U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession
bloomberg.com
bloomberg.com
My job just cut benefits and hours but we're "essential." Remember those $1200 checks? Im still waiting on mine. Lenders and banks were supposed to start going easy on loans but ive had two emails and a phone call about the loan for my Silverado this month and wouldnt you know, the caller was excited to mention my stimulus check.
A guy who used to be my bartender now couch surfs a few days a week at my place while he looks for work. His mother is getting evicted from an assisted living center in a few days and his girlfriend is sick. She 'works at the Amazon' so she cant take any time off, but hes hoping if he gets a job at the Flying J at the edge of town he can switch places with her and she can take a few days off.
Shops are closing and nobody seems to care. Ive counted 2 furniture stores, a consignment shop, a few barber shops, and half the god damn bars in this town including one that was burned to the ground "mysteriously" over the last two weeks. Someone spray painted a swastika on the late night pizza joint.
So yeah this is a recession but it is so much worse than a lot of people think. No school means poor kids roam the street like packs of feral dogs asking for money for food around here. Half the country is out of work and the best Bloomberg can come up with is "its the start of a recession dont you know!"
People don't want lockdown to stop because they need to go to their hairdresser, or because they need to go hangout at the pub, or whatever idiotic reason these privilege a-holes put in their tweets. People want to get back to work, because they need money, to have a roof above their head. To feed their kids.
Edit: Just to clarify because I see a lot of misunderstanding in the replies: I am not advocating to end the lockdown. I am criticizing the tone deaf, patronizing, rude, caricatural comments attacking people who want to end it to get their paycheck back.
I don't need to explain what a 10-20% death rate would do to society, however.
Not much if 80% of them are very old and sick.
I'm more concerned about social and political unrest that often results from mass unemployment, people losing their homes, not enough to eat, etc than losing people to the virus (which still stucks). 22 million unemployed and growing is enough to swing elections in dark directions...
4% of an (healthy not very old) population dying still means overall the economy would contract by 4% (because product/service demand is down 4%), which would still be the greatest recession in the last 8 decades.
Your comment ("not much") is thus completely false.
4% of a population dying also does not mean the economy contracts by 4%. You just... made that up too.
Lastly, you've assumed that a 4% annualized economy contraction from one month in a quarter means that we'll see 4% by just keeping this going. That's... wrong. The negative impact of lockdowns will compound. I don't give a shit if the economy shrinks by 4%. It's absolutely fine if we have a bit of a shitty economic time. Prolonged wide scale poverty for millions of people is an entirely different beast.
I did not claim that. I just took this percentage from the hypothetical situation you used to build an argument (you yourself said if 10-20% die then it wouldn't mean much to the economy.)
«4% of a population dying also does not mean the economy contracts by 4%.»
Yes it does. Basic economics. With everything being equal, the size of an economy is linearly proportional to the number of persons. A population half the size of another one will buy half the number of cars, half the food, will spend half on entertainment, etc. So if 4% of average individuals die worldwide, consumption (thus the economy worldwide) is down 4%. Like I said, it's basic economics.
«Lastly, you've assumed that a 4% annualized economy contraction from one month in a quarter means that we'll see 4% by just keeping this going»
No I don't assume that. Read again what I wrote. I am only talking about the impact of a certain percentage dying, not about the impact of the lockdown.
> "I don't need to explain what a 10-20% death rate would do to society, however."
Yes, you didn't claim anything. But the implication is clear. When I responded I assumed you meant 20% CFR.
> Yes it does. Basic economics. With everything being equal, the size of an economy is linearly proportional to the number of persons.
I don't know what else I can say other than this is a dumb statement that you just made up.
* It's not a basic tenant of economics
* All things aren't equal, ever
* It's not a linear relationship, nor even always positively correlated over time depending on context
And lastly if you actually believe your math, then its clear that for any realistic death rate the economic impact is negligible.
«I don't know what else I can say other than this is a dumb statement»
Not dumb. It's a good approximation, especially because post-pandemic times (after people have regained their jobs, which might take months/years) will be identical to pre-pandemic times with the ONLY difference being that a certain percentage of Americans will have died prematurely. That percentage will directly translate to an economic loss.
Look, the fact your post (https://news.ycombinator.com/item?id=23019875) was severely downvoted indicates most HN users disagree with you. I tried to take the time to explain to you why. You don't get it. I don't have any more energy to spend on this discussion.
> Not dumb. It's a good approximation, especially because post-pandemic times (after people have regained their jobs, which might take months/years) will be identical to pre-pandemic times with the ONLY difference being that a certain percentage of Americans will have died prematurely. That percentage will directly translate to an economic loss.
This is simply not true. The world does not click back to the state it was with fewer people. Millions of people are now unemployed. Thousands of companies will no longer exist. The lockdown is killing small businesses disproportionately fast and that gap is going to be filled by larger businesses. Larger businesses have fewer local employees. The wealth gap is going to be greatly exacerbated, and this will affect everyone. Supply chains will change, inflation will change, consumer spending habits will change. The economy is going to feel different, and in a large part driven by how long everything takes to restart. x% of people dead meaning x% worse economy is just an irrelevant, naive comment.
I don't really care to debate this further either because... it's not interesting
I had hoped the government would freeze all the mortgages, bills and offered real assistance to people in need. The stimulus check for the hoi polloi is a joke. I personally don't need it, why did I get it? I know I could donate it to the poor but that's not the point I'm trying to make. That stimulus seems to be a way of saying "but we already helped you".
a ) covid won't destroy society in any case
b ) we cannot endure a lockdown until the disease is eradicated or a vaccine is produced
c ) a lockdown ended before the disease is eradicated or a vaccine is produced will just lead to a second wave of the disease
d ) the economic burden of the lockdown will increase exponentially as more businesses run dry
I don't want your uncle to be sick. But I'd rather your uncle get sick than have you, your wife, and your uncle lose your jobs; and then have your uncle get sick anyway.
It's a pet peeve of mine when people claim that we must lock down or that the virus is forcing us to do this or that, as opposed to it being a political choice based on tradeoffs.
In fact, I predict that after things open up, they will not shut back down, no matter how bad the second wave of the outbreak gets. People simply won't accept it.
Now to the substance of your argument: this has little to do with capitalism. If most people are not working for a long period of time, in any society, even a non-capitalist one, then that society will rapidly become dramatically materially poorer.
We make choices to improve material conditions at possibly increased health risks all the time. Longevity is not the only metric for overall quality of life.
I would happily accept some increased risk of my own death for the lockdown to be over. Correctly navigating the tradeoff requires figuring out how much increased risk of death is acceptable, not asserting that it’s zero.
Further, we are seeing people still testing positive and having health problems over a month after first symptoms. If your entire supply chain is taken out, essential or not, you can end up with larger problems than when you started. If you think it's a problem that the meat packing plant has to close after a single case, wait until 75% of the plant is symptomatic.
Finally, the solution is to have enough tests and contact tracing so that people can confidently open up, knowing that we can stop the rate of transmission. This shutdown should be used to prepare for a way we can safely reopen, a la South Korea.
What's implausible about this? Is Covid 19 less lethal outside NYC? Can R remain below 1 anywhere in the country, without a lockdown?
The rest of my point still stands.
If you believe the IFR is lower, say .5% (still over 5x the flu), then you still have the same number of hospitalizations, but just 1.15M fatalities.
If you believe the IFR is the same as the flu (0.1%), then you'll still have 20M hospitalizations and 230K fatalities.
Say we're really lucky, and the IFR is the same as the flu, and we find a therapeutic drug to help treat it, dropping the IFR to half of the flu (0.05%), you have 114800 fatalities, but still the 20M hospitalizations.
The math is just brutal. What will the impact be of 20M hospitalizations, to say nothing of the deaths?
Not freezing debts/rents across the entire economy is how this whole thing spins into a depression
Ultimately we are losing the wealth that we otherwise would have generated. We are poorer and there's no way around that.
The former are far more important, and numerous than the latter. I eat butter, I don't eat dividends.
And don't have any illusions about the rich losing here. Most units are owned by small time landlords who will be wiped out by a rent freeze. Those units will be gobbled up on the cheap by rich people that can borrow money at cheap rates.
So what? They've already stopped paying people to build. Construction workers have lost their jobs already. While having to keep paying their rent, or mortgage.
This is a temporary disruption, and needs temporary, stop-gap measures to stop the bleeding. Nobody's advocating to stop all rents forever.
> And don't have any illusions about the rich losing here. Most units are owned by small time landlords who will be wiped out by a rent freeze.
1. No, they aren't. Most units are owned by real estate companies.
2. Couple it with a mortgage freeze, and none of them will be wiped out. You can, in fact, kick this can up the hill until it hits the capital markets...
This paper seems to suggest there isn’t really a tension between protecting people’s health and saving the economy: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3561560
You are correct that the lockdown measures are a choice and not a natural consequence of the virus though.
*there's always somebody
This whole thing just starts over if we EVER go back to normal unless a vaccine is invented. Herd immunity is impossible to achieve during an effective lockdown. It's not like we're any closer to being able to safely resume activities than one month ago. A highly infectious disease with asymptomatic carriers cannot be eradicated.
I hate people saying generic statements like "we have to stay inside until its safe" with no reason to believe its getting safer.
We can get to normal faster if effective pharmacological treatments come out from the ongoing trials. If we can treat it, or at least prevent it from being severe, it is not a problem of public health anymore.
I'm blaming privileged people for lecturing and gaslighting people who are not as privileged.
It seems like no one is understanding your point... yes, it's an absolutely terrible idea for people to go back to work right now, but if it's literally between that and going hungry (because you know your government won't do shit to help you), then it's no surprise that some people will want to go back to work out of sheer necessity. In fact I'd be shocked if most of these Silicon Valley tools would come to any different conclusion if they were actually in the same boat.
Care to explain? Last time I checked, it was governments (monopoly of force) who issued stay at home and quarantine orders.
The US economy in not capitalist despite the popular belief; it's mixed. The current pain would not be as bad right now if it were not for the artificial asset bubbles that were created by Keynesians via cheap money in response to the last recession...
We The People
Sure, the problem isn't actually capitalism per se, but rather the rent treadmill fostered by extreme concentrations of capital. Our economy is strongly centrally planned via artificially low interest rates, with the overt goal of making everyone work full time - essentially by eroding labor's bargaining power versus capital.
If someone's latent paradigm causes them to see this dynamic as endemic to late stage capitalism, nitpicking with no true Scotsman isn't terribly useful unless you have a plan to keep the people who control large capital accumulations from continuing to influence monetary policy to their benefit. Putting aside terminology, your gripes would likely have more in common than not.
Either pay people a decent wage to stay home to flatten the curve, or accept the death rate resulting from people who need to eat and have shelter having to go to their jobs.
It's not like you can relax social distancing and have the economy do well, especially not when the death toll really starts ramping up and people fear for their lives every time they leave home. There isn't any choice available in which there isn't a bad recession.
To take the logical extreme, if we were to avoid all possible immediate threat to life, no one should leave the house, let alone drive to work. Obviously, our society would immediately collapse, and many millions would die. So we have to balance possible immediate threats against likely longer term consequences. Something we do not seem to be doing very well in the case of covid-19.
I'm confused, do you actually think the mortality rate of a down economy will be anywhere near that of a pandemic? Let me know if I'm misinterpreting you here but it sure seems like this is what you're arguing.
History doesn't bear this out. The Great Depression resulted in an uptick in suicide, yes, but a decline in practically every other cause of mortality.
https://www.pnas.org/content/106/41/17290.full
> yters: Yes, I do think we could have a more reasonable approach that will result in less aggregate deaths than our current approach.
You could look at any societal attempt to deal with a large scale threat and say "well that could've been done better", but as I said in my other comment, perfection takes time, and, with time of the essence, I think we were smart to move forward with an imperfect but obviously impactful solution rather than burn time and lives trying to find some mythical perfect balance.
I live in NYC but currently reside in rural upstate NY. We have very few cases up here and it's impossible to NOT socially distance because that the way of life up here.
As of last week, Cuomo is applying the same rules in NYC to all of NY state, which is ridiculous. My family friend has a furniture factory up here that employs 220 people with a backlog of $2M+ pieces worth of furniture. All of his employees were socially distancing before and everyone had an N95 because of what they were building. Cuomo shut down the state and this guys business is about to go under (competition is legally opening up in Ohio and other states) because he's weekly payroll is 125 and at some point he doesn't want to risk $500-1MM of his own money out of pocket to weather the storm. That is 220 jobs that do not need to disappear.
The same rules that apply to NYC should apply to other areas. Some of these problems were are seeing are policy problems.
This is an awkward and difficult situation. If we underreact, we will have hundreds of thousands or millions more deaths (not joblessness, actual dead people) than we could have if we reacted appropriately. I think that's worse than the alternative of a massive recession, but I definitely sympathize with people who are most affected, like your friend and his employees. It's tough; there's no clear right answer; mistakes will be made. We just need to do the best with the information we have, and trust the experts to do the same. I'm sorry :(
I do agree mistakes will be made, but i also think there there are leaders on both sides of the political aisle that should resign at this point for errors they have made.
If no one can pay their mortgage, loan holders HAVE to make exceptions.
That shared spirit of sacrifice isn't a reason to institute lock down orders, but my opinion is that it will allow us to lesson the economic damage long term.
I fully expect, and you should too, foreclosures to skyrocket and people to be on the street. The banking sector is not in the business of shares sacrifice and the US government isn’t in the business of letting the banks collapse.
This lockdown will kill people. Let’s not be blind to that fact out of some sense of moral righteousness or some hope of humanity being found by faceless corporations.
Why, in the worlds wealthiest nation is that something I should expect?
It's a feature, not a bug. We're seeing one of the largest transfers of wealth from the poor to the wealthy ever and it's only getting worse. The cruelty is the point.
Oh also don't forget the number of people who are, or will shortly be, underwater with their car payments too. That's another ticking time bomb.
As long as I have breath in my lungs, I will do whatever I can for the least of my brothers.
If it goes that direction again I see even more people just staying without paying anything. The banks don't have the resources to force everyone out and no one wants to buy that many properties in a lot of areas.
How about we just take care of those who need taking care of during this disaster. How about we put all national efforts to keep the lights on, providing safe housing and keeping the food supply chains intact.
Instead we are worried about corporate quarterly profits and when the Ruby Tuesday can reopen, because somehow serving burgers for $3/hr plus tips is going to secure that person's financial situation.
Man, fuck off. This is so god damn entitled. Writing off someone's income as negligible because it's already in the realm of poverty anyway is so callous. Taking care of people's needs is hard. You can't just hand wave it with band-aid money. No matter how much money you allocate, people, especially the poor, are going to suffer if their livelihoods are destroyed. And it's even worse for people in poor countries that depend on exporting to the US for money for things like food. I don't give a shit about Ruby Tuesday's bottom line. I care that Ruby Tuesday's being closed means long term economic harm. The real world is complicated. The existing system is horribly far from perfect. But keeping it turned off is going to make things so much worse. Asserting that people who recognize this are thinking only of the corporate profits is incredibly disingenuous. We have printed astonishing amounts of money to ease this situation. It's not a viable solution.
