Our revenue this week is down 20x compared to the average of the past 4 weeks. In France, many local businesses are basically down to 0 turnover.
We can read here and there that the economic downfall will be worst than the 1929 crash. What will be the chain of events? How bad unemployment can get? Should we expect the real estate market to crash too? In 1929, what kind of businesses were affected the most, should we expect something similar here?
"Take Boeing. The aerospace giant of course wants a $60 billion bailout. Financial problems for this corporation predated the crisis, with the mismanagement that led to the 737 Max as well as defense and space products that don't work (I noted last July a bailout was coming). The corporation paid out $65 billion in stock buybacks and dividends over the last ten years, and it was drawing down credit lines before this crisis hit. It is highly politically connected; the board of the corporation includes Caroline Kennedy, Ronald Reagan’s Chief of Staff Ken Duberstein, three Fortune 100 CEOs, a former US Trade Representative, and two Admirals, one of whom is the board’s only engineer. Using the excuse of the coronavirus, Boeing is trying to get the taxpayer to foot the bill for its errors, so it can go back to making more of them."
https://mattstoller.substack.com/p/stop-the-coronavirus-corp...
Scary times indeed
I'm more pessimistic. The extent of the layoffs, even if temporary, is just too large to not have a lasting impact. What happens when people with inadequate emergency savings get laid off and can't pay their bills? There's a cascading effect. Maybe they owe a landlord with inadequate emergency savings who now can't pay his mortgage. Maybe they owe a bill to a small business operating on small margins that can't stay afloat. Maybe they owe a corporate behemoth that has aggressively taken on debt and now needs to lay off a bunch more people to be able to pay off that debt. The federal government's mortgage deferral solution might help homeowners, but it's not going to solve the problem that people are going to continue to need to buy things and not have the money to buy them. Even those of us who are fortunate to have some emergency savings will see those savings dwindle down if we're laid off.
And keep in mind that in a lot of cases, when people lose their jobs in the U.S., they also lose their health insurance. Not a great position to be in during a public-health crisis.
"If they would rather die," said Scrooge, "they had better do it, and decrease the surplus population."
Also, not everyone has insufficient savings.
I’m better a lot of other online sellers are seeing the same as people stay indoors and change how they spend. Of the items I’ve sold they were all hobby items.
Many companies will have figured out how to run leaner. So post recovery, they may not bring back everyone that was laid off. Lean is good, of course, but unemployment isn't.
Competition will go down. Not every company in every space will survive. So things will consolidate down to the survivors. This probably hits small businesses especially hard. Again, Darwinism isn't inherently bad, but it could, for example, drive wages down.
In short, whatever emerges will not be what we had, and will take some time to adjust to.
Though I'm by no means an economist, I'm with this. What's more I have the feeling the economy might come out even stronger here is my reasoning:
A lot of young people are confined to their homes at the moment. I'm talking about anyone in the 25-36-7-8-9 range(being a representative myself). Fair enough, take away the people who have families and children out of that group and you have a substantial number of people. And in that group are the most active members of society, which in normal circumstances, have plenty of entertainment in their lives outside their homes and work environment(contrary to popular belief). Yes, many spend too much time on social media, but plenty do not. In the additional spare time we have (at the expense of time spent at bars, restaurants, cinemas, shopping centers, etc.), many are occupying themselves however they can. Myself including - I'm almost out of books to read. I've enrolled at several online courses, I'm working on personal projects, including writing a book(which I intend to open source once complete).
My point is that in that additional time, plenty of people will have time to work on current and potentially future problems and open markets that currently do not exist. Sure, many will fail, as usual, but some will succeed. The truth is that multi-billion corporations started as black swans. Stephen King has a brilliant essay called "On being 19". I don't remember the exact quote but it went something along the lines of "When you are 19, you believe that the whole world is at your mercy and no one should mess with you". Which is rarely the case. Companies and entire industries around them(Facebook, Google) might have been started by 19 year olds but they are the Black Swans. The truth is when you are 19, regardless of how smart you are, you lack experience and by implications, adequate amounts of knowledge. Most people have tried multiple times when they were in that age group and 99.99999% have failed. Now people with experience have the time and nothing better to do then use it to the maximum. I'm not looking at it as a Black Swan phenomenon but the next step: Antifragility. If anything, I believe that now is the time to pay close attention and use your resources, knowledge and experience to capitalize on it.
