Dow Falls 2997 points worst drop since 1987 crash (opens in new tab)

The thing with dotcom and GFC is that they both revealed fundamental problems in the marketplace. Dotcom was over-hype around internet startups, GFC was the financial house of cards around subprime mortgages. There was no "going back to the way things were" in those cases.

In this case, on the other hand, the primary mechanism is "people can't work/aren't going out and buying things". That's absolutely going to "go back to the way things were", in some sense. It's just a question of how long it will take, and how much damage will be dealt in the meantime. But it feels very different from those other ones, which could be good or bad.

Put differently, the GFC was like organ failure: things couldn't just heal, they had to be reworked and replaced. The current crisis is like a knife wound: the basic problem will heal on its own, but in the meantime you have to keep from bleeding out and hopefully avoid necrosis.

9/11 happened during the dotcom crash, which likely had a much greater effect on the economy as a whole.

> well overdue for a crash.

This is not how markets work.

> well overdue fo a crash.

Not sure why a crash has to be expected or should be the norm.

A crash of this magnitude was overdue without coronavirus. The market can't just go up and up forever, that's not how markets work. Super long 11-year irrational raging bull market with blowoff top had to unwind and still does after coronavirus is a memory. The underlying financial factors will still be the same and probably even worse because we (mostly the president) keep trying to prop up the stock market like the guys in Weekend at Bernie's. Best to just tell the truth that Bernie is a dead guy, so the adults can put the pieces back together to the economy.

Not OP but I don't think we'll bounce back as quickly due to the lack of urgency coming from the Federal government. I suspect we'll fall into a vicious cycle of business layoffs, corresponding dip in consumer spending, reduction in r&d/business investment as we are now and after cases taper off which now seems even further away than what it could've been had the CDC/FDA/WH been on top of this earlier. Some countries took the threat seriously and immediately took care of things.

A lot of ventures that were hanging on by threads will be ruined by this, so the pandemic is likely to clear out a lot of the weaker businesses as any good recession or crash is apt to. It will take a while for the marker to grow around that loss (though good in the long term, there is pain in the short). It could also trigger a housing correction, which has ripple effects on the construction industry, and those people are no longer eating at restaurants, and so on. Think of busts being inevitable anyways, and a crisis is merely the way into one.

I look at it this way. Your essentially buying a companies future earnings by buying their stock. For some time here, corporate earnings are going to take a hit. B2C probably the hardest, but B2B will also feel the effects, ripple effect if you will. The strain these quarantines are putting on Small business owners will also ripple into the larger corporate companies that the market is composed off because these SBO are the consumers too.

I don't have a full understanding of the Repo market, but I do get it at a moderate level. I understand that it acts as the "lube" to our financial system and It's obvious it's not functioning correctly. What effect will this happen on the growing corporate debt that's out there? What effect will the lower revenues have on the ability for business' to pay back the debt and interest?

These are questions I have, but don't necessarily have factual answers for. However I don't feel good about the answers to them and for that reason do think were in for a recession.

South Korea and China itself are the best models for countries that have (sort of) bounced back. And they leveraged a variety of mass mobilizations the US hasn't started with. So basically we're in for a LOT of pain in dealing this.

Exogenous shocks usually don't provoke recessions but is going to be like a planet-wide tidal wave. Things are going to be very different at the end. Huge, efficient enterprises may well end up even stronger but would the market for a given medium sized enterprise even make sense? We don't know.

There is going to be a wave of airline bankruptcies. There is going to be a wave of retail bankruptcies. Add in cruise lines, tourism, restaurants, etc. Now add the secondary effects and most indicators are flashing red.

A significant cause for the massive drop today is that indicators out of China are that the disruption is much, much larger than anyone accounted for.

A few days ago there was a guy talking about refinancing his house and putting 20% of the value into the market[1]. He asked whether it was a bad time. I said it was a bad time -- not that it was going up or down but that there is enormous uncertainty and a long way to drop -- and got moderated down to the gray. The non-gray comments were all that this is a great time. Buy 'em on sale is a claim that has been foolishly made again and again.

No, it isn't a great time. Anyone deluding themselves that there is a market "bottom" that it is bouncing off of has been proven wrong repeatedly. Over the past couple of days the federal government has done more to try to fix the markets than they did during the entire housing crash, but compressing it all into a weekend. They have essentially nothing left.