My local restaurants are down to: McDonalds, Burger King, and Panera Bread. Everything else is shuttered. It will take years to recover from this, and in many locations, just won't, as wealth concentrates further into fewer areas.
So it's not that it was being dismissed as not significant before this but, rather, it hadn't been going on long enough yet to officially be called a recession.
How would that help...?
The specific point being made was "don't get frustrated that they are downplaying the economic impacts based on the terms they are using; because that's how the terms are defined. It's not a judgement call".
1) Have you tried the IRS website to check the status of your payment? My status finally flipped from "GO F YOURSELF" to "Please give us your bank information"
https://www.irs.gov/coronavirus/get-my-payment
2) As your hours are cut, you may qualify for Unemployment from your state under modified rules from the CARES act, have you applied?
I think a lot of HN readers are simply unable to believe such a thing can occur; the recessions of the past thirty years were mild compared to what's happening right now. Personally, I'm absolutely terrified.
We don't know. And without that knowledge, you can't plan for the future. I wouldn't want to invest money into any business right now. Who knows what shape we will be in in 12 months time?
How much the world can safely open up businesses is directly correlated to testing. Eg, it's easy for schools to open up when they require testing every day for every student when they come in. On the other extreme, it's hard for schools to open up when there is no testing being done.
A second and even third wave is highly likely without proper testing. It will take longer for a vaccine to be created than we can shelter in place, unless we get very lucky.
The alternative is a country does not shelter in place, and it builds up herd immunity. A lot of people will die. It's not the ideal option.
At the end of the day it comes down to tests. The more we have the more the economy can open up.
Thanks for posting this comment. I know it sounds trite, but I’m sending well wishes your way, hoping you and your loved ones make it through this crisis as minimally impacted as possible.
I think you likely see the big picture better than others. The economy is absolutely crushed. That the markets go up must be especially frustrating to those not able to partake in any gains. My take on the market is that it will go up on good or bad news for the moment. Going up on good news is self explanatory, going up on bad news could be related to speculation that the Fed and Congress will pump even more money into the economy —- the wealthy expect to be propped up by the government as they were in the great financial crisis.
My cynical take on this is that the rich expect to get richer, no matter the outcome, and are investing accordingly. My question is how much, if any, social unrest this will lead to.
Individuals must answer this question, not just ask it.
My question is how many people have absolutely no ties to the stock market? I'm pretty far from any definition of rich, but I still have a 401k, so you're not likely to see me rioting because the S&P 500 is in the green.
[0] https://news.gallup.com/poll/190883/half-americans-own-stock...
But that needs to be put in its proper context. Even if you have a small amount of stock or indirectly benefit from stock prices in some way, it'd be stupid if you let that mentally tie yourself to the stock market.
For instance, shortfalls in taxes do not necessarily need to be made up by "all taxpayers." With progressive taxation, they can be made up by some taxpayers (which will likely consist of most HN commentators, since software engineers are relatively wealthy).
Which is what I believe has been happening for decades. Progressive taxation can help, but I doubt the political will exists to tax capital gains.
A friendly reminder that capital gains is taxed (when it is realized).* I assume that you are actually complaining about closing loopholes that exist for avoiding paying the full rate.
* Obviously this comes with the caveat that the tax code is large with lots of "loopholes" (in quotes because they were mostly intentionally created). Capital gains losses are somehow socialized as tax deductions and the "carried interest loophole" allows certain fund managers to treat capital gains as a different class of income.
The top 20% of earners also handle close to 90% of the tax burden, while close to 50% of the population pay nothing in taxes.
...In all seriousness, the parent comment was probably referring to the Federal Income Tax.
This is precisely why a flat tax disproportionally impacts lower income people.
I think it would be interesting to try out a model where _only_ capital assets are taxed. No sales tax, no income tax, no capital gains tax.
It should dampen the effect of the rich getting richer only from rent collecting, while still making sure the market allocates capital to where it provides the most economic value (I.e can be turned into enough revenue to pay the tax in question)
I'm as liberal as they come, and that just seems ridiculous.
Edit: (I do not think of wealth in the form of art though. Imagine most wealth is tied up in capital assets$
But I suspect that from an economical efficiency perspective that division is less interesting than between revenue and assets.
Progressive taxation is aware of the exploitive nature of capitalism. Just because people are being exploited doesn't mean they don't contribute, much to the contrary.
Sales tax is almost 11% here. And I'm in a red-leaning purple state, not "Taxachusetts" or anything. Property tax on vehicles. FICA ("it's not a tax!" yeah OK, but it is really)
Can you explain how this happens? How does one "loot" one of the largest economies in the world?
The U.S. Dollar is backed by an ass whopping!
Think about it, a CEO of a big company is more likely to be in social circle of the politicians, judges and regulators.
They are more likely to be sympathetic to their immediate acquaintance who they see every week rather than those poor social economic class people who they have nothing in common with.
Add some dilllusion and descrimination in the mix, like "they are poor because they are lazy" and it becomes easy to make policies which benefit your immediate social circle.
And lot of poor people don't even have time or motivation to analyze those policies and even if someone manages to do that, they don't have enough influence to do anything about it.
Only if you only count the income taxes, and ignore other (mostly regressive) payroll, excise/sales, and other taxes at the federal and state levels.
https://theintercept.imgix.net/wp-uploads/sites/1/2019/04/ch...
However, you typically can borrow money from your 401k, and pay no penalty, which makes it a good option if you need temporary liquidity.
If I ever have a full year gap between jobs (like some kind of a long sabbatical), I'm going to be doing a lot of Traditional to Roth converting, for exactly this reason.
* Middle-class Americans consistently pump money into the stock market generically (not information trading), raising the value of all your stocks over time.
* Now you have a gun to their head to support policies that pump up the value of your stocks even more.
* Also, when shit hits the fan, they can't easily cash out, but you can. Both on a mega-scale (recession), and individual stocks (when companies tank, you sell first, and 401k index or diversified funds take a hit).
I'm not an expert in this stuff but it smells from miles away.
You make a very interesting point!
I wonder what a "reverse 401k" program would look like (e.g. box the wealthy into aligning their actions with the interests poor/middle class while only marginally benefiting themselves).
Any attempt to recognize classes exits will lead to class war. Everyone is upper class, or waiting to join upper class, anytime now.
Pensions? Those also don't seem to work all that well.
However (thanks, Federal Reserve!), you get punished with interest rates below inflation, so people, increasingly desperate to protect their savings from inflation, put their money in risky investments (not just the stock market, also overpriced real-estate, etc).
There is deep rot at the heart of the American system, and something is going to have to give. The economy has been broken for the lower 50% for a long time now. This course is unsustainable.
I try not to get explicitly political on here, but Bernie Sanders was, as far as I can see, our last shot at reversing the trend from within the current system. He is the only person on Capitol Hill with the motivation to make the real changes that desperately need making. Joe Biden will just pretend the problem doesn't exist for another four years. Trump, as a leader, is just an agent of chaos with no ideals and no plan. I can't totally blame people for taking a chance on that over the continued, slow march of rot.
I think we're going to start seeing escalating social unrest until something breaks. All we can hope for is that something breaks sooner rather than later, and that we get whatever new deal needs making before things get too bad.
People think the U.S. is removed from this sort of thing. It's not. If you push the working class to a breaking point, they will break into stores to steal diapers if they have to.
My conspiracy theory is that because the stole 700billion with the bank bailouts and that resulted in OWS, which was quashed pretty quickly - and resulted in no consequences for those that stole that.
They have ossued the “stay inside orders” whole the now steal four trillion dollars so there wont be another OWS at scale.
If anything, Bernie Sanders was our first, worst shot at structural economic change. In fact, every candidate on stage during those Democratic debates was running far, far to the economic left of Barack Obama, John Kerry, Al Gore or either Clinton. With some historical perspective, you might see that the tides have turned in favor of the types of changes you are calling for, not against as so many people seem to pretend.
None of them except for Bernie Sanders was willing to recognize the system as fundamentally broken. Biden and Clinton and indubitably their Democrat sosies would openly profess to the elite that nothing would change.
Why would the person with few allies and hostile relations with various power players be the one who could "actually" implement anything? Barack Obama had a senate majority that Bernie would have killed for in his hypothetical first term, but Obama still couldn't get his own party to even consider a public option. Things have changed compared to them, but not so much that any 51-seat senate majority could pass anything close to what Bernie calls for. It's beyond unrealistic to pretend otherwise.
And it's total bullshit that the Democratic Party wouldn't consider a public option. The Republican Party was considering a public option.
My memory is a bit fuzzy on this, but didn't he also have to compromise with the (relatively) right-leaning wing of the Democratic party?
He also openly compomised in the name of "bipartisanship" multiple times despite it being uneeded.
But yes, the entire Republican party line eventually toes the party line. Same for the Democratic party, as long as the party line strengthens the class interests of the elite.
Now, that doesn't completely invalidate the point! There's a genuine "economy" of votes around "I take a stance for X, you give me votes, I continue to take that stance, you continue to give me votes", which can function even in the midst of cynicism. But it's much less reliable or efficient when that's the case; when the politician, as a person, doesn't base their platform in their genuine beliefs. In fact I think the prevalence of this mentality is one of the major causes of our current situation.
There's almost nobody left among our politicians who has any real conviction. I think John McCain did. And call me naive, but I believe Bernie Sanders is authentic when he's talking about these topics. He's been doing so since the seventies. Career-politicians who do nothing but appease voters might do an okay job at running the show, but they will never truly change the system that got them elected.
I am still hopeful for our future, maybe foolishly, but I am. If there is a silver lining of Covid-19, maybe it will highlight some of the insane bureaucracy and regulatory capture that are strangling our institutions in the US and lead to improvements. Don't get me wrong, we also need some progressive policies targeted at helping those who are struggling most, but those policies will only be effective if we also recognize and address the underlying cost disease issues. Just look at progressive havens like San Francisco to see how much money can be burned on well-intentioned ideas without achieving any results, if you refuse to acknowledge the underlying causes.
That's not what those proposals were. Single payer healthcare and state-provided education is how you fix those problems.
We're promising kids that if they study hard in school they'll be elevated to the middle/upper class by their degree, but in reality most of those degrees are almost completely worthless for building a career.
People are graduating with 4 year degrees in business, math, assorted liberal arts, and then they're saddled with 6 figures of debt and not any more appealing to companies than someone with a year of experience in a desk job
Another problem: So many people are getting pushed into getting 4 year degrees now that they're now a requirement for many jobs that don't even need them. Sure, a CS degree will help if you're building some Google-scale backend code, but you really don't need one to tinker with a small web storefront's layout bugs
a) giving 20% of ownership of large corporations and 40% of board seats to workers?
b) breaking up the big banks and helping community banks.
These are insanely good ideas and aren't simplistic. Unfortunately, many, including you, only scratched the surface of what Bernie was about.
A better alternative is the less sexy but more productive political action obviously with buy in from the power brokers.
Unrest is what happens in Venezuela or Yemen, etc. it doesn’t always have to be like that as those are extreme; never the less unrest is a medicine that is in most instances worse than the disease.
True Believer has lots of insight into the circumstances than lead to unrest.
On the other hand, some societies can descend quite a bit and be okay with going into more or less survival mode: witness Russia.
So I wouldn't call it a good example of being okay. It made it through that political unrest without blowing up as a whole (but with plenty of local crises, like Chechnya)... but it was not smooth sailing at all.
That's the first thing that will be tried, but to be truly successful the "buy in" needs to happen equally as much from the people that are on the verge of picking up pitchforks. It also needs to be an authentic political action. Unfortunately our politics in the USA has gone into profound dysfunction. Something ugly is going to happen, I think. I don't know when, but it's been on the way for quite some time. That guy in the oval office is just a symptom of a really deep problem.
> Unrest is what happens in Venezuela or Yemen, etc
Not necessarily!
There are a number of really bad things that precede unrest, usually a collapse of systems that people rely on. The folks in Venezuela didn't want unrest either, but when your currency becomes worthless within a span of a couple years... bad things are going to happen.
I only hope more people woke up to this fact and form a critical mass but I doubt it.
It does little good to send people thousands of dollars if when that dries up, and it would, there are no above board jobs to go back to.
There is no reason assistance to people has to go through business. The reason governments do that is because leaders own equity in the current hierarchy and definitely don’t want to disturb that by giving the lower classes leverage to demand better terms.
The way to go is to protect workers during transition from one job to another by providing them with decent unemployment benefits, training, etc., not bail out lousy executives over and over.
I swear I have yet to meet a capitalist who actually believes in "capitalism"...
They’ve had them in France, they’ve had them elsewhere. That’s a kind of unrest but not the kind I think we’re talking about.
I think what we’re talking about is the kind that results in overturning of the power structure. I don’t think we’re near that. I think 99.9% of the people do not want that outside of people on the extreme left and extreme right, interestingly for quite different reasons.
The exploding inequality and continuous safety net collapse in the united states could very well be a similar powder keg waiting for a match.
Usually unrest is not decided so naively like that.
For example, you can organize and take political action just fine, but your larger encumbered opponent might want to start unrest for you https://en.wikipedia.org/wiki/Haymarket_affair#May_Day_parad...
As Thucydides wrote, the tyranny that the Athenian empire imposed on others it finally imposed on itself. "Unrest" in Latin America is caused by USA's off-the-leash unsupervised services. Venezuela's government is taking better care of its citizens than our government is taking of us, in this current health emergency. This despite the crippling sanctions and attempted coups d'état we've perpetrated against them. Don't believe the war media; I recommend The Grayzone. [0]
Although, of course, for the last year or so not even the war media attempts to defend what we're doing in Yemen.
I've seen nothing to corroborate this.
>Don't believe the war media; I recommend The Grayzone.
Here's a video from last year of Grayzone founder Max Blumenthal cheerfully receiving honors from Venezuelan President Nicolás Maduro, who has ruled that country by violence and decree since 2015:
https://twitter.com/NicolasMaduro/status/1156588153945427970
I do trust The Grayzone to have an anti-U.S. editorial position. I do not trust them to be objective.
If a USA president had been subject to massive bias from nearly every news media corporation, he might be tempted to honor an independent news outlet that attempted to report with objectivity. Oh, wait... that actually happened this year, at the "State of the Union" speech.
When we fall into the trap of running to wikipedia every time we're confused by world events, we can't be surprised that the war media continues to lead us around by the nose. If we step back and see the pattern, we begin to discount every story that leads us closer to yet another stupid war. Every day this month, it has been obvious to non-Americans how deficient our system is. Every other nation on earth has responded more reasonably and more effectively to this virus. Venezuela is among those nations.
This has been tried for many years with little result. People in my social circles have grown fed-up and tired with the U.S. political system, especially those who supported Bernie Sanders in 2016 only to watch entrenched power-brokers deny him the candidacy. Some allege similar interference in 2020 (see podcast with former Bernie staffers):
https://soundcloud.com/seeking-derangements/sd7-the-bernie-p...
>unrest is a medicine that is in most instances worse than the disease.