Firstly, though I have not worked there for six months or so, I am Italian (from Milan, in the north, the worst-hit area). The economy there has basically shut down. Consumer spending has collapsed, production has collapsed, and logistics are increasingly untenable.
What can we expect? Six months of this (and some people are projecting up to eighteen months) are going to shut down demand. There’s a term going around now “demand destruction” — I’m not going to pretend to know more than I do, so I’ll admit forthright that I had never heard it until a few weeks ago — that seems to meet the requirements here.
It’s uncertain whether the supply side of the economy will be similarly affected. Probably yes, as governments curb production to slow the spread at the workplace.
Even three months will be dreadful.
Now, let’s think of a few things: governments are stepping in with public support to support businesses, provide liquidity, and support workers that do not have income. That means debt. That means interest payments in future, for those businesses that are fortunate enough to survive. Taxpayers will be on the hook for decades.
The situation is so severe that German economists are proposing a 1 trillion euro Eurobond issue to help support the economies because the southern economies cannot hope to cope with this.
I guess I’ll sum it up thusly: this might turn out to be a “great pause”, but economies and demographics cannot idle without incurring enormous financial costs.
Note: Above is not a value judgement. The measure is necessary to prevent the system from completely breaking down.
There’s an enormous amount of money already sloshing around in the systems, and it seems to be pooling at the top (hence all the inequality).
On one level, somebody could argue that all the typically ‘renter’ activities (rents, licenses, et cetera) should be suspended during the period of crisis to prevent those who “profit from standing still” to absorb more liquidity and boost their wealth whilst the scurrying masses are bled white, but I don’t think that’s practical.
One of the things being negotiated right now is a loan in the amount of current payroll to smb's that would be 100% forgiven if they retain 90% employees. They're completely fucking it up right now but that would be great - if the timelines are good (e.g. keep loaning until this is over, the 90% requirement is so long as $ is loaned).
I am hoping - slight optimistic but scared nonetheless - that passes and we could use. It would remove a lot of stress and given we have low overhead (digital services) even if the worst happened it could keep us afloat almost indefinitely.
BUT fucked up partisan delay + Republicans demanding scary terms are create huge uncertainty which will likely hit markets hard tomorrow.
As written it looks like Mnuchin would have full discretion on who gets loans. Who knows what timeframe or bureaucracy needed to get loan. Even the most optimistic estimate of the individual checks is 2-4 weeks which is not quick enough. Doing a SBA loan is a huge process that takes a long time.
For better or worse, most of the medical costs are going to be spent on the older generation. More debt will become the burden of the current taxpayers and then the next generation.
"economies and democracies cannot idle with incurring enormous financial costs"
This is what worries me about this crisis more than the myriad other issues, like-
-the end is unknown bc we dont have an antiviral treatment or vaccine, and we dont know how long immunity lasts
-we have generally awful, sociopathic high level leadership (I am in the US) and while local leadership may be exemplary (I am in NYS) the ongoing contagion factor means there is no isolation
-so many entities have already been broken that will never return and the implications from which have not begun to be counted
-we have such an awful information availability and consumption imbalance, which will perpetuate bad decision making
Those issues above I believe CAN be dealt with over time, with study, process, mobilization, etc in the course of this pause.
But that work has to be FUNDED.
We DO NOT KNOW how to fund this without
a) creating future "costs" / "obligations" that will weigh on future flows for decades
b) destroying current asset stores in a way that increases uncertainty
I mean, this is what "assets" are for- they are there as a store to create future flows. So for instance I am in favor of a very long block on evictions and foreclosures- 2 years- because many renters have lost jobs and will not be able to find them, in order to force landlords to, where necessary, waive rent and themselves take out mortgages to pay for their own flows. That is what the "value" of their property should be used for, and in times of strife, drawing down on asset stores is sensible.
But that imposes future costs- the mortgage- and even if the mortgage is at 0% there is still principal that has to be returned. And debts are the highest priority obligation.