And here we are, staring into the abyss.

Things will improve, and at one point we'll laugh about this and consider it all an overreaction, etc. But there's a lot of downside between now and then. And if history is any example, once we bottom out we'll hang around for a while.

[1] Oh add that we have historic debt levels, bubbled house prices in some areas, and the simple idea of financing the current, elevated value of a house seems risky.

Singapore is an interesting one. Their outbreak looks really benign, but actually they are on an exponential trajectory as well. The rate is just much lower, something like 7% daily. It doesn't register compared to the countries with fast growth, but if it stays like that, they will reach high numbers too. It translates to 10x per month.

See https://studylib.net/coronavirus-growth

I wouldn't underestimate the effectiveness and ability to respond of highly developed (and small) states like Singapore, Hong Kong or Taiwan.

They have very good control of their borders and the (medical) resources to act in case of trouble. Not only that but I think they have learned a few lessons after the 2002-2004 SARS outbreak.

Anecdotal, but while in Hong Kong (2014) there were a few things that stood out:

- they had thermal screening for ALL passengers - while walking towards customs an agent asked me to take my hat off and pointed to the thermal cameras. In contrast, at Bucharest's airport they were set up 3 weeks ago. As of 2019, there were 1.2M Romanian citizens living in Italy, about 600k in the northern part.

- banners against spitting in the trash bin - coming with a big fine. More generally speaking, a general state of cleanliness which can't be found in many EU capitals.

- no toilets in the subway - might be sources of contamination. And when you finally found a public toilet, they were as clean as they can be.

I think there are better odds of finding a cure fast than for Europe to contain this. Note, the evening before the Milan area lockdown people were rushing to the train stations - Schenghen area is borderless.

> Maybe, but why don't you think the markets will bounce back once we're on the other side of this?

Of course. Do you think people will stop working, going out, watching movies, buying cars, etc forever?

Every market decline, people think the world is going to end. But the world just keeps chugging along.

During the 2008 financial crisis, people were predicting the end of the world, bank runs, financial collapse, etc. The most recent ebola scare, people were talking about pandemic, every hospital being at capacity, death rate, triage and the end of the world.

In a few years, we'll do this all over again. The markets will be reinflated, the markets will decline, we'll have another crisis, the news will feed panic for ad money and people will go out of their minds. Then things will return to normal.

Longer term, nothing of the underlying fundamentals has changed. This is why the collapse is inevitable.

Looking at Europe (but the US seems to be taking the same direction). All restaurants, shops, entertainment, tourist industry are closing, and will remain closed for several months. Large businesses will fire people (see airlines now), small businesses will go bust.

If these health policies undershoot their targets in term of number of people infected, then we may have to deal with this virus again next fall/winter, so add a few more months of similar pain.

I just don't see how this will not have lasting effects. Even in Dec 2008, at the very worst of the crisis, you had deep discounts in shops, but at least you could consume. But here all malls will be basically closed.

This is probably a wave of margin calls forcing a lot of funds to liquidate. This contraction will reduce the money supply and scare this generation of investors.

There is a very large amount of corp debt on shaky ground. A lot of people are _very_ concerned that this debt is going to blow up in a very similar way to MBS in 2008.

I expect far WORSE in a month or so which is the scary part here because it is questionable how many companies will survive this long period of salaries with zero demand even with emergency aid packages. By next month the infection rate is calculated to barely having plateaued yet, with exponential rate until then.

I worry this will go so far that it’ll take a very long time for worldwide business to heal due to layoffs and wrecked personal finances killing demand even when we’re past the corona spike, and by then weapons like Fed’s lowered rates will have already been used.

I wouldn’t be surprised if we’re leaving this year with a -50% stock market value and 5-10 years for everything to get back to speed and valuation like it were.

It’s not even uncommon advice to not be heavily into the stock market if you have less than a >7 year savings horizon for these reasons.

If one assumes that the market was a powder keg waiting for a spark to explode, it doesn’t matter when the virus part of the equation clears up

Could you define 'much better'? Because we actually do know what the incubation period of this disease is, and we know how the virus has spread. It's a practical certainty that the spread of Covid is goingto gte worse, not better over the next month and that the mitigation strategies are going to completely tank some companies over that time.

If there's anything I learned about this virus is that my pessimistic predictions were way too optimistic.

Maybe in a year or two. In a month or so, covid will still be ramping up in various parts of the world.