Millions of increasingly desperate and frustrated Americans may not be able to agree with you. People are never purely rational actors, and beat-down emotional people are among the least rational. The LA Riot's immediate outcome was arguably worse than its proximate cause, but nevertheless people rioted.
The only social unrest that has happened so far have been the protests about wanting to lift or ease restrictions on states, and they were widely panned as a bunch of nutjobs. I doubt there will be any "unrest" beyond the protests.
It's easy to look down on people lower on the socioeconomic ladder. They're still human beings. They've been given this raw deal: For the greater good, you will now give up your job for an indefinite period of time, with no prospect of finding like employment elsewhere. You have no choice, and if you refuse, you are a horrible person and in some cases you may face civil and criminal consequences.
Injustice isn't any less unjust, because the recipients are somehow in a group one perceives as deplorable. Principles of justice and human rights are universal. This was MLK's ideological point in the Civil Rights movement.
Adherence to this principle is how I distinguish pseudo-activists who just want power and attention from those who really have justice at heart: Are the principles applied to everyone, or just to whomever it's convenient?
Lastly, at least some of the protests were funded by the DeVos family [1].
[0] https://poll.qu.edu/florida/release-detail?ReleaseID=3659
[1] https://www.theguardian.com/us-news/2020/apr/26/devos-family...
How about breaking down by religion or something else that at least points to what kind of media/message the group is more exposed to? or something that hints at extraneous interests, like homeowners or not. There are so much better ways to break down this data.
I'm an American that fits into neither of these groups but nearly everyone I know does, so from my third party perspective I think you might be underestimating how different the sources, messaging, and conversations are between white and black Americans on average. That being said, I think it is still vastly overused in polls, and is perhaps a self-fulfilling prophecy to some degree.
I would have preferred to see a poll based on income, but race is still a decent proxy for that.
There is no reason to bring that reference in an otherwise non-political discussion.
It's hard to separate socioeconomic differentials from politics. And I specifically use deplorable to call out the political excesses of my own accustomed "tribe."
And, either purposely or naively, you're misconstruing the context and scope of a single quote as if you were a part of the other "tribe."
The "basket of deplorables" comment is widely and incorrectly assumed to be an expression of elitist disdain by "the left" for all rural white males, all Trump supporters, or everyone of lower socioeconomic class, when it rather explicitly referred to the - and I'm paraphrasing almost directly from the quote here - "racists, sexists, homophobes, xenophobes, Islamophobes" who took over Trump's base and steered it in an extremist direction. In other words, people who should be considered deplorable.
It may not have been a precisely worded criticism but it was an accurate one.
The "basket of deplorables" comment is widely and incorrectly assumed to be an expression of elitist disdain by "the left" for all rural white males, all Trump supporters, or everyone of lower socioeconomic class, when it rather explicitly referred to the - and I'm paraphrasing almost directly from the quote here - "racists, sexists, homophobes, xenophobes, Islamophobes" who took over Trump's base and steered it in an extremist direction. In other words, people who should be considered deplorable.
It may not have been a precisely worded criticism but it was an accurate one.
Thanks. I have absolutely no reason to reply to any of that.
I know the following from personal experience as a person of color, as a not completely hetero-normative person, and as someone who lived in the on-campus house of an organization that had non-gender specific bathrooms in the 1980's. As I mentioned elsewhere, tone-deafness and lack of self-awareness are often symptoms of someone having lost the ability to view others -- all others -- as fully equal in basic human being status.
Left as an exercise to the reader: Who exactly am I calling out here?
The Scandinavian countries have moved to pay all payrolls to keep people paid during all this madness, instead of just bailing out large debt holders.
(That said, I think Sweden of all places in the west, have had the best, most sane reaction to the pandemic.)
Any of them.
Some of them, I'm in. Some of them, I'll never be in. The principle is universal: A just society protects the minority. Any of them.
Of course. Rights have to be universal, even for people with such desires. Otherwise, whomever has the power to adjudge what others are "actually" thinking have the power to remove people's human rights.
The dynamics where accusation is enough, guilt is assumed, and no proof is needed are often abused to have power over others. If there was ever a time when this should be obvious, it is 2020, present day.
In fact, all of the above is the whole point of the Bill of Rights and the Magna Carta.
That's the whole point of protecting the minority. Otherwise, if the majority always wins, and the minority has to be satisfied with the crumbs left by the majority, the minority has effectively zero power. It's like writing an API. You know you're doing it right, when things mostly work, but there's someone, somewhere sorely dissatisfied with not getting their way.
In the words of one fictional British gentleman, "You don't have it. I don't have it. That's detente, comrade!"
They have more of a voice, because they don't have a two party system. If you are American, please check out some European political systems. You'll find that politics in Europe are a lot more nuanced and minorities in general are much, much better represented.
I don't know if you intended it that way, but the above feels like you're trying to put words in my mouth to that effect. No, I don't think I said that minorities are voiceless in Sweden.
They have more of a voice, because they don't have a two party system.
Right. Again, as Matt Easton says, "Context!" If the US were to go fully democratic, with our two parties, no electoral college, and everything done proportionally, things in the US would suck for constituencies smaller than 50%. Particularly with discourse being what it is in 2020.
However, if you know of a way to do away with the US two party system, I'm all ears.
Also, when I read your comment above, I tend to read it in my head as sounding angry and patronizing. Hopefully, you didn't mean it the way of, "What, you ignorant fool, do you not know...etc...?"
This is why being gay before 1950 was so great: because the majority of society got its way. That's why there was segregation in many places in the US back then: because the majority of society got its way. It took the Civil Rights movement of the 1960's to get the in-built principles and mechanisms which are there in the US system to protect the minority to really apply. And yes, it was in part the action of the national majority which got that to happen.
The usual reason why people say the majority should get its absolute way, is generally because they are in the group who would come out on top. That's a shortsighted view. Even the majority is human and gets it dead wrong sometimes. This is why certain human rights need to be inviolate. This is why every government needs some sort of mechanism which gives the minority out-sized power. The US just does it in this particular way.
EC and Senate are a very different arrangement - they don't protect any rights as such, they simply give some people more votes than others. Which means that not only those people can then veto majority decisions (even when they don't actually infringe on their rights) - but they can impose legislation that curtails rights of the majority.
As for it being a short-sighted view that majority should generally have its way, well, here's Federalist #22, for one:
"Every idea of proportion and every rule of fair representation conspire to condemn a principle, which gives to Rhode Island an equal weight in the scale of power with Massachusetts, or Connecticut, or New York; and to Delaware an equal voice in the National deliberations with Pennsylvania, or Virginia, or North Carolina. Its operation contradicts the fundamental maxim of republican Government, which requires that the sense of the majority should prevail. Sophistry may reply, that sovereigns are equal, and that a majority of the votes of the States will be a majority of confederated America. But this kind of logical legerdemain will never counteract the plain suggestions of justice and common sense. It may happen that this majority of States is a small minority of the People of America; and two thirds of the People of America could not long be persuaded, upon the credit of artificial distinctions and syllogistic subtleties, to submit their interests to the management and disposal of one third. The larger States would after a while revolt from the idea of receiving the law from the smaller. To acquiesce in such a privation of their due importance in the political scale, would be not merely to be insensible to the love of power, but even to sacrifice the desire of equality. It is neither rational to expect the first, nor just to require the last. The smaller States, considering how peculiarly their safety and welfare depend on Union, ought readily to renounce a pretension, which, if not relinquished, would prove fatal to its duration."
Was Hamilton short-sighted when he wrote this criticism? You can argue that it was originally aimed at the Articles of Confederation, not EC and Senate. But it's clear that this is a rather generic criticism, and it's applicable whenever "larger States ... receiving the law from the smaller" becomes commonplace - which depends on how many states there are, and their relative sizes, which have changed a lot since the original 13 colonies. Looking at the outcomes of the presidential and parliamentary elections in the past 20 years, I'd say that this condition is already fully in force, and so is the warning.
Tone deafness in the media and the social and governmental leadership of any country is a key reason why demagogues and sociopaths get into power. This has been the case across time and cultures.
The Scandinavian countries have moved to pay all payrolls to keep people paid during all this madness, instead of just bailing out large debt holders.
Watch Louis Rossman's YouTube coverage of the US programs as a potential recipient/applicant. As a small business owner, he has a front seat to the incompetence of US lawmakers. It's the same kind of thing which smells like grandstanding incompetence, which also afflicted the "banking reforms" post 2008. The laws aren't written by and for people who actually know how things work.
This is very good on the surface, however, there is a large chunk of wealth going to the rentier class. The rentseekers were encouraged under successive Tory and New Labour governments with schemes such as 'buy to let'. Now they are the only truly protected sector of society. The rich get richer.
There's some truth to this, but I wouldn't say rentseekers are the only truly protected sector of society. My parents put their life savings into buying a block of flats in the 90s. They borrowed from every single person they knew and took out a mortgage against their own home and put most of their subsequent savings into paying off the mortgage sooner.
The last mortage payment is due end of this year and they were looking forward to leaving their full time jobs whilst maintaining their little property 'empire'.
So far this month they've had 3 tenants call asking for rent reductions, 1 totally unable to pay rent and another insisting on a 20% discount because their friend's landlords are offering the same.
Maintaining that block of 10 flats is no picnic. It means you're on call to unblock toilets on bank holidays or clean, paint, draft tenancy agreements and file paperwork on your evenings and weekends.
Of course - owning an appreciating asset means you're better off than someone who doesn't but you're not quite sitting pretty.
Yes rent seeking activities are a serious problem and I think there's a consensus forming on this, at least in the UK.
For the latter, you can get pretty close with this algorithm:
WillHelpRichBuddies() {
return true
}The man in front of the protest to ease restrictions in my mid-sized city was a wealthy local real estate magnate.
That still doesn't change the equation for those who aren't real estate magnates and were living paycheck to paycheck before the crisis.
You either listen to all people and meet them where they're at, or you give fuel to demagogues. (Who might be rich magnates.)
If people who shouldn't have political power gain it by listening to the neglected, the proper course of action isn't to denigrate the people. Take back that power by listening.
He didn't get it by listening to the neglected. He got it by spending money. The protests in my city, like in most places, were primarily people saying "I want people to work for me!" and not "I want to work!". Also had some confederate flags thrown in, because why not.
> Take back that power by listening.
If I were to listen, I would hear that people don't want to be forced to choose between survival and health.
If you were to listen.
I would hear that people don't want to be forced to choose between survival and health.
Losing your home, losing the ability to pay for healthcare, perhaps losing custody of your children or losing your already strained marriage -- these are all serious issues which may greatly impact the survival and health of many people.
One thing which tone-deafness is often a symptom of, is that one has lost a bit of the capacity to think of certain others as full, equal in worth, human beings. I know this from first hand experience.
Absolutely. And nobody wants to be forced to pick between that, and the very real possibility of getting sick. But if the states just open up, that's the position that they will be in—work and maybe get sick, or not work, and lose your home, the ability to pay for healthcare, perhaps losing custody of your children or losing your already strained marriage.
Keeping the states closed is a popular position.
> One thing which tone-deafness is often a symptom of, is that one has lost a bit of the capacity to think of certain others as full, equal in worth, human beings. I know this from first hand experience.
It's an honest shame that people with your attitude weren't the ones running the protests, instead of people flying the confederate flag and wanting to get their hair done.
For a lot of people, this is a choice they make every day, even predating the pandemic.
It's an honest shame that people with your attitude weren't the ones running the protests, instead of people flying the confederate flag and wanting to get their hair done.
It's an honest shame, that politics in 2020 is often about group stereotypes, not fundamental economic reality.
It is, but I'm not sure where you're going with this—are you implying that the pandemic hasn't drastically affected that decision? Otherwise: what are you saying?
We're all human beings, regardless of "tribe."
Lots of these people (and a lot of the trumpy, NRA class at large) are bourgeoise, fwiw
Well, for one thing, in that subset there are still people getting a raw deal.
For another thing, it's a generally bad thing when people start formulating their political equations or thoughts of who's worthy to be listened to based on group stereotypes. "People like that," is just another form of, "those people," or "them."
I've been on the receiving end of stuff like that all my life, as being one of a few classes of minorities, some of it from people who might be characterized as "the trumpy, NRA class at large."
Ultimately, we're all individuals, and we're all human beings. Beware of people who rail against a group, then have you identify them by outward signs. Be especially wary, when those people start claiming to know the presence of bad thoughts in others, such that they "don't deserve" this or that. Be especially wary when the "don't deserve" starts extending to basic human rights.
In 2020, be triply wary if you are, in effect, being asked to think badly of and ignore the human rights of one particular group -- in the name of justice and human rights.
That's not who's protesting with assault rifles demanding that their hairdresser show up to work.
People who are "lower on the socioeconomic ladder" are the ones going on strike for PPE, hazard pay and sick leave that the media are dutifully ignoring.
Again, it's easy to paint a group as a "type" to justify disregarding their viewpoint. There are opportunists at any large protest. Ultimately, the protest is a collection of individuals, each with their own story.
People who are "lower on the socioeconomic ladder" are the ones going on strike for PPE, hazard pay and sick leave that the media are dutifully ignoring.
Noted!
So its unevenly applied (not in every state). That's an issue to bring up with your state representative.
* Coronavirus is a hoax!
* Fake nurses!
* 5G cellphones cause coronavirus!
* Impeach Bill Gates!
* Vaccines are poison!
* Social Distancing is Communism!
* Freedom!!
There are reasonable arguments against the temporary shutdown, but the protesters are not part of that reasonable conversation.
Ask yourself this: Why is the media playing up those fringer crazies, and not covering the very poignant, socially relevant, and human angle of "I need to work to feed my family"? Then go and look up Manufacturing Consent. Here's how propaganda often happens in the West: Emotional manipulation is better than outright ham-handed Pravda-esque censorship.
BTW, you seem to have watched the same "All Gas No Brakes" YouTube video of the Sacramento protests I did. You name the very same nutcase signs as appeared in the video. There's part of your answer right there: If it bleeds it leads. Nutcase signs are easy to get viral sharing out of. They tick the humor and outrage buttons all at the same time.
Freedom!!
This is a good thing. If someone tries to associate freedom with bad people, it's because they want all the power for their own tribe.
Note this quote from a cousin comment: "People who are 'lower on the socioeconomic ladder' are the ones going on strike for PPE, hazard pay and sick leave that the media are dutifully ignoring." Please, ask yourself why the media are dutifully ignoring certain things.
"Freedom"
Every protest in the USA, no matter where it sits on the moral or political spectrums, tries to hitch its wagon to "Freedom" in some way. It's become a word you just paint on a sign when you can't think of something to actually be complaining about.
All of the media coverage I've seen and read played up those protesters as valiant, the suffering workers of the world uniting to stop the government from destroying their career.
Your argument that this is the result of a unified media doesn't exactly work, unless you're referring specifically to media you disagree with.
Well, of course not. That's the classic trope of putting the predicate calculus version of "All" into another's mouth. However, depending on where you look, such an approach is quite predominant in the "mainstream." I don't have time to review all media myself, personally.