IOW, we dont have an economic and accounting system where we can just stop, timeout, change the rules, get back on feet, and start again. In our current model the timeout still has to be paid for in the future. And while history is full of debt foregiveness regimes, those were all local. We don't have even the beginnings of a model to institute a global forgiveness regime.
At any rate, the human side of this looks very challenging, though I have optimism that good wins out- but I worry about the accounting side. The rules have to let good come through.
- Short term we need government to step in and avoid a large-scale meltdown of businesses that would be more catastrophic than the virus itself. This will likely involve taking equity stakes in airlines etc. Warren Buffet might also be willing to help here again, he has 128 billion USD saved up for times like these :)
- Stock market likely hasn't seen the bottom yet. There will be more deleveraging and panic selling. Long term (10+ years) it's still a good point to buy (perhaps with one third of the capital you do not need anyway)
- Western countries might lose some civil rights that are necessary to quickly control new outbreaks (e.g. analysis of cell movement data to locate all places an infected person visited)
- There will be long-term impact with regards to stricter controls necessary to quickly contain new outbreaks. This will increase costs for a few, potentially a lot of industries (everything travel, potentially logistics)
- I have some fear that some countries which are simply not able to get the virus under control will be disconnected from the rest of the world economy, since no one wants to risk importing the virus from them again.
I hope most of the countries go the way China went in Hubei: Take the most radical measures immediately - i.e. total lockdown, government backs the economy. This will make it possible to lift them after a very short time and affect the economy the least while controlling the spread of the virus.
Second thing is that you suppose that there will be forever lockdowns. We're only having it because the current health system isn't able to handle all the patients given this exponential spread. Once we finally manage to handle it well and enough people get infected and cured(yes, it is also important). We will move on... until we find a new kind of virus.
I'm not assuming there will forever be lockdowns, quite the contrary, but for that there needs to be an effective system for responding to these kind of viruses so there doesn't have to be a full lockdown again. Basically you have to be able to quickly follow up on each case, and this will require things like determining where someone has been the past 10 days or so, and also regular controls (no more flying with any fever?)
The crux of the issue is that economic activity is severely hampered due to the paralyzing fear of the coronavirus. Even if the government pays out benefits as though everyone remained employed as they were a few months ago, that's not truly economically productive activity. It's an economically-neutral but socially-positive action.
Economic value is generated when people exchange goods (in a better example to reflect modern life, money for goods and vice versa) such that every party is better off. Shuttered businesses prevent this value generation. I live in NYC and most non-food/beverage stores are closed.
I think we will see governments in the coming week or two start doing broad randomised samples of the population for antibodies and realise that many many more people have been infected than previously thought.
Meanwhile fears for the economic consequences will grow larger. Also (hopefully) countries like Germany and the UK will not see Italy levels of death and misery.
Around the mid of April when spring in the Northern hemisphere is really kicking off people will have been socially distancing/quaranting for 4-6 weeks and will be really tired of it.
These factors will start to lessen the public support for social distancing and life will start to return to normal. Big events will probably still be canceled, people will not travel for holidays etc but economic activity will start to pick up in some sectors.
Some sectors like hospitality (which employs many low skill workers) will continue to see very low demand until July/August (or possibly even longer). If the important summer season doesn't deliver, these industries will be doomed. While many other sectors will get a swifter recovery.
A litmus test for the general economy will be sales of new iPhones this fall. I suspect it will be slightly below last year, but not like 50%. If it is, my predictions were completely wrong and we are probably much worse off than I expected.
I actually would go with the sales numbers for the new PS5 because:
- People who already have a console and are stuck home will not buy a new one because the cash is not there.
- PS5 is a nice to have but not a necessity. Though the iPhone is in the same category but at a much higher price. The PS5 is estimated to be sold at $470-$499 while the new iPhone is much more expensive $799 up to $999.
- People who don't own a console will likely put this off and buy it next year and focus on more necessities.
- The entertainment industry is hit massively by this crisis, and this will be a good indicator of where things are going.
Going back to the main subject, I believe the economy may well bounce back. The issues that may arise may be more related to security and politics. If things go on like this, there could be worldwide riots, or even revolutions in some places.
Let's just hope a vaccine is found quickly.