This is going to take much longer than that to play out.

A month seems a bit optimistic. Even Trump himself was saying July or August. Note, he didn't specify the year.

Goldman Sachs already said they expect a further drop of 20%. Of course, this is just the beginning.

One has to account for 1929 gold standard. Since the world has confidence in the US dollar, Uncle Sam can dole out dollars, unlike gold. Just as bull markets are irrational, so are crashes; both are manifestations of herd mentality, as money ebbs and flows.

Today, Vanguard and Fidelity wanted to sell 6M shares of $ROKU after hours through Morgan Stanley. That's how things will go.

It's not a contradiction if it was meant to point how how ridiculous the market is behaving for something so relatively tame compared to the over-leverage that led to the great depression.

Everything happening right now are delay strategies to get a vaccine / antiviral treatment. Before we can control this the economy will be shut down. Nothing will be like before, the financial stress in the global economy is too extreme.

Nobody can tell you what will happen for sure, but it might be a good idea to look for businesses with large market caps and capital stores to deploy that will make it much more likely they will survive this period.

Like you rightly said, this is a gamble. You're playing against volatility we haven't seen in almost 40 years. Look at VIX. You would likely burn yourself, especially as an amateur. If you want to play this game, there is room for put options in your portfolio to counter some of the bleeding.

You’d have to be sitting on a cash savings equal to the value of the retirement account? Because you couldn’t use the proceeds from the retirement sale?

Be weary of catching falling knives.

I've made that mistake before.

Can you explain like I'm five how you plan to perform this tax loss harvesting for years to come?

That is opposite of what you should do. You would just be locking in losses (or greatly reduced profits). As long as you are reasonably sure you can hold your stocks for a few years then just hold on to them. Or better yet, go on buying spree and get cheap stocks.

If this drop is related to a panic sell off, then it's deeper drop than it needs to be. If you sell now, you might be selling in a panic low and locking in your losses.

If. Make your own decisions.

2008 was one sector of the economy dragging down everyone else. Shutting down everything for weeks to months is going to wreck everything. There's not a pause button. It's an emergency stop that's going to take a long time to recover from.

You're absolutely right and this is what most of the "buy the dip" idiots don't understand.

You’re assuming things will return to “normal” after things start improving.

Businesses, big and small, are going to take a huge hit from this that will take a long time to recover from. Probably more than most (all?) of is have seen in our lifetime.

Seems like this is something we’ve never faced before, and it’s not that highly unlikely that we’ll see some pretty nasty and long-term impacts from this.

The problem is that the externally driven factor can cause systemic issues. Having 25% retail & restaurant sales for a year will wipe out savings for a significant portion of the world. Most people will be fearful of spending for a long, long while.

> the exception being for companies that is going to go bankrupt

This is not a small issue. If businesses are closed for two or three months, I believe half of the businesses in this country will be close to bankruptcy.

Why do you presume there won't be another external or systemic recession in the next 18 months?

You can't just assert it's temporary. You can say, "The causes of this downturn are temporary."

We have no idea what the market will do in the future. We have strong evidence it will recover, but that's not the same thing.

You are assuming that COVID will go away and not become a yearly thing. Also assuming that this type of shutdown won’t become the new normal in response to a virus. ( something that happens every 4 or 5 years )

I too am hopeful, but I think there is 10-15% chance of massive long term economic downside

I agree with both of your three points. (ha!) It was why I stated that it felt like a panic. The problem is panics are much like stampedes, they can take on a life of their own once they get started.

>...this one is purely externally driven (like 2001) - which means it's temporary.

This can't be stressed enough. It may take a while but everything is going to be alright and normal again.

A lot of the companies won't survive.

A lot of the companies that do survive, will take a huge beating by the government, forcing them to be more resilient (to supply chain problems, short-term lack of labour, ...), reducing expected profits.

I 100% expect made in USA (or made locally for other countries) to be the selling point of both Trump and the Democratic candidate the next election. Most certainly after a shock like this.

There are so many assumptions in here that are IMO wrong. We're not asking for a recession. And I have no idea what you mean by "externally" driven. Everything is connected in the economy.

Its not fundamentally crazy.

In one sense, standard investing advice is to periodically rebalance between investment classes when your holdings diverge too much from you desired profile. In this, for a "simple" investor, that would probably mean transfering from bonds to stocks; since the portion of your portfolio that is in stocks recently fell substantially below your desired portion.