> No school means poor kids roam the street like packs of feral dogs asking for money for food around here.
What was that quote about society being three meals away from anarchy?
Unemployment rate is underreported because states can't bring applicants onto their rolls fast enough for demand (if the state even accepts the applicant).
Rent payments, Mortgages, credit cards defaults are all growing. Once people exhaust their stopgap measures, the pressure for civil unrest grows quicker.
Just go figure the only widely covered protests are the right wing astroturfed ones...
How about some activism, social representation..? We don't really do that in the US these days.
...in the corporate news media. They have never had the full story, and they have less and less of it recently. This knob has been turned too far; it's broken now. TPTB will remember they have other knobs (every other OECD nation is directly supporting citizens' incomes, for example) or the whole machine will catch fire.
Keyword being "so far". In Italy, where people have been out of work for months, things are starting to get dicey. Here are some links:
- [Sky News: Coronavirus: Italy becoming impatient with lockdown - and social unrest is brewing](https://news.sky.com/story/coronavirus-italy-becoming-impati...) - [The Guardian: Singing stops in Italy as fear and social unrest mount ](https://www.theguardian.com/world/2020/apr/01/singing-stops-...)
There's more but I won't flood you. The point I'm trying to make is that things _so far_ are okay, but will get increasingly dicey if people don't have access to food and the necessities for living.
P.S: I live in Rome and here people are still singing. P.P.S: "Novella 2000" is the unquestionable italian king of trash gossip magazines.
One possible exception, and it's quite a small group really, may have had a lot of money in cash and bonds. They may be able to do quite well by buying or investing in businesses at relatively low prices and earn gains during the recovery. This is _not_ a bad thing. The economy desperately needs fresh investment to re-grow businesses, re-hire employees, pay salaries, rebuild supply chains. That takes a lot of capital investment.
I suppose another way would be to confiscate all their wealth and give it to the government to invest, but who do you trust to do that most efficiently and to the best economic effect. Government bureaucrats, or businesspeople with track records of investing in and growing businesses?
So on the business side now is not at all the time to bet on Socialism. We can't afford it at the best of times, let alone the worst. On the other hand, this crisis has starkly exposed the weaknesses of naked market capitalism. It's pretty obvious already that the European model of social democracy with single payer health systems and a robust social safety net has proved far better able to cope with this crisis. It's a system specifically designed to help people suffering hardships, and now it's doing exactly that on a massive scale. I think this comes out of the European experience in the two world wars. Existential crises in which all of society pulled together because we flat out had no other choice. We were all in it together. Now we're all in this together.
I suspect this will lead to similar realisations in the US. If big companies hit by disaster deserve bailing out for the common good to save jobs and economic resources, why are individuals hit by adverse circumstances any less deserving at a personal scale? If it's reasonable to help a business hit by a health crisis, why is it unreasonable to help a family? I'm no socialist, check another post on this discussion where I defend Conservatism here in the UK, but recognising that as a society we have obligations to each other isn't socialism, for me it's just pragmatism.
But the poor and the middle class will be hit - are being hit already - at those physical assets. So their quality of life plummets directly and immediately.
It is clearly not, otherwise that 4.8% would be a much bigger number. Hyperbole doesn't help here.
No one claims things are good. A global pandemic is a disaster any way you cut it. We're all affected, some much more than others, and we all have to help. But there's no magic wand we can wave where we all go back to work, either.
Even "essential" industries are affected. Very few people want to go to a crowded restaurant or theater right now, lockdown rules or no. Almost no one wants to travel on an airplane. That's just not coming back until we get the disease under control, and releasing lockdowns pushes that date farther into the future.
Remember the disease is disruptive all by itself. We have something like 25% of the nation's pork butchering capacity off line right now, not due to lockdowns (obviously they were "essential") but due to actual outbreaks. And that's what we should expect everywhere we permit commerce: random, uncontained, very disruptive outbreaks.
There's no magic. This sucks. But we have to work together to fix it, and harping about only one side of the problem hurts and doesn't help.
Uh buddy, you know the first quarter is January, Feb, March right? The country was in shutdown mode for maybe half of March at most. Extrapolate that out to the full quarter (ie multiply 5% by 6) and you get a 30% drop. And on top of that, in March many businesses were still trying to partially pay or at least remain in business on paper. That's all done, plus now we start getting secondary effects.
The Administration's mismanaging of this situation is one of the single most costly screw ups in our country's history.
What, concretely, does this mean, especially if creditors are pressuring people to return to work to keep up with their payments, and returning to work is a public and personal health hazard?
High unemployment in tech or finance would potentially drop GDP much more than high unemployment in low-income fields would, even though low-income workers are often VERY important - nurses on the front lines right now don't bring in big money, neither do people staffing grocery stores or fulfillment warehouses.
I think this is possibly the single biggest long term problem we're going to face as a result of all this. Economic recessions will come and go. But missing 5/8ths of a school year is going to be absolutely devastating for this generation of kids. They will be left permanently behind without a serious concerted effort by every school district to make up for lost time. The bar (which is already dismally low) will have to be lowered further for them to graduate, and how/when will it ever be raised back again?
But kids in poor home situations who were already barely scraping by--if that--will basically lose the year and everything that implies. In some areas, double-digit percentages of students have basically gone incommunicado from their schools.
I don't know if they'll be roaming the streets (the police in America are pretty unforgiving), but I can certainly say they will have it worse than ~2001 and ~2008 graduates.
If any school district cares, all the kids will essentially end up repeating a grade. This is not the end of the world. If anything, it might improve student achievement. (Students who are born right after the cutoff for a particular elementary school class, in aggregate, outperform the ones born just before, the youngest in the class.)
Outside of college-bound seniors — a special case — the main price is their time, same as anyone else, and their caregivers' time.
It sounds more like you haven't thought this through.
voted +1 touché
2) the count of districts ready to have a 7.7% student headcount increase in one year (you're doing this for 13 grades at once, plus have another coming in) on top of whatever growth they already expected approaches zero. I mean, hell, think of what that would do to the teacher labor market alone if even 10% of districts all did that, putting aside things like building space and bussing.
ADDED: What I suspect happens is that most schools bend over backwards to pass everyone they feel they possibly can and adjust lesson plans when schools come back to recognize that many students didn't really learn much the previous semester.
Which subject can they study at school that they cannot study at home?
Given how competitive our society has become I am terrified that we will get behind.
In the US we have a school system where the children are off from school for about ten weeks in the summer. Educators have tested the children at the beginning of the school year and at the end of the school year to study the effect of this.
Students with decent to above average socioeconomic factors tested at about the same level from the end of the year to the beginning of the next.
Students with poor socioeconomic factors tested measurably worse at the beginning of the next school year compared to the end of the previous year.
They also looked at the delta from the beginning of the school year to the end of the school year. There was no significant difference in outcomes when socioeconomic status was taken into account.
https://journals.sagepub.com/doi/abs/10.1177/000312240707200...
Some have parents ill equipped to assist them with school work those parents never completed themselves. (Hell, I went to college, and my kids' math work is a challenge.)
Some have no access to internet.
I saw an article the other day (I'm unfortunately having trouble Googling it up) that said some school districts have 15-20% students they still haven't managed to connect to teachers yet.
- I was in 4th grade where school was less rigorous
- I went to a private international school
- While my parents were busy working, I still had a stable home environment to count on
If I think back to my grade school experience, I was admittedly a pretty good student but I can't really imagine any single semester being all that critical. (And, in fact, I ended up skipping 8th grade.)
Contrast that to the public high school system in the US, where resources are lacking, and students may not even have the tools at home to follow through with remote learning, let alone hope to go to college, which is still 5 figures a year minimum.
Speaking from personal experience, if you did decently well academically in high school, you can get upwards of 16K a year in grants alone (Pell Grant ~6K, State Grant ~5K, University Grant ~5K) if your situation is documented poor based on your parent's and your tax returns.
My state school (UT Austin) charges tuition of about $5.5k/semester if you take >= 12 hours of classes a semester.
Of course, I realize this advice only applies to those who are demonstrably poor and perform decently academically. But college is (better than) free if you fall in this category.
You don't have to lower the bar. There are other options. There is no fundamental law of physics that says a generation has to graduate at age X, so we -- the society -- should be perfectly able to delay that process for a year, instead of lowering the bar.
That said, there's something deeply wrong either with the society as a whole or with the HN audience if you read "poor kids roam the street like packs of feral dogs asking for money for food" and you say that the biggest long term problem is the lowering of the bar because kids skipped school.
Not every kid is willing and able to live with their current parent or guardian after they are legally able to either move out on their own or be evicted.
It's not a law of physics, but there are a lot of pitiable kids out there who have never even caught a whiff of good fortune in their lives, and the US lacks the social sensitivity to make them feel secure enough to add another year of high school to their pile of problems.
Yes, that's why there are "poor kids roaming the street like packs of feral dogs" in the first place, in one of the wealthiest countries in the world. That's the big problem.
So let's not pretend that lowering the bar is what's going to make those kids catch a whiff of good fortune. The US system grinds people like that into dirt and that won't change with a single decision, be that decision to add a school year or to lower the bar.
A sufficient proportion of the US is willing to let those kids fall by the wayside, rather than do whatever can be done to boost them over this hurdle. It won't be adding another school year, and it won't be lowering the bar. It might be by providing housing, food, and petty spending allowance for over-18 kids still attempting to finish their high-school diploma.
Sorry, I misinterpreted your reply. My comment was a reply to a comment about lowering the bar and I thought you were arguing that same point.
>I'm just saying that those kids are as screwed now as they have ever been, and that this particular misfortune will not play in their favor in the future, as employers, government, and nongovernment institutions will be just as unsympathetic then as they are now.
I completely agree with that assessment.
I'm a summer child so my first year of school consisted of a two week introduction and then the summer holiday.
My best friend at school and all of the higher performing kids (except me) were born in the first half of the year so had an extra 6 months of schooling.
It may be different nowadays; it would make way more sense to have everyone start in September. I live in The Netherlands and here kids start as soon as they turn 4. They then spend two-three years in the young kids class depending on maturity.
Left behind who, exactly? Everyone is out of school.
Yes I'm sure many did not plan on having a snap year. Though it does seem to be the case. Looked cool in the movies, real life - not so much.
Let alone the whole financial impact upon university students whose lifelong debts they build up in education fees, will also entail the everyday costs of living as well. Most of which work summer to pay for that and now, had a real kick upon that. Now that whole aspect hasn't even been touched up and does seem to be one that needs addressing. Heck, i'm sure some parents will be impacted equally. After all if a child is effectively held back a year, then equally government support should for that child equally be extended a year beyond the normal age cut-off's.
Though I'm 50+ and no children, I'm mindful that the impact has much minutia.
May I ask you a question though - when you do get back to school after this `snap`, will your drive for learning and making the most of the class's be more, or the same as it was without this pause? I ask as I suspect many student will be more focused and keener to learn after this break as for many if you deny somebody something or remove it - they tend to appreciate what they are missing more - something we all do in many respects.
There is so much redundancy in elementary school education that you can take out a large chunk of it and still teach the same amount of information. School could be way, way denser than it is. Hell, even in high school, a full year would cover the same amount of material as a single semester of one of my college classes, and my college classes only met 3 times a week (for the same exact class length as my high school classes; or fewer than 3 times a week for longer class length).
Middle and high school is for everybody and college/University is for the smart 50% (or whatever).
It's natural that you cover more in less time in college/university because students that go there are already smarter than most.
If you try to apply the same standards to high school, you will push the dropout rate into 60 or more.
Sure there is redundancy in elementary education. But middle and high school kids missing out on a year of math can be fatal. Smart determined kids can make it up. But the vast majority will be completely lost.
It was really frustrating for everyone. I just wasn't in a position to basically teach them a few years of high school math from zero foundation.
And you'll see the same pattern in pretty much any of the books written over the years about the challenges the author faced in the first year of their MBA program.
College: 25-30 hours per week of class time and homework, walks outdoors between classes, long, leisurely breaks throughout the day. Usually at most 3 early wake-up days a week, and often zero. Work almost never due the very next day. It was like a goddamn vacation, after high school.
(granted I attended a low-ranked university and I gather it's not that easy everywhere, but we were still covering material much faster and with far higher expectations for work than in high school, yet it was way the hell easier just because the conditions were more humane and there was far less wasted time—on the flip side, my high school wasn't in any way prestigious or notable either, yet still demanded all that time)
The point of most of that is not to teach you about whales (though whales are cool). It's to teach you:
* How to read and process written material.
* How to organize your thoughts and write grammatically correct sentences.
* The moral value that science is useful and nature is important to preserve.
It's the same reason they still teach cursive. Cursive matters fuck-all, but training fine motor skills in general is very useful and cursive is just a semi-arbitrary means to that end.
It's not. The amount of learning that happens in a typical school year is not very high. The world can skip an entire year of school, and the educational cost it will pay will not be very high.
The cost of missing a year of childcare, that school provides, on the other hand, is pretty massive.
Of course this is all "crazed cinema depicting crazed societal horror", but are we truly expecting a return to such times and activities?
If only there was a way we could give them access to the entirety of the world's knowledge, a million lifetimes of recorded video, and the world's best teachers for near zero incremental cost, right in their homes. If only.
We're gonna flub this one because "Netflix and chill" is the best this tech generation can muster in the face of the worst crisis in recent history.
Squandered.
I weep almost every day because our entire communications infrastructure and online experience has been tailored for our own. goddamn. greed.
We could come out of this with a generation of kids that have learned better how to play and how to let boredom cultivate creativity. Depends a lot on the home situation though.
Retail like that is very underrepresented in the stock market, so those losses wouldn't be reflected.
That the stock market doesn't reflect main street yet after the biggest stimulus in history is perhaps unsurprising but also a little worrying.
Indices like DIA, SPY, QQQ don't have much of this, though.
Hope better days for you man, but those other jobs in leisure sector will not recover for a long time unfortunately. Do you think that they can somehow use the itnernet to keep businesses alive?
Having money is a feedback loop. You can't negotiate if you're skint.
Also essential doesn't really mean their more in demand now than before in all industries. Mechanics for example are essential and still at work but cars if anything will be needing less maintenance now than before because so many people are out of work and not driving anywhere for vacations.
Additionally the places where there is simply an increased demand and need are a lot of 2 types of job 1) warehouse workers or 2) manufacturing. Warehouse workers don't have that strong of a bargaining position because places like Amazon are already used to constant turnover, surge by up to 200k a year already, and only really need warm relatively able bodied people of which there are loads right now that'd love a job. Manufacturing people are in a slightly better position as it's harder to just throw bodies at it but factories have limited ability to ramp up. Grocery store workers are kind of (1) employees where it's very easy to replace workers so it's tough for ununioned employees to demand hazard pay or raises because it's very easy to find replacements, especially so now when there's so many other service industry jobs that are out of work right now.
With 22 million out of work, it's easily to replace an "essential" meat packer. It's far harder to replace an engineer or doctor even if they aren't essential
That's why white collar workers make so much money in the first place...
https://www.principles.com/big-debt-crises/
Basically when money printer goes brrr then prices of financial assets tend to go up. The unfair bit about this is that these kind of assets are mostly owned by the rich, which makes the wealth gap even bigger.
