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Comment by Barrin92 | Hacker News Reader

I think there's a difference between an economic depression for fundamental reasons or say overleveraged finance and due to an exogenous shock like this.

It's true that the current measures put the economy on freeze mode but really even if businesses are closed down temporarily, no assets are lost. Even if the stock market contracts sharply, after this is over the planes are still in the hangars and the restaurants still exist.

It's obviously not a good thing but I'm not really as pessimistic medium and long term. The crisis will compress prices, it'll devalue assets but the flipside is that after this is over waiters will be rehired, someone is going to pick the airlines companies up, there's no value destroyed here, just ownership shifted around. The bull run had to come to an end at some point for some reason and the aftermath may even equalise generational inequality to some degree.

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> even if businesses are closed down temporarily, no assets are lost

Intangibles like customers, suppliers and know-how can be a lot more valuable than physical assets.

Maybe the restaurant building is still there, but if the visionary chef changed careers because she has to pay the rent, is it really still the same restaurant?

The tables, chairs and kitchen equipment are still there, but if former customers can no longer afford to dine there, is the restaurant still a viable business?

None of those intangibles are lost either though. The visionary chef is still going to be a visionary chef once the pandemic is over and things return to normal, it's not like knowledge workers or artisans all turn into permanent forklift drivers or something.

There is going to be some degree of disruption as organisational capacity needs to be restored but this is no different than any other natural disaster, from which economies usually rebounce very quickly.

And as to customers still being able to afford things, that's where the government can and will step in to stabilize demand.

> government can and will step in to stabilize demand.

As much as they can. Government debt at all levels across Europe and the Americas was out of control before the epidemic, especially in the U.S. This crisis will lead directly to waves of state/sovereign defaults.

I should say I'm optimistic about the pandemic itself. I firmly believe the morbidity and fatality rate will drop sharply as it spreads, even where medical systems are poorly prepared.

I think the economic effects will end up being the bigger concern.

Prior to the pandemic, Government spending was out of control. Considering we were/are paying billions for an already obscelete border wall and our defense forces (ironically totally defenseless against the C19 enemy)are soaking up almost a trillion$ of our national budget, it may be time for the our fearless leaders to re-prioritize.

Quite true, the federal deficit has skyrocketed under the Trump presidency.

A zillion enterprises are going to go bankrupt, and it will take a long time to get them built back up.

What's worse is that the economy was already in a weak position because there was a huge amount of corporate and finance debt out there. And that was true in much of the world, not just the US.

> It's true that the current measures put the economy on freeze mode but really even if businesses are closed down temporarily, no assets are lost. Even if the stock market contracts sharply, after this is over the planes are still in the hangars and the restaurants still exist.

Of course this is true, but was it any less true of any of any major recession or depression in the last 100 years? It's not like the 2008 recession was caused by a major drought/famine or war. There were plenty of assets then, but they just sat unused because the system had broken down so much that people couldn't or wouldn't use/purchase them.

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