Assuming an efficient market, it is almost a no brainer that you should rebalance. Since your risk profile didn't change from a month ago, and stocks are being correctly valued, your portfolio is now overly conservative.

If you dont believe the market is effiecient, the question becomes 'in what way is the market inefficient?'. If you believe it is now undervalues stocks, you should buy them since they are now on sale for a bargain price.

Personally, my view is that the market is irrational, but I don't know how; so I am planning on not reballancing until after the dust settles. This minimizes the downside risk caused by me not knowing what I am doing.

Prices is the answer. That's why you are failing to grasp the situation. If you can buy a house for 100 in boom times but 50 in panic times, it's often better to get it for 50.

Same asset, lower price = less risk. The only thing which is up for debate during a panic is "is it the same asset now? How similar?"

Market has been hot so far this year, so the wise thing to do has been to slowly trim holdings for cash - i.e. up to 30% of your portfolio - so that you can buy on the dip. The correction has been a long time coming but the pandemic is making it even worse.

Can't speak to OP but I always think about the "buy low, sell high" cliche. If you follow that idea then when you think the market is high you should not buy.

My personal feeling the last 2 years was that the market was higher than it should have been. So I avoided buying equities. Now that the market is going lower I'm considering buying again.

If you have enough money, you can do some of both.

A related idea that might interest you: https://www.investopedia.com/terms/d/dollarcostaveraging.asp

Would I have rather bought two weeks ago at 3000+ or today at 2400? Answer: today! The logic is that eventually the market will recover and you want to buy before that happens.

You're forgetting the fundamental rule of the stock market.

Buy low, Sell high.

They've relaxed the no-liquids rule now!

for hand sanitizer only.

I hope you're not saying that measures which actually achieve more social distancing is somehow theater.

It's not so shallow, the stock market is still bubbly, these are the prices of mid 2017, when everyone said that the stock market is a bubble...

I have puts on a bunch of stocks that target the 52 week low or 10-15% below that in ~3 months. So far that strategy has been wildly profitable. There have been tons of stocks that doubled or tripled in value in 2019, no way that is a realistic price in the next 2-3 years.

29 here

Entered the workforce right after 2007, in my 16, after moving to Singapore from small town Russia as an exchange student. Financial fortunes of my patents went nowhere, and I had to keep myself afloat for pretty much 2.5 years.

Made not so bad money selling low end electronics to the third world on Alibaba, and such.

Then, my parents made me dump all my money on the best things since sliced bread: "Business Education" in Canada. So I will "never ever be in need, and be making money like those big men from America"

Wasted 3 years of my life on that, it was useless.

And in 2014, they made me buy an apartment in my hometown under an immense pressure, and "or else" threats for me "not having a chance getting a wife, without one"

A month later, the Russian roubles folds, property prices collapse. And I just parted with $78k USD, having just a few months of savings left, while my job in Canada was burning.

Somehow, I recovered. 5 months later I got $29k back to Canada. Life was good again, I got my first Canadian girlfriend.

Then at the end of 2015, when I just began making big plans for my life again, my troubles began to mount again... It was found out that my last employer in Canada was for some reason unable to secure LMIA after applying for it for 3 times in a row.

I tried every option to extend my stay in the country, but the government was hellbent on reducing the amount of work permit holders, closing every legal workaround for extension. I spent tons of moneys on immigration lawyers, without avail.

I decided to cut my loss short, and leave in 2016.

Having to leave Canada after 6 years, leaving a lot of money there, and almost getting a family, was a bitter, bitter loss. I was enraged for month.

After leaving 10 years abroad, I was completely unable to fit in Russian society of the day, and got robbed just weeks after arriving.

After doing few remote gigs, and throwing tons of money left and right to sweeten my grief, I got to think of going to China, a country whose manufacturing Industry I owe most of the money I earned in my career.

Been working in China since 2016

Ironically, the most normal part of my life began in the least normal country of them all.

My last relationship was a beautiful 29 years old self made entrepreneur, and an owner of a chemical factory. I dated her for a while, but had to leave for a series of extended assignments abroad. After returning just 10 month later, I found her already engaged to somebody more enterprising than me :(

Again, fortunes cut short just few centimetres away from the finish line. This bittersweet life.