It takes a while to kick in, though while the numbers go up, the values don't.
Don't settle for this. My niece had her car repossessed 3 weeks ago. They said for $18k cash she could have it. We told them to pound sand. She's borrowing cars and getting rides, but next week she'll have a decent car, and I'm going to record a lien on it with the county so nobody can take it if things get worse and she has to declare bankruptcy.
Make them an offer: for $1000 cash, you'll park it in the driveway, unlocked, with the keys in the visor on any day they want to schedule. You're going to buy it back at the auction for 1/3 of what you owe. Or they can work with you, politely. If they take your car, they're just as screwed as you - possibly more so. The used car market is a bloodbath and they all know it's going to be far, far worse in 6 months.
The rich get richer because they know how to take advantage of situations like this. As a diesel tech, you almost certainly have the knowledge to nurse an old beater along and take advantage of your lenders weakness. Please do it.
This is brilliant. I have never considered using such a tool in my travels, but have added it to my tool belt. Thank you.
> The rich get richer because they know how to take advantage of situations like this.
Preach!
A distant family member did this on the house of one of their kids, and it saved them from losing it in a foreclosure. The other lender was so angry with them for refusing to release their lien; but they couldn't legally force them to do it.
Skirting what's owed, playing games with manufactured leverage, getting repossessed - these are all the factors that cause people with lower credit scores to pay a lot more for their loans.
something is very wrong with the lending market when it makes sense to give people free money.
These 0% 7 year loans are not coming from banks. They're coming from the car companies. They're a sales tool.
I dont have access to the actual sale prices at auction to know what the true worth of these cars is though. I would guess half of the retail asking price?
And since manufactures own the lending arm, and the sales arm, they enjoy higher margins, plus more in interest payments. Not everyone is going to qualify for that 0% interest. Plus, it keeps dealers happy because they can squeeze in bullshit fees to pad the sale price.
Then you look at the asking prices for larger SUVs with 200k+ miles and its even crazier.
My point is, cars last far, far longer than we generally assume if you take reasonable care of them!
I think he did 60k km (37.5k miles) during the first year, but you couldn't tell that from the shape the car was in, since he cared for both the exterior and interior.
The only thing that showed any visible signs of aging were the windshield wipers - he had so much on his plate that he couldn't squeeze out a few minutes to refresh them.
Is the car "heavily used" after that? I would say that aside from the driver's seat there's probably no clear indication of that.
These are the kinds of vehicles that everyone wants to drive (along with trucks) and 72/84 month loans have been common for a while now (even for lightly used cars). So that sets price floor for trade-ins, since people can only roll over so much negative equity. Then you have to factor in that car sales in 2009-2012 were 50-60% of what they were in 2019.
So, demand is high, and supply is low. It makes sense that used SUVs are expensive. Once you start looking at less desirable models, like coupes and sedans, then prices drop considerably.
People weren't buying new cars and so the supply for used cars dropped (I remember dealers calling me begging me to sell my Ford Edge) but the demand increased exponentially because it made more sense to buy a used car, then to get a new one.
This is turn increased the price to many models and in some cases, a lot. Hybrids and electrics shot through the roof because people were trying to save money on gas. More reliable models from Honda, Toyota and Subaru also went way up in value.
Used cars are an immensely diverse range of "products". You've got $500 Aveos that Jimbo or Manuel will have no regrets hauling an I-beam on the roof of, you've got $25k 25yo 4Runners that 25yo software engineers with six figures of salary and minimal expensive responsibilities will talk themselves into paying asking price for because it's what they grew up getting dragged around in.
The market for anything new enough to get a loan on is always inflated, obviously, that's what easy financing does.
For the last 4yr or so the bottom the the market, non-japanese compacts and subcompacts with 15k+, 90s junk that needs work, Altimas in perfect condition but with a time bomb CVT and 80k on them, etc, unfashionable midsize SUVs from the '00s was just fine. You could pick up running, driving, has one or two known mechanical issues that need to be addressed 10-25yo vehicles for $1500 all day long, non-running for even less.
The market for low mile, low flair, A to B commuting and family hauling vehicles in good cosmetic condition that people who think "good schools" means "no poors" and worry about what their neighbors think of their lawn buy for their kids to go to college in or slightly less well off kids have to buy for themselves after college were what was inflated, like 5k+ for a Japanese crossover from '01 with 250k on it inflated. These vehicles have become less and less common because the white collar upper middle class crowd that keeps things nice but changes cars decently regularly has been leasing more and more.
If you were wiling to clean the ever living crap out of a kid-stained interior or get some cosmetic body damage fixed (or just ignore it and live with the ugliness), or (get your pearls ready folks), <gasp>, drive a domestic that isn't a pickup, you could get cars of the same, age miles and mechanical condition for $1500-$3000 instead of $4k on up. These vehicles are plentiful because the middle class has been buying them CPO off lease and using the piss out of them hauling around their families, commuting a ton of miles, etc, etc and then ditching them for another one when they feel they are too old/beat. This is the niche I specialize in and I think these vehicles are a great value.
Basically the stuff that white collar professionals feel is the bare minimum of what they or their kids can drive without looking below their class has been ludicrously overpriced because (surprise, surprise) those people have a decent chunk of change to throw around and supply has been dwindling.
Now we don't know the full extent of the original poster's loan issues but the best bet is to try to arrange payment changes with the lien holder. Never ever advise anyone to walk away, that is the worst thing you can ever do.
Startups are having massive layoffs right now, and each week bring companies further and further down the chain lay people off. I strongly suspect we'll see more major layoffs next week.
Most big tech companies are driven by either consumer spending and advertising. Before 2008 at lot of these companies still had not capture their full market share, so even in a recession there was room for growth. Now profits in these companies are based on market dominance. Even the big names will likely take a hit as the severity of this recession starts to take hold.
Finally in the Bay Area there's the looming problem that huge amounts of everything is paid for in RSUs (restricted stock units). The more ridiculous those total compensation packages may seem to outsiders the more they are built up from RSUs. In theory you should just live off base salary and RSU are the (very thick) icing on the cake, but this is unrealistic in SV. This stock part of the compensation goes a long way to paying for the insane housing in that region. Stocks drop and instantly Bay area income does to.
Tech will be effected, but a combination of naiveté and denial make conversations here seem like tech is safe.
As soon as things pass, money should start to flow back into startups.
This may not be soon.
The problem with a lot of startups is that they aren't making a profit when everything is going fine, let alone during a world wide pandemic, sometimes for years.
I see it as a wake up call for tech. It will suck for many people but in the long run it might be positive for the industry.
If we use the SP500 as a benchmark for RSU valuation, in 2020 those regressed, at their lows for the year, to mid 2017. They are currently at September of last year. In the past year, SP500 is up a quarter percent. I don't think tech workers were doomed in 2019, and nobody was buying a house on the assumption that RSUs would appreciate at 50 percent per annum.
> If we have layoffs, in FAANGs, I suspect a lot of folks will not be able to pay their mortgage.
Indeed million dollar mortgages are high stakes. If foreclosures actually become an issue I imagine the politicians will step in to bail someone out. Maybe the lenders, but probably homeowners directly since they vote. It's entirely possible we see a democratic congress throw out the SALT limits from the tax reforms.
[1] https://www.washingtonpost.com/business/on-small-business/we...
The FED and Treasury have "united" in some sense, and we have unlimited (trillions) QE flowing into equities. So unless the FED stops the money printing party, I'm not so confident this will happen.
Says who? Are you really claiming knowledge of what the future portends?
If you are certain of the future-- you would make a bit bet. Have you bet money on it? I doubt it. If you truly thought this was the case, you'd have purchased some options ;)
A lot of people care. Many of those who care believe that the situation we're in right now is caused (or at least greatly exacerbated) by incompetent leadership at the national level, but unfortunately that view is not shared by a substantial fraction of the American people, and against that kind of headwind there is only so much we can do.
The facts that are denied will be those that run counter to the prevailing sacred cows of whatever movement it is. One that especially irks me on the Democratic side of the fence is denying that the minimum wage has a cost in jobs, despite near universal belief from economists that this is the case.
"Chicago continues to be the most corrupt city in the country and Illinois remains the third most corrupt state."
https://pols.uic.edu/chicago-politics/anti-corruption-report...
But that is one example. You said many large cities have been run exclusively by Democrats for decades and are notoriously corrupt. One is not many. AFAICT Chicago and Illinois are the exception rather than the rule among Democratically controlled cities and states.
Also, Democrats don't exhibit pride in their corruption the way Trump does. When Democratic corruption is exposed, Democrats seem to be, for the most part, ashamed of it. It's not just Trump's corruption that is problematic, it's the way he wears is proudly as if it were a badge of honor. When Rod Blagojevich tried to sell Obama's Senate seat, he was put in prison. And then he was pardoned by (of course) Donald Trump!
Also, your (one) example deals only with corruption. I cited two problems, the second being denial of facts. Do you dispute that?
First hit on Google is:
https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-...
First occurrence of the string "corrupt" in that article:
“Is it rigged? Yes,” said Charles G. Moerdler, who has served on the M.T.A. board since 2010. “I don’t think it’s corrupt..."
> Mohammed Nuru's Penthouse, Leland Yee and Shrimp Boy
OK, I'll concede those two. But both of those examples are from one city (San Francisco), so now at best we're up to two cities. That's not a "large number" in my book. Also, the Nuru example seems pretty petty (yeah, he built himself a nicer office than he should have. That hardly seems comparable to me to the President of the United States proposing to hold the G7 summit at a property that he personally owns.) And both Nuru and Yee were ultimately disgraced. Yee is still in prison.
At the level of Nuru and Yee, there are literally tens of thousands of Democratic officials of similar rank througout the country. Two examples of corruption, one of them petty, and both of them ultimately disgraced, hardly seems like a pattern to me.
By way of very stark contrast, the entire Republican party is covering up for Donald Trump.
And none of this speaks to the other problem I cited: denial of facts.
https://rantt.com/gop-admins-had-38-times-more-criminal-conv...
But I suspect you will be unable to find someone who has done it because it's simply not true.
Here in the UK if you said you were going to buy a car, most people would instantly assume you mean second hand. There's not much of a culture of buying or leasing new cars here, and even less of leasing cars that you really can't afford (outside of petrolheads anyway)
The issue seems to be in previous generations cars were more of a status symbol for many (as well as being generally more affordable), so lots of people were raised with that expectation. So they buy/lease flashy overpriced German maintenance money-pits and scoff at used Toyotas because they're boring.
That or they're just trying to put on a veneer of financial success as part of their "hustle".
A little while after I bought it, prices actually went up over what I purchased it for, and I was getting letters from Toyota dealerships offering to buy it back from me above my cost.
It's declined in value since then, but still runs well (knock on wood).
This isn't saying used cars aren't worth it -- they definitely are -- but for certain scenarios I think the choice is maybe more complicated than I thought for a long time.
I doubt the same would happen now with an economy halted.
They're living at their means instead of within their means, let alone beneath their means. So the moment any financial difficulty comes their way they're screwed. It's especially irrational if it's just for extra enjoyment beyond necessary comfort. Someone who takes out a personal loan to buy all the blu-rays he wants would be called financially irresponsible, yet it seems perfectly reasonable to some to pay hundreds of dollars a month extra for that BMW or Range Rover.
My father enjoyed driving his Mercedes, so I figured I ought to enjoy a German luxury car as well. I expected to pay a certain premium on parts, and obviously for premium fuel and synthetic oil, but that I'd get a much more solid feeling car in return.
The problem is, the Mercedes he drove were from the 80s and 90s, so parts markup aside, they were basically Toyota reliable.
The German car I bought was from the mid-2000s, and nowhere near as well built or reliable as a 90s Mercedes, even in present day.
I'd even owned a 1986 Mercedes that was still reliable in 2010, I'd also owned a 1992 Mercedes that was also reliable, and continued to be so after I sold it to a friend who drove it for all of university (2010-2015).
But it was the 7 year old one that basically fell apart despite me buying one with full dealership service history, then sinking endless money in making sure all the repairs were done properly with OEM parts, on top of my religious maintenance as I'd believed German cars were only problematic due to neglectful owners.
So, it went about as poorly as you'd expect.
I guess part of it is that it's a very car oriented culture, but the other part is that people value owning a new shiny thing over financial cautiousness.
So while I agree if someone says they are buying a “new car” it just could mean “new to them” I do think a lot of people do lease. I see a lot of young people with new BMWs etc, probably paying with money that they will regret not having put into their pension in years to come. Or maybe I should have lived a little bit more at their age.
Mainly because I've never seen a lease where the dealer doesn't ask you if you want to buy it.
Americans also spend a lot of time in their cars, I went from a short commute to a long commute (1 hour each way), and found I got almost exponentially more critical of my car the longer the commute.
Suddenly the practical vehicle I didn't mind driving 15 minutes, was an eyesore to look at after an hour, and the NVH (noise, vibration, harshness) wears on you exponentially with time.
I started browsing cars to buy that would have been borderline financial suicide for how much I made, just because of how important the comfort and aesthetics became to me.
Couple this with their tendency towards financing things, and how cheap automotive related expenses are in the US, and it's the perfect storm.
I ended up changing jobs to one 10 minutes from my house, and it's downtown so parking is just done at various pay lots a few blocks from my office so nobody ever sees what I drive, and suddenly what I drive is irrelevant again, I was back to being content with my 15 year old Camry.
I found out after test driving BMWs and Audis I don't see much difference between those cars and the Fit other than some bogus identity around it. It's just driving. I've taken many 6-12 hour long non-stop trips in the Fit (e.g. SF to Seattle where I only left the car once to pump gas, the 2nd time I had to get gas was in Oregon; many trips to Eastern Sierras from SF, etc.) and I think it's fine.
That’s quite different to somewhere like New Zealand, where the average age is twice that and almost nobody buys a brand new car - instead most cars are imported second hand from overseas.
This is true in America as well. I think wealthy Americans forget that regular Americans often live their whole lives while never owning a "new" car.
(This is even true of car loans in the US -- the majority of those are for used vehicles).
Frankly, as an American, the UK's car market seems nuts to me. The kinds of cars that folks get as "company cars" is laughable.
The rule of thumb in the UK is a car gets about 10k miles per year and "modern" cars tend to last about 150-200k miles before they're not worth the repair costs.
For example, my car is a 2005 Focus which I recognise is older than most cars on the road, but costs me a couple hundred quid in maintenance each year and I have no intention in upgrading until it becomes uneconomical
The bigger picture is not any more visible from a STEM job. I haven't left the house aside for a jog in at least a month, and I work from my kitchen. I am living in a smaller bubble than ever, the only thing I'm missing is a hamster wheel. Wait, no, there's already a treadmill in the basement.
I hope online shopping is helping the shipping industries limp along, if only a little.
But the valuation is the number that actually matters, not the number of stocks you own. You can't buy food with stocks, you have to exchange them for money first. If the price of stocks goes down then you own less real value.