Besides, the UK didn't quarantine officially much later than Italy. Not to mention that the the larger corporations instructed employees to work from home week(s) before the official lockdown.
Let’s get through this, support each other, and be doing everything we can to be ready to spring back into economic action when COVID gets under control.
I think it’s entirely up to the people’s response. The spirit of the country (and govt policies) will determine more about what happens after then pure economics can tell us.
I personally don’t think there’s a good economic analogy so everyone is just guessing.
1) Governments are not shutting everything down fast enough. Many countries are in the phase of "oh, we only have 200 cases, not a problem, look at Italy". They are just a few weeks behind Italy.
2) Some people, especially young ones, are not following quarantines. All it takes is one super-spreader to start another wave of infection.
3) People will run out of money soon. Governments will have a choice of either
a) printing money
b) distributing food and meds to everyone
c) letting people work in masks / googles / gloves
5) Most countries are not ready for thousands of patients requiring an ICU. No country is ready for a million ICU patients.
I think our only hope at this point is one of the drugs works very well. People suck.
I'm just a rando from the internet but my suspicion is that governments could be intentionally trying to slow the infection rate down rather than stop it completely. If you perform a perfect shutdown with 200 cases, lets say another 400 are identified since, all 600 recover/don't make it, but once you stop the quarantine everything will be back to square one - someone will spread it again eventually.
On the other hand if you let it spread a bit, then shutdown, high but manageable number of people will get sick and recover. (I will be less efficient so some transmission will still occur, eventually ensuring everyone either recovered or died, with as many as possible getting the medical care)
The individualistic attitudes in the US (and probably Europe, although I'm not an expert there) were never going to lead to the infection being stopped entirely. I can't imagine anyone was actually worried about being too effective in containment.
Let's have a look at company A and company B. Company A employs many people and is not able to offer remote work. Company B doesn't employ many people and can offer remote work. If these companies compete it is clear that company B will grow during the crisis, and company A won't.
In other words, we have structure change bombed upon us.
CEOs and owners say, let's see, a pandemic and suddenly labor disappears. How can we mitigate such problems in the future?
My hunch is that after the crisis is contained economy returns, however it will be even more difficult for people to have a job than before. If the state doesn't help the people, economy will stay depressed because people are laid off and just don't have the money to buy things.
Edit: many little improvements.
Give it another week or so.
I have been "giving it another week" for 3 weeks now, trying to figure out which direction it is going to go.
Enough of the dramatization. It accomplishes nothing but stress.
To what extent is impossible to say right now.
Save emergency funds and in the next decade of growth and stockpile for the 30s, when we hit real trouble. Find a currency or commodity that won't be washed out, silver kept China out of trouble in the 30s until the US raised demand for it so much that they got dragged in too.
Think of it as much needed reset on multiple levels. New supply chains will be created, new business opportunities. Capital re-allocated. It is going to be wonderfull times.
Also historically plagues allow for great upward social mobility which is kick-start for the economy.
This certainly happened with Europe in the Black Death. I would argue, however, that the present is not a good analogy.
My knowledge of history is a bit sketchy, but from what I understand -- prior to the Black Death, times were rough for ordinary working people. Subsistence farming, in particular, was stretched to its limit; for many peasants, not all that much separated them from starvation.
The Black Death caused a truly massive number of fatalities. Afterwards, when the same total amount of natural resources were available, people had breathing room and the economy was able to expand.
Covid-19, while terrible, is not forecasted to be nearly as bad as the Black Death. The fatality rate is expected to possibly reach 1%, most of that concentrated among the elderly. Although this would be a catastrophe, it doesn't seem likely to have the same direct economic impact. The main economic impact is probably going to come from what is happening now -- bars, restaurants, concert halls, hotels, and such all being shuttered. Especially if this needs to be maintained for a long time.
Moreover, economics are different. So much capital now is concentrated among very big businesses. They'll be fine, especially since there is talk of bailing them out (e.g. airlines in the US). I doubt they'll change all that much, unless coerced by a radical change in public policy. But meanwhile, a lot of small businesses will go under. New ones will start, but I'm afraid (for example) that independent coffee shops will go out of business and that Starbucks will take their place.
I very much hope I'm wrong.
