to say.

This is why I dislike that some have characterized the bill as a "stimulus." The point of stimulus efforts is to stimulate the economy, implying that it's ready to be stimulated. It's not. The $6 trillion is life support. We've put the economy into a medically induced coma. The $6 trillion is what we need to keep the economy alive, barely, while we try to get Covid-19 under control. Once we've done that, we'll need separate stimulus to get out of a depression.
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