This is something I see from coverage of "lock-down protesters." There's a concentration of imagery, so bad associations can be made, pandering to those with left-leaning viewpoints. The underlying message is, "see, we don't have to pay any attention to the ravings of these crazy deplorables."
Such patterns were also at play in the media coverage of minorities in the 1900's and early 20th century. They're just being used by a different set of people with different directional vectors.
What you have to remember, is that a lot of people have been given this "deal:"
How about you have a period of unplanned, involuntary unemployment with little prospect of finding alternative employment in your areas of expertise? Okay, thanks, bye!
We need to begin opening our country back up and implementing more targeted lockdowns and isolations for the most vulnerable.
Not only will this bring us to herd immunity faster, we will have a huge pool of recovered people available to donate plasma antibodies to those suffering from the virus.
Taking the recent deluge of antibody test data that's been released in the last few weeks from around the world indicating infection rates are far higher than official numbers indicate and the growing threat of economic misery for tens of millions, this is the best way forward.
Though, if "go back to work!" also means the unemployment assistance and stimulus payments stop, it could get more exciting.
That's awful. I know some localities have "paused" evictions and payment "holidays," but there's been a lot of unevenness. Frankly, I think there should have been a national to that effect, so there'd have been uniformity and no gaps.
In a lot of areas, schools are still open to serve breakfast and lunch to kids, school buses are dropping off food, and in states like mine, half the families are getting extra cash for food right now. Families will receive $193.80 total for March and April for each eligible K-12 student, and another $182.40 total for May and June.
Over time the more tourist-serving towns seemed to recover.
I am pessimistic that we're heading for the same situation again. The companies that the stock market cares about will recover, we will all go on pretending that things are back to normal. Meanwhile there will again be large swaths of the population in dire straits.
I don’t want anyone to have to put themselves at risk of catching covid in order to survive. And, the survival of working class people has to be placed above the convenience of upper middle class people who want a haircut or to go to fuddruckers.
At the same time, working class people are the ones who will suffer first and most from an economic downturn. So if they want businesses reopened, you can hardly blame them.
I think we need ubi, right now. Can’t think of any other solution.
Having tasted some of the bitter existence out there, it felt needlessly cruel. In a land of abundance, there's really no reasonable explanation for anybody going hungry, being without shelter, live in dilapidated conditions, fear one's neighbors, fall into irrecoverable debt for healthcare, or any of the million ways that poverty ruins people.
I've been down and out in the U.S., where whole neighborhoods were struggling. It's enough to drive one crazy. Much respect to those able to rise above (or just hang on) and still manage to keep their spirits up.
Mass media and journalism often feel way out of touch with the day-to-day realities on the streets. Much of the time they're in the business of shaping the public narrative, rather than giving people a voice or reporting the truth.
The top is, well, obviously, useless.
State leadership is all doing different things, which is, in some ways, a good thing, but I don't hear much in a concrete way about what the plan is to address this all over the next 12-18 months. We hear a lot about when we'll "open things back up" or phased re-openings, but nothing whatsoever about a strategy -- THESE are the tests we'll use, THIS antibody test to let people work THOSE jobs, THIS kind of contact tracing.
I'm not quite sure if the states are hoping the federal government will come out with some unifying strategy/process/materials/procedures at some point, or what, but it sure ain't happening.
And really, no one can argue with them on that. A governor or president can order businesses closed, they can lift that order, but they can't force businesses to go back to work before the business leaders and customers are ready to.
What governments need to do is clarify the new rules of the road for businesses. For example companies that used to be heavily restricted on how they can use health information are now going to need to test all their employees, make decisions based on those test results, provide protective medical equipment, etc.
They're not - most of the megaregions are forming interstate compacts to coordinate medium to long term strategy. Colorado and Nevada just joined the Western States Pact which CA/OR/WA started a few weeks ago around the same time the East Coast created their own. I think the Great Lakes states have one as well.
You don’t think that describing poor kids who cannot go to school and likely cannot afford to eat on their own as packs of feral dogs is problematic at all?
I would be very interested to hear from someone who find the current phrase acceptable but not if the comment had written "black" rather than the word "poor".
Some businesses will fail (for whatever reason). New ones will step in to fill the void-- perhaps very similar ones, or ones somewhat similar to those they replace.
I think of it as economic evolution.
The world outside of those businesses has evolved-- if those businesses and their management are not simultaneously evolving, then they risk being left behind.
I think the covid-19 situation has exposed weaknesses in the economy, which will be shored up-- but not without painful economic corrections.
"No one seems to care" Eh, the reality is that the owners, families, and adjacent/partner/affiliate companies may care. Other people care-- about other things which are higher priorities from them (things which you may not be aware of).
Ultimately, those businesses may have failed in part because their owners/management didn't care enough to evolve their skills and offerings to what is in demand in the economy (outside of the impact from covid, of course).
To be honest, if you really want to understand economics, you might not be trained to the degree necessary-- i.e. diesel mechanic does not equal knowledgeable economist. So, you are allowed to have an opinion, but others like myself might remind you that it is not a qualified economic opinion, but rather the opinion of a mechanic.
For example-- Do you take investment or other economics advice from your local mechanic? Do you think others would? I certainly wouldn't. As such, if I were a mechanic, I would not have confidence in my assessments of economic situations-- instead I would read the thoughts of those who I am confident are knowledgeable on the topic.
Assertions are easy to make. Valid assertions depend on knowledge, experience, data, perspective, etc.
Feedback welcome.
Is most of the 12% just market speculation that the virus issue will pass without a long-term earnings hit?
So the real value of stocks is lower when adjusted for true inflation, but everyone claims inflation is minuscule / nonexistent so we can pretend that printing trillions of dollars and handing it to banks is having no effect.
It's mostly companies that do well in any market or have a habit of surviving massive market disruptions. Sort by founded date. Almost all of them are 2000 or older.
As an investor: Very happy with my "QQQ" (NASDAQ-100 ETF) investment, but my more diverse retirement portfolio is nowhere near as good. I have recently been buying hard hit stocks that I think will survive over the long term: Disney, Marriott..
As an employee: well, the trick is to remain employed.
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t...
Investing in Amazon is almost as profitable as a 3x leveraged parity risk bet on QQQ. I get what you are saying, "buy when people are fearful", but do you really think it will be more profitable than betting on the top 6 tech stocks?
I guess I don't believe in the statistical basis of the risk calculations (bell curve is an invalid model for sure for stocks), so only one stock is way riskier than you would think and tech only is already exposing you to some kinds of systemic risk.
https://www.visualcapitalist.com/a-visual-history-of-the-lar...
https://howmuch.net/articles/100-years-of-americas-top-10-co...
QQQ would be a hedge on "big" but not necessarily just these current big.
The stock market is not trading in baseball cards.
If the dollar gets less valuable due to the government printing cash (or buying bonds or issuing loans they are expected to later write off), then things denominated in dollars increase, even if the real value remains unchanged.
It's hard to tell if the dollar is weakening, because most other currencies are in the exact same position.
Expected inflation can be calculated as the difference between a Treasury and a TIPS of the same tenor - say 5 years.
Treasury yields: https://www.treasury.gov/resource-center/data-chart-center/i...
TIPS: https://www.wsj.com/market-data/bonds/tips
So 5 years out, the expected inflation is .37 - (-.418) = .788%; pretty low. In other words, the market doesn't expect all this money printing to translate into general inflation (as measured by the CPI).
Personally I would be dollar-cost averaging into equities.
Can't post this enough these days. TLDR is that the stock market is forward looking. It goes up or down based on whether conditions are better or worse than EXPECTED. If reality is in line with expectations then nothing happens. If it's better than expected stocks go up, if it's worse than expected stocks go down. The current shitty economy has already been priced in as far as can be known.
Plus there is the expectation that once a vaccine is developed/distributed it'll be the roaring 2020s as everything recovers fully, which I largely agree with. So if you're looking at record profits less than 2 years out, makes for a pretty rosy outlook.
That of course is assuming there aren't any particularly economically devastating effects from the oil price wars/demand drop, educational lapses, hurricanes/wild fires on top of corona-virus leading to a renewed spike during evacuations, and any other manner of things that can go wrong. That's where I'm generally making the opposite bet, there's just too many unknowns and plausible disasters that can happen, and if even one of them comes true things get a lot worse quickly. But that's pure speculation/conservatism on my part.
A lot of businesses are cutting back because people can't go out and do what they'd normally do legally. So when governments start easing restrictions, people [stockholders] are probably more optimistic because the situation seems more tractable. It's a lot more predictable than 2008 when people were talking about the collapse of fundamental financial institutions and systems involved in monetary supply because of their underlying structural composition.
I do think there's some disconnects in interpreting the stock market, but it seems to me investors are just seeing restrictions being eased, daily COVID case counts on a downward trajectory, etc. They're reinvesting in markets they see a path of recovery in, early.
What's less certain to me is if in say, July, this all gets worse again with overrun hospitals, etc. in a second wave. Then markets might really take a nosedive.
Also, the S&P 500 is made up of mostly large companies, many of which could benefit long term from the virus. Sure in the short term there will be a revenue hit, but in the long term if their smaller competitors can't survive that hit and they can, they will become more dominant in the future. As far as I know, small business indexes have not recovered much.
1. People keep saying about the market being up recently, but skip the part about it still being down about 10% since the start of the year.
2. S&P is heavily weighted towards the strongest companies. Amazon, Apple, Facebook, Microsoft and Google account for 20% of S&P market cap. Most of those companies have been helped by the pandemic, or at least not hurt nearly as bad as smaller companies.
3. The market is always very forward looking. It is essentially betting that things are as bad as they'll get. I don't know if I personally necessarily agree, but if you look at countries starting to open up it's not an unreasonable bet.
https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
It is no harder to inflate the dollar than any other currency. Print enough of them, and the their price will go down. It's no different from any other commodity.
But it is simply not possible to keep pumping currency into a shrinking economy without producing inflation. Sooner or later the law of supply and demand will catch up with you. The only question is whether it will happen before or after November.
For everyone who will respond "oh but CPI has a housing component": https://slate.com/business/2014/02/housing-inflation-the-cpi...
But that is NOT what is happening at the moment. What is happening at the moment is almost the exact opposite: money is being injected mostly at the top in order to prop up asset values, with a little bit coming in to the bottom via the $1200 relief checks, and the middle via PPP.
If you increase the reserves, you are forcing the interest rate down, so you are making credit more cheaper (until it arrives zero and can't go further down).
For inflation to appear you need borrowers to who the banks think is good business to lend, and that spend that borrowed money in the economy. That it's not going to happen in a depression, when nobody wants to invest and the banks are scared to lend.
What is necessary is a decisive fiscal policy. That would increase the central bank balance sheet also, but what would cause some inflation would be the spending in the economy, not the number in the balance sheet.
So, down 10% from the previous bubble.
> 2. S&P is heavily weighted towards the strongest companies
Good point. Dow is also up almost as much though.
> 3. The market is always very forward looking.
I may be cynical, but I see perhaps 2 to 3 years to regain the jobs we are losing, to see the employment rate return to earlier levels. That's years of depressed spending, and all the other woes of society from high unemployment.
So the market is looking to, what, 2025 or something?
Sorry to pick on you, I still just don't get it.
Well, another point not mentioned is, where else are you going to park your money? Interest rates globally are basically <= 0, real estate may be a dicey proposition for many years to come, bond yields are garbage, so... stock market. And considering so many companies are selling at a discount (regardless of whether or not you think that’s the case), dumping money in the stock market is a pretty good bet right now.
Long-term these problems should work themselves out and real estate (particularly in hot coastal metros) should start going up again, but 2020-21 is going to be rough.
Sure. People are basically betting that stock prices are cheap right now, and if they hold onto them for a few years they'll be back to where they were.
Look at the 2008 recession. If you bought then you'd be doing very well.
They're basically betting that the worst has already been priced-in. In a sense, they're probably betting that we won't get a totally calamitous re-opening of the shutdown, or a totally calamitous fall and winter next year. But, in any case, most people adhere to the idea that stock prices always go up eventually, and therefore they buy accordingly.
We're about to hit bedrock, I suspect.
The dow is a subset of large companies in the S&P.
Interest rates are negative or near zero, so bonds have the risk of losing value as interest rates rise, as the Fed needs to fight inflation. They also have no real upside, since interest rates are so low.
The Fed has agreed to print unlimited money to prop up businesses that basically don't exist, so having a bunch of cash is not safe, since the Fed is printing so much more of it.
So grossly overvalued stocks may be the best thing now.
And as always the stock market isn't anywhere near a holistic view of the economy, it just gets over used because it's a convenient constantly updating number that can get slapped beside any news cast or announcement.
I would also add a #4 to your list that people often miss. There is risk and there is uncertainty (think unknown unknowns). The market hates uncertainty because it is so hard to price. Risk though can be priced. This is often why the market will go up with numbers that look really bad when they come in. They are no longer uncertain.
The downside for those companies will be the regulators at DOJ. I have no doubt they will survive this pandemic in even better shape than before. The question then is if the government will work to break them up.
Obvious examples would be splitting YouTube from Google, splitting Instagram and WhatsApp from Facebook and forcing Amazon to pick a side (own the marketplace or be a seller).
In a mathematical sense, the relationship isn't as much between the absolute level of the economy and prices, it is the tendency of the economy and the prices. You should look at the first (maybe second?) differentials.
Furthermore, values like GDP are inherently lagging. They show data that has happened months ago. There's almost no new information content in that number. Yes the number is bad, but everyone knew it's going to be bad. It sounds like (judging by the market action) that it wasn't worse than consensus.
Now, all the above is viewed through a lens of efficient markets. Reality is again more complex. As it has been pointed out, the price is not just driven by expectations about the economy or stocks, it is very much driven by central bank and government action. Easy money distorts prices. When Tesla which makes a puny 400k cars a year and has just about stopped being loss making is priced higher than VW which makes >6 million cars a year and made $17 billion, something is off. Let's put that into context, Tesla shares have priced in decades of non-stop geometric (20% YoY) sales growth to justify the _present_day_ valuation.
Don't think for a moment that traders don't know this. It's absolutely a game of musical chairs and they know it. Everyone, and I repeat, even the most boring, backwater pension fund board knows that this is a bubble. Everyone is participating and hopes that when the music stops, they'll have already made some safe haven stockpile to weather the storm.
"Sales of monitors increased by 73 percent compared to last year, PCs were up 53 percent, printers were up by 61 percent, and microphones were up by a massive 147 percent. Chromebook sales are also reportedly seeing triple-digit sales increases, which makes sense given how popular they are in classrooms.
Underpinning all this tech is a 70 percent increase in the sale of networking equipment. Although not detailed in Baker’s tweets, we’ve also seen a shortage of webcams, leading to skyrocketing prices."
It does look like some businesses besides medical equipment manufacturers have benefited. I'd be shocked if other things like sewing machines haven't seen huge growth in sales, also.
I want to add emphasis on (2). The effects are not spread out uniformly across all businesses. The hard hit businesses including restaurants, bars, and hair and nail salons have seen almost all of their business evaporate. You're not going to find the corner nail salon in the S&P 500.