The number of fatalities appears to have increased the bargaining power, wealth and social mobility of the remaining agricultural workers [0], amongst other things.
[0] https://en.wikipedia.org/wiki/Consequences_of_the_Black_Deat...
Needless, gratuitous (business and other) travel for one - which in turn will lead to much better housing prospects for young people. Treating a house as investment was the most damaging trend of the last two decades.
The loss of accumulated wealth also reduces inequalities.
Wasteful practices will be affected more in all walks of life.
Reducing the carbon footprint is also a massive benefit. We will reduce that more than by any other measure we would have taken.
If only. I but I think wealthy individuals and companies with huge cash war chests are going to be just fine.
Yes, it’s accurate... but I think it also somewhat misses the point. The unexpected consequences of a mass culling several years down the line probably is of the “extremely bad” persuasion.
https://dailyhistory.org/How_did_the_Bubonic_Plague_make_the...
The Black Death was horrific, but had what I would argue were some very positive long-term consequences.
So did the spanish flu. Everyone forgets that we had the roaring 20s ( one of the great economic, societal and cultural growths ) right after the spanish flu.
I keep saying wait one or two “1st of the month” milestones, see how things look. That’s where my own decisioning is headed.
Make sure you have the cash to live properly and satisfy urgent needs if necessary over the next 6-12 months or longer. Only invest the remaining in highly-rated bonds or great stocks with long-term resilience.
The world is facing a liquidity crisis, along with both demand & supply shocks that can’t be easily fixed by governments.
We are in a war with the virus and, in most of the world, we are losing.
Global economy can be rescued only if we can mostly mitigate the virus impact. The other 40% is for the case where we found a way to do that and the liquidity injection & fiscal measures are sufficient.
How did you arrive at this probability?
Though maybe the work of fighting a medical war is more narrow and specialized than the work of fighting a literal war. For example, you cannot institute of draft and make people into doctors in time to fight this. Whereas with an actual war you can stick people on the front lines with a few months of training or put them to work in a factory.
I doubt anyone is going to be super keen on investment in that money loosing miracle startup now money will dry up soon it’s just been so sudden people haven’t really adjusted yet. I don’t think it will be as bad as the depression of 29 though. There is plenty of food available and some limited safety nets will keep people from starving. The gears of forclosure are so slow many will stay in “free” houses for 2-3 years. The real question is jobs, will Americans work the fields? Or Will they just sit on government benefits? Will manufacturing come back? How do we deal with global labor and ecological arbitrage. Honestly I don’t think trump or Biden are going to be capable of addressing these Structural issues so we’re gonna loose 4 more years and risk a second smarter and more dangerous Trump in 2024
I think the cycles are getting shorter, because of computers and the internet which allows this manipulation of the economy to literally happen at the speed of light.
It is possible to maintain our current standard of living without the work of the Federal Reserve, but such would require drastically cutting military spending and other uneccesary expenses (conversation for another time). One way to cut the military budget, without actually reducing our firepower would be to merge all branches together into one command structure to facilitate interoperability between machines. For example, military contractors will sell the DoD 3 different copies of the same helicopter with slight differences which make it hard for them to interoperate; you would need 3 different mechanics/computer techs, with 3 different sets of parts and tools.
Some will inevitably look for and find other work, but if the whole company goes under everyone will be in the same boat. I'd say this is not going away in the near term and if you're not acting like it's a crisis now you may be unprepared for a sustained or even worse drop in revenue.
Just my five cents, obviously noone can predict this with any certainty.
Goldman put out a note saying the GDP would dip about 9-10.5% over the first quarter of the year, which is almost the worst we've ever seen. And that's a single quarter, a single quarter. US GDP maybe down 20% by the time this is over.
And keep in mind no doctor that I've talked to thinks this will be over any time before mid 2021.
And probably the worst news is that this is the type of drop that won't be V shaped, for all the talk of 2008, atleast it went down and then went right back up.
Most recession affect a specific geographical area or market sector, This pandemic affects the entire world at the same time, which hasn't really happened since the 1970's gas shortages.
The recovery here will not be V shaped, it will take years and years to recover. People have spent their savings just to survive, governments are delaying tax payments and throwing money at the problem.