Now, when China is descending into mass madness again, I am risking to loose everything again.

Having been roughly in your position back during the 2008 dump... https://news.ycombinator.com/item?id=318595

Don't forget, the market can drop 20% a day for awhile. Plenty of smart folks are sitting on the sidelines with cash, but time will tell if this is the trigger for a much larger longer-term 2020 deleveraging.

Markets aren't even where they were pre-Trump election yet, so this 30% haircut from the top isn't even a "correction" from some viewpoints.

I personally wish I was ballsier back in 2008/2009 (Ford for $1, BoA for similar prices, etc), but it'd also be premature to jump into this market if you truly think it's the tip of a recessionary iceberg. Recessions take 3-6 months minimum to spill over into WallSt. If you're not jaw-agape at the prices of some of your favorite companies, it's probably not the bottom just yet.

Further, if you take the pessimistic view (ala Japan Nikkei), you might get stuck holding stock that never recovers. Be patient.

While you're not outright advocating a trading strategy here, what you're suggesting is dangerous if you're not talking about the downsides to shorting.

Do not, I repeat, do not attempt a short without understanding all the risks.

When you buy a stock for $10, the most you can lose when that stock goes to zero is $10. In theory, when you short a stock at $10, your loss is infinite as the stock goes up higher and higher. In practice, your broker will most likely force you to cover that short long before that. Just know that the loss can be big and fast.

You should apply strategies you are most comfortable with and please do your research before attempting anything besides a long term buy and hold of index funds.

that's what I did. bought a little at -3%, a little more at -6%, a lot more at -9%, lott lot more at -12%, by the time it hit -20%, I'm almost entirly in equities. Keep in mind, this is ONLY in my retirement accounts and I do have a 30 year investment horizon. I figure, it's better to get into equities than loose everything (in bonds and cash) once the eventual inflation taxes wipe everything out.

UBI, tax credits, emergency direct to consumer low interest loans with suspended interest in the crises or all of the above.

Cash transfer from wealthy individuals and families via the IRS.

1. Most of those problems are being tackled: localities, states, and the fed have interest free loans and many have frozen rent and evictions (for both residential and commercial real estate). As far as that goes, 1-3 months with the above addendums makes me skeptical about mass bankruptcies. 2. This is such a silly point I keep hearing: "Everyone is a socialist in a crisis", "Oh suddenly people realize UBI and universal healthcare are good!" - DUH! Collective problems require collective solutions. Everyone agrees that the tax-payer foots the bill for the healthcare of veterans in WW2, everyone agrees with price-controls when fighting Nazi Germany. Everyone agrees with collective action to fight collective threats because it's necessary.

If you contract a pandemic disease, collective action must be taken for the good of everyone else. If you break your leg falling of your roof on a bender, you and only you should foot the bill. This isn't hard: supporting collective action against Coronavirus doesn't mean M4A is a good idea for more normal situations.

Many currencies have been propped up and artificially kept competitive via QE as the new tool to augment interest rates as having driven them so low, they had to use something else. The next tool in the box is negative interest rates.

Kinda all leads into a perfect storm, and now have whole generations having grown up with no saving mentality and a have today, pay tomorrow expectation that if things ever go back to normal, real interest rates that encourage responsible spending instead of artificially stimulating an economy. Well, it will be a huge education for many and as always, the people end up paying for it.

Banks can cover some things going wrong, sometimes, not everything going wrong at once.

Just takes one queue at a bank, few social media posts and next thing, all those branches have queues due to panic and end up with a self fulfilling prophecy so to speak.

Heck, if people can panic buy toilet roll, nothing is out of the reach of stupidity.

>For reference, the current rate in France has an 8 handle.

I'm no expert here, but weren't the French literally rioting a few months ago..? And beyond the markets: you keep downplaying this and 2008 as not "being serious." I mean sure, maybe for your portfolio - but can we avoid trivializing the gravity these economic movements can and will have on the lives of millions of people?

It's as though you think everyone is rational. If they are they should be selling, but no, they are buying.

In any case I am just trying to help people limit their downside by giving some simple advice. It's always better to make less money and yet be able to sleep well, then always fearing your portfolio goes to naught with some naive strategy. Not worth shortening your life by a few years with all that underlying anxiety just to make a potential 10-20% more. But definitely I would say this strategy would at least increase your upside and minimize your downside than a pure DCA, because it factors in the psychology of a bear market. Just trying to help here, I stand no gains, just don't like to see people losing their minds and sleep over losses that could have been avoided.