A related assumption is also that government bonds will be a less attractive alternative place for investors to park their money.
The employees of these businesses also consume products from large cap companies. Who is going to buy things if they’re out of work?
I'm not without hope, but I fear we're going to see a lot of otherwise great businesses (breweries, bakers, barbers, spas, bars, restaurants, etc) go under and not get replaced by businesses of the same caliber anytime soon. If my barber closes I'll keep cutting my own hair. Same with my favorite local bakeries, restaurants, breweries, etc. I certainly won't start eating Applebee's microwave dinners and sugarritas just because they're the only joint in town.
I've diverted a significant portion of my savings due to this pandemic towards my retirement, but that actually has a small deleterious effect on my local economy as it is not strongly exposed to greater market forces as I'm reducing the volatility of money in my locus. I'm sure that I am not be the only one making choices like this.
It's also at the same level as one year ago. The economic situation, and outlook, is surely worse than one year ago? What has improved is the Fed inclination to make it true that stonks can only go up.
April is in Q2.
A key detail from the Alphabet earnings: there appeared to be different performance trajectories for the brand and direct response components of their advertising. Direct response continued to have substantial year-on-year growth throughout the entire quarter — can be explained by brands now directly reaching people at home under quarantine. Brand advertising growth accelerated in the first 2 months of the quarter, but began to experience a headwind in mid-March. Snap's earnings call appeared to include the same observation, from Evan Spiegel: "In the short-term, we are shifting sales resources and pulling forward some investments in direct response to better serve the advertisers who are trying to reach our audience during this time…".
Additionally, Alphabet obviously also makes its money through Google Cloud Platform, whose compute usage will continue to pick up as more and more people consume online content at home. The net argument is that, even in Q2, Alphabet might come out looking stable because it is not as exposed to the downsides of COVID as, say, Twitter or Facebook.
THAT is what I mean when I say "we'll see".
At the moment, the stock prices of health care are up +5%, consumer staples +6.5%, and information technology +8.5%. Energy is down -50%, consumer discretionary -27%, and financials -22%. Due to this, the composition of the S&P500 has dramatically changed, most of its underlying capital is now in higher priced assets in the former list, rather than the lower priced assets in the latter list. Because the S&P500 is a capitalization-weighted index, the total market value reflects this.
Honestly this is all just a giant advertisement for investing in index funds.
And the only thing that can explain where the stocks are now is that the Fed has pushed 2 trillions of liquidity into the market in matter of weeks, which is just unprecendented (the previous QE were much more gradual) and that lifted all asset classes.
But at one point stock prices will need to get back in line with earnings. I don't really hear anyone talking about v-shaped recovery anymore.
That's not entirely true, the composition of the S&P500 has pretty dramatically changed in the last few months[1].
If you look at the linked chart most sectors are down — energy is -50%, consumer discretionary is -27%, financials are -22%. However, a few sectors are up — healthcare is +5%, consumer staples +6.5%, information technology is +8.5%.
So with shelter-in-place and quarantine, it makes sense that the world's demand for oil and travel is at all time lows, and the stock prices reflect this. Instead, the demand is now almost entirely online, on the internet. Nearly every IT sector company is surging.
Even real-estate is down, as expected (fewer moves happening, less commercial leasing), but it appears to have a high variance[2]. Why is that? There are actually a few real estate companies on the S&P that are doing really well: $SBAC (operates wireless infrastructure), $EQIX (specializes in datacenters), $AMT (wireless and broadcast communications infrastructure), and $CCI (shared communications infrastructure).
So, many sectors of the economy are down, as are most companies. The current pandemic has pushed more capital to businesses which operate online. So the reason why the market cap of the S&P500 hasn't changed dramatically is because the distribution of the money underlying it has. The S&P500 is a capitalization-weighted index.
> But at one point stock prices will need to get back in line with earnings. I don't really hear anyone talking about v-shaped recovery anymore.
This week a lot of tech companies are reporting their earnings. Alphabet announced a 13% increase in revenue. If other tech, communication infrastructure, consumer staples, and personal health companies report similar earnings, then this whole thesis will be validated: the S&P500's current market value can largely be attributed to a flight-to-quality, where the "quality" is pandemic-proof stocks.
That's super interesting and makes a lot of sense. However, could you elaborate a bit further? Suppose we have an S&P 5, if the top 5 companies remain the same, but they on average do worse, we'd see the S&P 5 go down. You seem to imply, if I understand correctly, that the S&P 5 is not down as much because 1 company did really well and stayed, 4 that did poorly left and got replaced by 4 companies that did really well, too. Thereby the S&P 5 changed its composition.
And that makes some sense. However, that would mean that if you had an all-world or all-us stock indexes, which did not exclude any companies dropping out of a top 100 or top 500 or whatever, would have to see a large drop.
And I'm not really seeing that. These stock indices track roughly the same shapes as the S&P500, with perhaps few percentage off, but nothing substantial.
No that's not what's happening. Think of S&P 500 index as a basket of stocks. What does that basket look like? If I buy one "unit" of this basket, does it include 500 shares of stock, across the 500 companies? NO. The distribution of the basket is weighted, and it's weighted by market capitalization. So if all stocks were worth the same, you would have a unit amount of every single stock. But if, say, 5 companies do really well and 5 companies do really poorly, 1 "unit" of the S&P500 basket will actually include more of the "really well" stocks, and less of the "really poorly" stocks. The capital is automatically reallocated based on the market capitalization. Because of this, the market value of the S&P500 has stayed relatively stable.
> And that makes some sense. However, that would mean that if you had an all-world or all-us stock indexes, which did not exclude any companies dropping out of a top 100 or top 500 or whatever, would have to see a large drop.
Again, that's only true if this index is naive enough to not apply any sort of weighting. Most indexes in the world are weighted indexes, in fact we are generally instructed that indexes that do not apply any sort of weighting are bad indexes.
The market doesn't need to reflect the reality when you have an excess of cheap cash on the market.
The market incorporates news quickly, such as that there is a pandemic and it is going to have bad effects. Then it essentially forgets about it. I suspect most of the 12% is a response to government actions to control the pandemic and to the recent news that it is coming under control. You will see another drop if relaxing controls leads to another covid spike, and when economic effects appear on corporate financial reports, and when long term job losses are reported. Those are perfectly foreseeable, but in the meantime the market will likely go up as the memory of why they went down in the first place fades.
I thought I'd look up the performance of various indexes for the past month (as of the time I looked them up):
* S&P 500: +15.2%
* Dow Jones Industrial Average: +14.1%
* Nasdaq Composite Index: +17.9%
* Russell 2000: +21.7%
* Russel 3000: +16.0%
* Wilshire 5000: +16.3%
I then looked at the YTD, and didn't bother comparing them because they all essentially looked identical to one another.
Note that the DJIA and NDQ are mostly contained within the S&P are they are highly correllated. Weighting aside (I'm not actually sure what differencs their might be), the S&P is contained in R3k and W5000, but not R2k.
So no, I don't think the idea that Apple and Facebook are doing well (thus keeping hte S&P numbers inflated) holds weight. In fact, the Russell 2000 does not include the top 1000 companies (like the Russell 3000) and shows the highest return for the past month.
Rather, it seems like all of these indices are correlated. It reminds me of the Hillary Clinton autoregression of prediction markets during the 2016 election: immune to new information.
The easiest, and best, comparison for this is to look at the S&P 500 vs an S&P 500 equal weighted index (where all stocks are weighted equality, instead of weighted based on market cap). Over 3 months (i.e. just before the market peaked) the equal weighted index is down almost 15%, while the market cap weighted index is down just over 10%. This is clear evidence the larger companies are significantly outperforming the smaller ones.
This is despite the economic slow down as B2C companies losing 20-100% of their customers and B2B companies lose their B2C customers who no longer have income.
Wait 'til the music starts and there's a scramble for seats.
You meant 'stops'.
The 17 min documentary from Netflix might be interesting here: https://www.youtube.com/watch?v=ZCFkWDdmXG8
If you're interested in preserving purchasing power 15 years from now, would you rather hold dollars or things today?
As a value investor, all of my theses were blown out of the water by the unprecedented Fed intervention. It is an environment in which the fundamentals are uncertain. I'm standing pat and waiting for things to make sense before moving again.
The trailing (!) S&P P/E is greater than 20 right now. The Fed is supporting prices above their historical mean/median of 15. It makes zero sense, from a financial standpoint, unless the market is pricing in substantial inflation.
Pretty much this. The Fed is backstopping losses. Betting against them post-2008 is a tough position to be in.
It's especially galling because the people pushing for these nigh-Stalinist levels of fed intervention and central planning (look how much support oddly favoured industries like manufacturing and coal get) are also posturing as champions of the Free Market. It's like we can't make any progress because nobody in charge is willing to argue in good faith.
2. Fed helped and did what they are supposed to, which is good for everyone.
3. Market is forward looking and it should be, otherwise it would be dumb. In other words corona will pass, it is not the end of the world and if stocks went too deep, potential earnings from stocks within 5-10 years down the line would be huge, so anyone looking at that timeframe would be buying at discount.
High p/e does not mean things are overvalued. It means whoever buys into market estimates strong future potential. Now knowing that you can start to argue whether they are over or under estimating.
Good for everyone. Much better for asset holders in a relative sense. Populism will continue to rise.
No, it's just pricing in low returns across all asset classes (to simplify, low interest rates) - assets are priced by excess returns not absolute.
There's nothing unreasonable about a P/E over historical norms if you think interest rates will continue to stay well below historical norms.
It is paradoxical that a sputtering economy can make equities worth more cheeseburgers, rather than fewer, but I see the logic. At some point, given the choice between a low-yielding equity and a cheeseburger, I'd rather have the cheeseburger.
For sure. People are not factoring in the long-term interest rate here - they should look at the risk-free T-bill rates in the 1980s and how equities performed against them, and what we're looking at as well.
Now a month later, my initial instincts don't seem so wrong anymore: My portfolio is doing fine... All I missed out on was a bunch of theoretical day trading gains.
(Too bad the things that really matter, like my friends that run local businesses, and everyone's mental health, haven't fared as well)
https://howmuch.net/articles/price-changes-in-usa-in-past-20...
You wouldn’t bet the economy will be normal by the end of the year but you might bet others think it might.
It's going up because poor people are being forced back to work.
It's not that they're merely different, the modern stock market bears almost no relationship to "the economy". It's HFT algorithms all the way down.
This is the most optimistic market participants (bulls) buying at low prices and creating momentum that others follow.
Waiting for them at higher prices are the pessimists (bears) ready to sell into the rally.
Since there really hasn't been a capitulation, where everyone who would ever sell actually sold, it's likely the bears are still in control. I think some people are mistaking the extreme volatility as capitulation.
I have heard this before, but I am having trouble feeling this. How do you determine capitulation? We had several days where trading was halted for a time due to steep losses, and 3/16 was the second biggest percentage loss in history (for the Dow at least).
If that isn't capitulation, what is? Hitting the 20% circuit breaker a few days in a row? Only in 1987 has the market fallen more than 20% in a day.
One reason I think the market is rising is because "everyone who would ever sell actually sold". Therefore, only the eternal optimists are left; the pessimists are sitting this one out.
Perhaps the Fed intervened early enough to prevent a retest of the bottom, but I wouldn’t count on it.
People were saying that when the market jumped back above 2250. It's improbable we'll get that low again.
The word 'recession' is essentially meaningless without knowing the impetus for it.
The 'outsourcing of Jobs to China' is a huge, permanent, secular shift that may affect stocks one way or another, but the 'coronavirus' is something I think business believes we will recover from quickly - for the most part.
Tim Cooke told Trump he thinks it will be a 'v-shaped recovery'.
But remember that this recession was 'self imposed' in the sense that we ordered businesses to shut down. We can open them again just as quickly. Obviously that won't the entirely the case but I think this is the sentiment.
When a new CEO takes over a business, he might 'write off' a bunch of crap. Even though the company loses money that quarter, analysts see it as a 'positive sign' because the company is getting rid of dead weight on their balance sheet. So like a 'one time charge' type thing.
I think markets are seeing corona as a 'one time charge'.
This isn't about what people want to do. It's about what they will be able to afford to do.
Point being, the markets are seing corona as a 'flash crash' that will take some time, maybe 18 months to re-adjust, but it won't really hold things back long run.
If someone hits a vaccine the markets will go on a tear.
More important than anything though is that the market right now is absolutely rigged. It's not just irrational and forward looking, it is completely rigged. Central banks all over the world are directly propping up the market up. The market has never been more of a ponzi scheme for the rich than this exact moment in time.
also, even if there is a decrease in earnings, interest rates are also lower, making stocks more attractive.
The market is still down from overall highs. We're not as far down as we were since we don't think it's going to be as bad anymore as we had feared. For 500 large cap stocks listed on US stock exchanges, perhaps about 12% better.
Also, in any recession situation, there's very high volatility. The days with highest stock gains tend to occur right before and during recessions. Even if there's a net downward trend, we'd expect things to be swinging all over the place as people keep overcompensating to the daily news
A significant number of S&P 500 investors (roughly 40%) hold their investments in retirement accounts. These people are not going to sell unless forced to because they lost their jobs. If you're looking for a huge drop in the S&P 500, then keep an eye out on laws that allow for penalty-free withdraws from retirement accounts and reports that Americas are taking money out of their retirement accounts to live.
Also, there are plenty of people betting on the market going down.
https://www.fedweek.com/issue-briefs/covid-19-stimulus-bill-...
The S&P 500 was up 29% last year. It's now back to the level of October last year - when there was no pandemic or economic crisis. So you could say that the market is remarkably blasé about the current situation.
This may also help explain why many people are terrified of the wealthy getting less wealthy: it'll cause a massive market correction as the demand for investment vehicles decreases to a more reasonable level.
I don't think any of the market growth from this month reflects actual economic growth, most just optimism or perhaps reined-in pessimism.
It feels like this is trickle-down economics again. Bail-out large companies by issuing cheap money, stock markets stay pumped, big companies don't go bankrupt, and hope employees don't get fired, and give each individual about 1 week of average income in the US as a little boost.
Meanwhile, 20% of people have last their jobs, the $1200 hasn't arrived or was already spent.
Fed balance sheet increased about $2T, and Congress spent $2.2T so far with more to come. That's at least 20% of GDP ($20T). Optimistic forecast is that the economy shrinks like 30% of GDP, so that's a 10% net reduction in NOMINAL spending/earnings.
SPX is down like 15% from it's previous high. The market seems to expect things to return to normal next year, which is probably short-sighted, but it's a market.
The real value of any company is down because it's producing less, but the nominal price of the company is inflated by the government spending. So the price of SPX is is not insane (if optimistic), given the government's actions. No comment on whether the actions themselves are sane.
The S&P/Gold Spot charts will be the interesting ones to watch over the next few years. While S&P shows consistent 6-7% returns historically, that's valued against the dollar. When you chart it against gold the returns are closer to 3-4%, and there are periods where S&P goes down in value against gold for years at a time.