This recession/depression will be with us for years to to come and will be the worst thing that anyone alive can remember.
Can anyone make the case that the recovery will be quick? Because I haven't seen anyone make that case yet in a believable way.
On the other hand, once there's a sign that the end of the pandemic may be in sight, I expect that the US markets will overreact on the side of optimism, regardless of the actual economic damage that has been done. Bear in mind that governments are adding to the vast stockpile of paper "wealth" that's already out there, and that tends to cause asset inflation.
I see two extremes, a restart without to much issues. Laid of people are hired again quick. And after some time of rebuilding savings people start spending again. I would say that is not the most likely outcome, unemployment in the US is rising, this will impact the world economy. Remember, all it took 2008 was mortgage defaults in the US and Lehman Brothers to send world economy into a downward spiral.
On the other extreme, the crisis shows all the cracks in our global economy. Some of them fail. Basic dynamics change, and there is no way of predicting what will happen.
The only constant seems to be cheap money. No idea if that is a good thing...
The core of the issue is that there is neither a vaccine or a test, combined with asymptomatic carriers. Hence, the only way to combat this virus is a quarantine for the whole population, which causes severe economic damage.
Once you solve either of these issues (e.g. South Korea), there might be a fast recovery. Did South Korea enter into a depression?
In any crisis, it is easy to assume that the last crisis results will occur, but everything depends on the context.
That said, interventions can have a huge impact on the extent of that. Interventions that delay/defer/mitigate economic damage at the entity and individual levels I think can do the most to simply “pause” the economy and prevent underlying degradation while we deal w the pandemic.
Imagine the benefit of just all debt being rolled over month-by-month to the end of the loan term, and similar for renters. Defer irreversible economic decisions and go into subsistence mode. I think that will be the best best for the maximal eventual recovery. That will be the difference in a return to prior levels taking 6-12 mo vs 5-10 years.
Sadly I don’t think the US is heading in this policy direction. I half wonder if we should just do it grassroots and then there will be ample support to reimburse it via tax or other incentive.
That’s how I am thinking about it anyway.
Not sure how unemployment insurance works in your country but in the US I spoke to restaurants and they just terminated people so that they could collect unemployment at a higher level than the business could provide income (salary or tips). Do what you have to do fast, and do it empathetically and in a way that preserves your options for restarting / re-hiring when things eventually improve.
It seems IMHO that such a historically new process cannot proceed linearly but only via sudden accelerations determined by the occurrence of crises (and talking about crises, I guess that in the next decades there will be enough of those)
Or maybe not.
The current situation will last at least a month (and how bad it will be while it lasts is yet to be seen), and after that keeping social distances, and closed borders will remain for many months.
The rules will be just different. It may be very bad for some old industries (travel, tourism, are easy ones), and good for some of the emergent ones.
I think realistically the drop in demand, the onslaught of bankruptcies, the stopping of lending and the depletion of consumers' and corporate cash savings will lead to a prolonged recession of at least 5% GDP decrease.
On the upside, climate change is now within bounds for the coming years.
What industry are you in that things are this bad? Surely it must be one that's directly impacted by people not going out?
Something thats flown under the radar of this is the new “Families First Coronavirus Response Act” which provides 12 weeks of “paid leave for those affected by Covid 19”.
Most (90%) companies will be bankrupt by week 3 or 4, therefore most are now contemplating just declaring bankruptcy now to avoid any further bleed.
It’s easy to write laws such as this, but where does the money for this 12-weeks come from?
I don't understand this. Why would they file for bankruptcy if their office is overflowing with cases?
Even if peak unemployment is similar, the recover is likely to be snappier.
The heat of the forest fore opens the pine cones, and there is new growth.
Meanwhile, not all countries were impacted by the great depression, Spain being one of the countries not impacted because of the isolated economy at the time.
Another reason the Great Depression got worse than a normal depression was that the Hoover administration unwisely decided to make money and credit less available during the crash. Today's policy response is more about throwing money at people (sometimes just at the politically connected, sometimes fairly). One can and should question many specifics (the response is not super coherent) but at least it is the opposite of fiscal and monetary tightening.
