181–190 of 243 posts
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How does a profitable company justify layoffs then?
To avoid becoming unprofitable? You don't wait until you're on the verge of bankruptcy to take action.
"The report said worry about an economic slowdown was the main driver of companies' layoff intentions." I sometimes wonder if these sorts of economic projections end up being self-fulfilling prophecies. If everyone tightens up spending because they expect a recession, that essentially guarantees there will be one.
It's not just projections or worries. Companies have real hard data, such as sales pipeline, inventories, orders etc. If your sales pipeline is down, inventory is stocking up, and your warehouse is idle compared to a year before, it is a manager's job to lay off employees. a few interesting reports: https://www.reddit.com/r/StockMarket/comments/aydpbu/first_h... https://twitter.com/paulkrugman/status/1110161228507348…
And it's about how the lower than usual rates it's currently at matter for what it says, which makes sense.
Then I noticed it was Paul Krugman making the observations.
Any prior points I had no longer seem worth adding now. ;)
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I'm curious how people envision a bank run looking in the era of digital banking. You already can't get much cash from a bank in good times because hardly anyone uses cash anymore for large purchases. Presumably Venmo, Visa et al will work just fine.
You can walk into a bank and ask for all the cash in your account, if its over a certain dollar amount they'll ask you to fill out an IRS form, otherwise there is nothing barring getting cash from a bank.
But then: Job market bounces back in March with 196,000 gain in payrolls https://www.cnbc.com/2019/04/05/nonfarm-payrolls-march-2019.... Everyone just kinda shuffled around it seems.
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You can walk into a bank and ask for all the cash in your account, if its over a certain dollar amount they'll ask you to fill out an IRS form, otherwise there is nothing barring getting cash from a bank.
They won’t have a huge amount of cash on hand, though. I imagine a modern bank run would happen in slow motion.
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I'm curious how people envision a bank run looking in the era of digital banking. You already can't get much cash from a bank in good times because hardly anyone uses cash anymore for large purchases. Presumably Venmo, Visa et al will work just fine.
You can walk into a bank and ask for all the cash in your account, if its over a certain dollar amount they'll ask you to fill out an IRS form, otherwise there is nothing barring getting cash from a bank.
But while people are waiting for their cash, if they can still use digital banking, then they will probably stop worrying about it before their cash is actually delivered.
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I think their point is that all of that hard data may be a result of self-fulfilling prophecies of other companies cutting back their business because there's a general sense that a recession might be coming.
More of a positive feedback loop than a self-fulfilling prophesy.
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The stock market finds the 'correct' price for stocks, by aggregating conflicting beliefs and predictions of traders. When the beliefs are overwhelmingly pessimistic, stock prices drop. Why should companies behave any differently with respect to layoffs?
> The stock market finds the 'correct' price for stocks, by aggregating conflicting beliefs and predictions of traders. 10-20 years ago, maybe. It's now driven largely by semi-autonomous algorithms monitoring swings/trends. I'd argue that it finds a 'simulated' price rather than a 'correct' price. The stock market is much less susceptible to emotional speculation than it used to be, for better or for worse. A quick g…
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Yes, but the government can. The 2008 crisis didn't happen in deposit banking, but it was effectively a "bank run" in the same sense you're talking about -- all the assets banks could normally use to draw on to meet obligations froze up, and they ran out of money. And the government stepped in, becoming a lender of last resort. And it worked (not well, maybe, but it worked). Saying "the economy is powered by belief"…
I think the absolutely titanic levels of quantitative easing that came and went in the last crisis can only be viewed as an unequivocal vote of confidence in our financial system. Consumers and investors got scared and shut down their buying, but we printed out way back to heaven and no one batted an eye. Fiat currency belongs in the pantheon of history's greatest inventions alongside fire, the wheel and electricity.
Everyone when there is an issue, the Federal Reserves stepped in, printed money and bailed them out.
The end result, the financial sector gets bigger and bigger over the last few decades. Privatize the reward, socialize the risk.
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I think the absolutely titanic levels of quantitative easing that came and went in the last crisis can only be viewed as an unequivocal vote of confidence in our financial system. Consumers and investors got scared and shut down their buying, but we printed out way back to heaven and no one batted an eye. Fiat currency belongs in the pantheon of history's greatest inventions alongside fire, the wheel and electricity.
I agree. Without fiat currency, the US would have crumbled into a pile of blood soaked rubble.