I don't test. I just trade with real money. VIX going below 30 just signifies the start of bear exhaustion. You don't go in now, it just means to prepare to go in. 200 SMA is usually used by technical traders to gauge when to start changing their strategies to trading an upward trend instead, which after awhile becomes self-reinforcing. It just experience here. You can plot the 200 SMA on the 2008-2009 graphs on your favourite stocks and you can see that usually that's a good time to buy in.

You should really check your tone as well. This is good advice.

It means when the market is sideways and bouncing within a channel. It is when bulls and bears are still indecisive. Depending on fundamentals as well, this is when smart money starts to accumulate. Big funds usually accumulate in these channels because they need time to accumulate. They act as the bulls here. The bears will usually be those day-trading euphoric shorters trying to scalp every bounce, or just some random capitulation. This is the time when money fears to go in and those who have held already gave up on going out. The volume will be quite low.

There are industry-based bear markets and bear markets in other countries almost every year. They all work the same.

Also: NYSE Composite (-11.84%) https://finance.yahoo.com/quote/%5ENYA?p=^NYA&.tsrc=fin-srch

"DJIA is price-weighted index which is completely arbitrary and there is no reason for that."

Well, I believe the reason is that it's much easier to calculate on hand-cranked mechanical adding machines. There is a reason, but it's obsolete.

I'm not sure why they don't add BRK-B though.

Spanish flu didn’t impact elderly nearly as much nor, at the time, was the government so elderly on average. The death rates for those in their 60s and above seem to be much greater than those younger

I said I wouldn't be surprised, not I think they will.

For reference, I work at a bank. The opinion is my own. The problem has to do with a run on the bank.

All banks are currently reporting negative earnings. Most banks rely on credit, and revenue from said credit. If that breaks down (because people can’t pay). They collapse.

I think the fed can bail them out. I also think that requires printing money so inflation will be high.

Serious question: what tools do they have left to try and shore things up? They've reduced interest rates to 0. They've injected 1.5T of liquidity. Mitt Romney today just announced they're giving $1000 of helicopter money to every American.

If all of this doesn't work, whats left?

To me that's fine. The S&P 500 isn't going to instantly spike back up to 3000. There is real damage being done to corporate bottom lines. The negative growth experienced by companies during a recession compounds into all future earnings -- for the rest of time. So the way I look at it is that the market is pricing all future earnings of companies, and once the volatility has settled it will reach some new baseline that's much lower than the peak, and then continue to grow at a nominal rate, only forward-looking, with no memory of what just happened. It took 4 years for the S&P to reach its previous peak after it bottomed out in 2009. So if you've been holding onto cash, or sold near the 2020 peak, you probably have a lot of time to get back into the market and still end up better off than if you'd bought in a month ago. You don't need to time it perfectly. I can make a lot of money if I do time it correctly, but if I fail to I'm not going to count it a loss.

Coronavirus and oil crash are huge catalysts. A vaccine won’t help much, as investors become risk-averse. When majority of investors become risk-averse, risk premium goes high, thereby reducing stock prices.

Most of the people betting on this becoming a recession/depression think that the coronavirus is just the pin to pop the (ETF) bubble. Most of the companies that have announced that they're working on vaccines have pumped already, but feel free to invest.

Sorry to single you out, but the stock market usually trades in anticipation of recessions. It's not a proxy for the current GDP, it's an expectations market. The stock market could start a slow rise tomorrow and go until the end of the year and the entire year could be in a recession.

I think it's realistic that we could see some sort of easing within a month - like maybe restaurants and bars can reopen if they meet some stringent requirements. But would agree that it will be a long time before things return to "normal".

That's not all - some will forego, lose the habit then not re-uptake.

Also schools - how will additional schooling later on make up for the lost service & revenue (schools need students to get tax revenues)

...but you might buy a coffee machine at home to satisfy that fix over the next 3 months.

For sure. But I don't think that's fundamentally different than any other crash in the US. But it may show that there is an economic benefit to having a stronger welfare net.

VIX was suppressed so long through shorting VIX futures via ETNs like $XIV, $SVXY up until Feb 5, 2018. Then the latter ETNs blew up. Lots of people made money just buying these ETNs. This was one way VIX was suppressed.