Another reason the Great Depression stayed so very bad for so very long was as a consequence the FDR administration's unprecedented intervention into the economy. I don't mean Social Security, either, I mean things like the National Recovery Administration, which explicitly sought to turn the US into a planned economy, with minimum and maximum prices for everything, run by local politically-connected cartels with their own police powers.
When the NRA was declared unconstitutional, its practices were shifted into other places. A few of the more ridiculous practices led by other agencies are still around. For instance, the Supreme Court only killed the USDA's Raisin Board in 2015 when a raisin farmer objected to them seizing 89,000 tons of raisins (30% of his crop) to give away for free in school lunches. (The USDA of that time was also great at encouraging the big agribusiness factory farming and pushing out what small farmers were still able to operate.)
None of this planned-economy stuff is on the table today — not in the US, not with this administration anyway, and not with the current US senate. There's an outside shot of a fully nationalized health system if Bernie Sanders wins and Democrats take the Senate, and that's the most ambitious plan, and even if we assume the taxes to fund it were quite stultifying indeed, it's unlikely to be as harmful. No one is coming for our raisins.
1. There’s so much friggin stimulus coming that something big will happen. The (U.S.) Fed is buying trillions of anything resembling bonds at the moment. Treasuries, commercial paper, muni’s. And doing a trillion PER DAY in the repo market. Plus $2+ trillion coming from Congress, which includes checks directly to consumers and also up to $4 trillion more in direct lending to small businesses with forgivable loans. Not to mention interest rates at 0% and gas prices at $1.50/gal. The financial sector is healthy. Big tech companies are still sitting on a few trillion in cash.
2. Everyone has cabin fever and missed their spring breaks and perhaps summer vacations. Prices on travel and leisure are at an all time low. A weeklong trip to Hawaii for a family of 5 is down to like $1500.
3. At some point (I believe in days/weeks) there will be a medical breakthrough. Hydroxychloroquine+Azithro has had stunning results in South Korea, China, and France. Many US docs are already prescribing now. Even if this works only 40% of the time, that’s significant enough to flatten the curve and most importantly lower the death rate around the seasonal flu. Early anecdotal evidence suggests it’s been effective in 90%+ of cases.
4. I think by mid-April folks especially in the U.S. are gonna say enough is enough and break containment. The rest of the 80% of America isn’t willing to shutdown the entire economy for the 1% who face almost certain death from this disease. I know that’s crude and sounds cold-hearted, but Fox News is going to be very convincing that we should just resume our normal way of life and let the chips fall where they may. Election season starts in earnest in mid-Spring and Trump I believe will end the shutdowns and tell us to go back to living our lives. Biden will almost certainly do the same with a focus on rebuilding America. People can shut down for a week or two, anything longer than that and you face rebellion. School has been out since early March and the soccer moms here just want to go back to being normal. Expect a presidential candidate to jump out first with a “let’s get America back to work” strategy and end the shutdowns and maybe only recommend quarantines for the at-risk population.
The Buffett Indicator.
https://twitter.com/search?q=%23fuckchina&src=typed_query&f=...
I don't think the CCP realizes yet just how harsh the backlash is going to be. China has zero soft power now. Expect to see supply chains being rerouted.
https://edition.cnn.com/2020/03/16/africa/jack-ma-donate-mas...
https://www.wsj.com/articles/chinese-doctors-and-supplies-ar...
https://www.reuters.com/article/health-coronavirus-serbia-ch...
And the live-animal markets have produced disease before, every year in fact for decades, and not been 'cleaned up' so far. I have little confidence in any of that happening.
I have no problem with the Chinese as people, but their current government is not to be admired.
https://www.newsweek.com/chinese-company-donates-tens-thousa...
Chinese companies are sending stocks of masks to help Italy to recover.
https://mobile.twitter.com/heylauragao/status/12386016724542...
China is also sharing the expertise of their medical team with Italy...
Compare with the US:
https://www.defenseone.com/threats/2020/03/us-air-force-flew...
They deprived Italy of half a million testing kits, in the area in which they are most needed!
https://www.theguardian.com/world/2020/mar/16/not-for-sale-a...
And they're trying to deny the vaccine to other countries...
If anything, I expect people to be furious at the US, after this whole event will be over.