So the second quarter will be a better reflection of the impact of shutdowns and changes in consumer behaviour/travel, but we won't see figures for that for a while.
Almost more worrying, 20% of the value of the S&P 500 is now concentrated in the top 5 tech stocks, which are vulnerable in these conditions (advertising spend is dropping dramatically and unemployment is rising).
https://www.cnbc.com/2020/01/13/five-biggest-stocks-dwarfing...
Entirely possible the floor is a temporary illusion and falls out over next 3mo, but the market is betting that won’t happen (I don’t know why, I’m not an expert on ads)
Do bear in mind those google results were for a quarter which was pretty much untouched outside China.
Except the economy was impacted, since manufacturing in China was slowed during the first quarter.
And that’s not even including the drop in travel and supply chain difficulties, which started earlier still.
The perception many seem to have is that everything is going to go back to normal in a month. But some businesses and jobs are just... gone. This will absolutely impact demand and this will be much slower to recover.
I was also surprised to learn that S&P 500 earning shave been flat since 2014 while the market has gone gangbusters. That had to come crashing back to Earth eventually.
Also, some things like social distancing are here for the long term. I've already gotten emails from airlines saying they won't be filling certain seats on the plane. It's probably going to be a lot nicer to fly in coach, which I guess many will enjoy, except it's going to have to get more expensive. Less passengers, same plane, higher price per passenger. It's just simple math.
And who's going to be traveling anyway? Business travel (the lifeblood of most airlines) is going to take a long time to recover.
The economy just doesn't shrink 5% and everything is back to normal the next month. People who think so are hopelessly naive or just plain delusional. And that GDP contraction isn't going to end here.
I was also surprised recently to learn how flat earnings have been. The stock prices going gangbusters can be explained (at least partly) by earnings per share going up due to stock buybacks. If you go look, most companies have significantly fewer shares outstanding than they did in 2014.
It's quite impressively small really, considering everyone is sitting at home, and many aren't working at all.
[1] https://en.wikipedia.org/wiki/U.S._state_and_local_governmen...
If I get murdered in December, it's not super helpful to note that I was 92% alive on average that year.
you are either dead or alive. Economic growth is a percentage.
The thing that worries me is that by attempting to prolong it as long as we are, we are basically setting up a stage for a greater depression. We already saw 'sell everything' panic in March.
Why?
The same could be said of stock market crashes.
Gadaffi, Sisi, Ceaușescu, Romanovs were not weak by any objective measure, they were happy to suppress dissent and kill their subjects and still had a functioning security apparatus when deposed, ordinary citizens just refused to cooperate. If almost the entire civilian population refuses to cooperate, regimes cannot function.
Killing thousands of people in the name of the economy would also set the stage for an even longer, deeper recession...
S&P500 crashed 30% in Feb/Mar.
https://www.bea.gov/news/2020/gross-domestic-product-1st-qua...
Instead, we see the US Dollar Index strengthening over the last 6 months [1]. The dominance of the United States as a global hegemonic superpower truly cannot be overstated; I'm in awe. We can literally print trillions of dollars worth of fiat and people around the world will give us real assets for it. Not only that, they will give us real assets at better rates than before we ramped up the printing presses. Makes me feel pretty good about the future, to be completely honest.
This policy does cause real suffering, and some would argue never really normalised the economy or led to growth for most of the economy.
I'd love to read about the thesis/explanation you just outlined. Do you have a link or two on the specific topic of competitive devaluation v inflationary challenges and the global conflicts?
eventually we will see a de-dollarization (there is a good book out with this name, which I recommend).
The thing that is really helping the USA now is that even countries that have been diligently working for de-dollarization do not want it to happen all at once. They want to slowly ease out of using the dollar for the reserve currency. I think that this may give us another decade of “owning” the reserve currency - that said, my friends correctly accuse me of over optimism, and I may be wrong about this.
I am worried that QE will eventually lead to a collapse in yields across the entire economy. QE is great at maintaining or increasing the price of assets, but unless the productivity underlying the asset continues to grow, then yields will continue a trend towards 0. It doesn't help that the people who benefit the most from QE, are also the those who never need to liquidate their assets. These investors are perfectly happy to watch the paper value of their assets explode while yields remain the same.
You're mighty free with making blanket statements about what did and didn't cause inflation. Some actual data would make your statements much more persuasive. So far, you have given us no reason to think that you actually know anything about the causes of inflation.
Since treasuries provide almost no return, and corporate bonds are at high risk of default, the money will move into stocks because 1) the US government is hellbent on making sure big companies don't fail and 2) the Federal Reserve is prepared to buy unlimited treasuries and mortgage backed securities at any price.
The fact that treasuries are providing no return tells you that most money is invested there "safely".
The problem of course is that the USG should be making sure small companies don't fail, because that's the actual driver of the economy both for employment and consumption.
The US government has also signaled that they will bail out these debts, so the companies themselves (and thus, their stock) will probably be fine even if they stop paying their debts.
Crazy times we live in.
FRB NY has a GDP Nowcast prediction of about -8% for Q2.
Look, I think the pause was necessary. But economies don't come with pause buttons. We had to do something that nobody has ever done before, and the second- and third-order effects are going to include some surprises.
I'm hopeful that you're right, that we can have a quick and relatively clean recovery, back to (mostly) where we were. But I'm also nervous that it won't work...
We have 20%+ of the workforce losing their income (many who are living paycheck to paycheck) as well as many B2C businesses closing, so we're accumulating debt that will never be paid off.
Even in lockdown the economy is not fully stopped, though, and we can expect a rebound after the lockdown is lifted, but the lockdown will impact more than a single month.
All in all, I think that it is probably a reasonable ballpark figure for 2020 as whole.
They are destructive, painful, cause loss of property, kill things and generally are undesirable. But (to an extent) they are also necessary.
In the Western US fire used to be a regular occurrence. Natives would start fires, lighting would start fires, they would burn until they ran out of fuel and burn out. But this kept forests healthy. There used to be more bigger stronger pine trees and less undergrowth. Somewhere along the line it was decided fire was bad and we were going to set up fire towers and stop fires with maximum effort.
Which was all good, until it doesn't work and we simply can't because there is too much built up fuel and the fire rages out of control completely destroying the forest. The previous fires, while more regular, were smaller because the amount of fuel never accumulated to the levels it does with modern fire suppression methods.
In this analogy we've somehow decided that we are going to stop people from experiencing economic pain at all costs. This is humanistic. And we want things to keep growing and we don't want to see destruction. But what happens is a lot of trash builds up. Malinvestment. Corruption. Paper profits over actual production. Unlimited credit spent on consumer items. No personal savings. No problem, firemen Uncle Sam and the Federal Reserve are here to save the day! And no one can argue with this happening because who wants to see anyone get burned through no fault of their own?
But (just to torture the analogy) what I suspect will eventually happen is enough malinvestment, corruption and lack of responsible behavior will build up they won't be able to put the fire out. No one will. And it will burn the system flat to the ground instead of just clearing out a little brush and giving space to strong trees.
This isn't to suggest the government shouldn't help in this case. It's an unusual situation obviously. Just allowing little fires to burn prevents big fires later. Everything can't be free to everyone all the time. Reality doesn't work that way unfortunately. Failing to behave ethically, productively and responsibly, failing to save and to prepare for rough times, trying to consume and grow unsustainable without regard to risk can't be forever consequence free. That's not a moral statement, just a practical one.
In keeping with your analogy, what may be wrong with current economic governance is the lack of letting a recession run its course and, for example, letting big banks who gambled too much fail instead of propping them up.
The revolving door between, say, Goldman Sachs and the Dept of Treasury has something to do with this, I think.
The NBER Business Cycle Dating committee explains their criteria and explains why "the two quarter rule" the financial press always talks about is not what they use.
https://www.nber.org/cycles/recessions.html
"The committee's procedure for identifying turning points differs from the two-quarter rule in a number of ways. First, we do not identify economic activity solely with real GDP and real GDI, but use a range of other indicators as well. Second, we place considerable emphasis on monthly indicators in arriving at a monthly chronology. Third, we consider the depth of the decline in economic activity. Recall that our definition includes the phrase, "a significant decline in activity." Fourth, in examining the behavior of domestic production, we consider not only the conventional product-side GDP estimates, but also the conceptually equivalent income-side GDI estimates. The differences between these two sets of estimates were particularly evident in the recessions of 2001 and 2007-2009."
The NBER definition is what gets used in the US by every single government department and academic.
The GDP approach is a lot more concrete. The NBER's approach is more nuanced due to evaluating more factors, but is also more hand-wavy.
> In the United States, it is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.
So it's not a recession unless it lasts for a while. So when the markets suddenly go down, it's not known if a recession is happening, until it's been ongoing. Since we've already been in lockdown for more of Q2 than Q1, its reasonable to expect that we're in a recession. But it's not official yet.
1) A shift to JIT stock control and resource management 2) Shift towards paying dividends over building up reserves for rainy days 3) Valuing of companies with more weight upon public perception and perceived prospects over tangible assets on the books.
With many other factors that all, whilst small, add up to a market with companies driven by a way of working that is more volatile towards any unknown changes as less prepared by design to handle any rainy days periods.
This is also not just a company thing, but a personal thing with the shift in mentality to buy now pay later over save now, buy later. Mostly driven by low interest rates, which have been kept low as a way to manage currency value as a way to manage inflation. That along with any crash saw people with high interest rates as much larger and quicker to drive an economic crash with debts. Though mostly, to drive consumer spending so GDP looks good and the perception helps that countries credit rating. Making them able to borrow more for even less. Consumers with no incentive to save, buy more, borrow more, everything looks nice.
But of course there is more to it than that, but the whole drive towards lower interest rates has over the decades bestowed a culture more included to think short-term and deal with the long-term later and enjoy the sun. This has permeated in many forms and creates what I would call a false economy.
So after the moore's law of interest rates started to hit a limit as they could not shrink any lower, they invented QE, which worked and helped avoid reality of things catching up with the markets for many a time. But then even that can only go so far, so the new tool - negative interest rates.
This of course, all tricks to help balance the books and keep the whole financial system rolling ahead without it taking a reality audit and adjusting down instead of being over valued due to perception of constant growth.
But with a big rainy day that is global, things in any market would take a hit, how much of that depends as many companies will die, but how many of them will be due to the way they operate and not the `market snap`(sorry Marvel, I'm using it) we are experiencing.
If anything, whilst many jobs will be lost, more attention to local sourcing will be given and that will create not only jobs, but more stable jobs. At least to until the fashion of outsourcing comes back and we end up with Detroit mark2.
Also be new opportunities/jobs - certainly be a boom for many internet companies. Also see alas another nail in many a high street and with that, things will change, how much of that does transpire is unsure for certain. But certainly see more things local produced instead of imported, with that production has been slowly clustering globally and in some area's has become centered. So insourcing may well become a word used more than outsourcing when it comes to production and materials resources.
About the only thing I do know for sure, even after this - people will use more soap than before.
This will be many many quarters from now.
Even if today China said don't care that would be 6 months at least. And they are only part of the supply chain.
What don't we know?
How many mines are run by under 10 people. The answer is a lot, there are 50 million artisanal miners globally, 90% of the mining workforce.
South Africa shut down industrial mining for a period and is still not allowed to fully ramp up.
Is oil all ok as it shuts down wells it can't just reopen?
Exploration has been shut down across the board.
No, mining is not ok.
And its only a small part of the supply chain I mentioned. It's just one bit that will not be fully operational within 6 months.
It's profitable to be an economic doomsayer, which is why every single week for the past 8 years someone has said that we're going to have a recession or depression. That doesn't make them right.
Saying the cure is worse than the disease shows a frightening lack of both empathy and objective reasoning. I don't want to construct a strawman, but I worry that what "reopen" people are really saying is "I don't care if X% of the US population dies - as long as I'm not one of them - if it means I can try to go back to normal."
And try is the key word there. I would argue the main thing keeping people at home is not stay-at-home orders, but fear. Correctly-calibrated, sensible fear of getting a disease that has better odds of killing you than lots of other sources of risk in modern life.
Hospitals are now FINANCIALLY INCENTIVIZED to lump as many patients as possible into the "Covid" column. Look at the stats on the sudden drop in historical "Other" column deaths in comparison to the "Covid" column (for this year)...they basically align perfectly....which tells you that hospitals are flagging people who were going to die anyways as "Covid" related.
Hospitals don't need formal covid patience. They need more testing.
There is no drop in "other" column deaths. The excess all-cause mortality rate is actually substantially higher than the number of diagnosed Covid deaths [1].
There are certain commenters on various social media sites posting CDC all-cause mortality charts showing a "drop" in recent all-cause deaths, except that's purely an artifact of the reporting lag (deaths take a couple weeks to show up in the stats so if you try to look up the number of deaths that happened within the past 1-2 weeks you will get an undercount). It sounds like you have been duped by one of those people.
[1] https://www.nytimes.com/interactive/2020/04/28/us/coronaviru...
In case that sounds outlandish, the supposed numbers according to USA Today:[1]
"Jensen said, “Hospital administrators might well want to see COVID-19 attached to a discharge summary or a death certificate. Why? Because if it’s a straightforward, garden-variety pneumonia that a person is admitted to the hospital for – if they’re Medicare – typically, the diagnosis-related group lump sum payment would be $5,000. But if it’s COVID-19 pneumonia, then it’s $13,000, and if that COVID-19 pneumonia patient ends up on a ventilator, it goes up to $39,000.”"
[1]https://www.usatoday.com/story/news/factcheck/2020/04/24/fac...
You should read the real arguments people who want to open actually make. Here are few examples that show that it may actually be better for (some) people to go back to work.
1. People die from suicide, drug use and alcoholism all of which increase quite a bit when there are economic issues. Its not clear if more people will die from this or any increases that could come from reopening. Somebody dying form suicide isn't better or worse than dying from corona virus.
2. Even if people do not die from the above they quite possibly will have a lower life expectancy from having depression, using drugs and alcoholism so people will die sooner. If 10 people die 1 year earlier (from drugs, alcohol, etc) is it worse than 1 person dying 10 years earlier (from virus)? It is a toss up and up to debate. This is of course assuming that somebody wouldn't get the virus and die in quarantine but they would if they were not in quarantine. This is not a sure thing. The person is still going out to the grocery store and could get the virus there. Obviously quarantine is not stopping everybody from getting it.
3. If somebody has the antibodies it appears like they will not get reinfected (at least until there are enough mutations so probably this season). If those with the antibodies go back to work there would be no increase in deaths. In fact it would quite possibly lower the number of deaths.
4. As far as I know there are no vaccines for any corona viruses. That could mean that this virus won't have a vaccine. The only way to stop it may be to build up herd immunity. This means we need people to get infected. Why not let the people who are least likely to die when they get it go back to work.
The death rate is actually far lower than we initially thought, we can see this from all the antibody tests coming out. 1/5 of NYC is now estimated to have already contacted the disease.
The system is entirely broken.
In fact, obesity is so bad in most first world countries, people are calling it an obesity pandemic (sounds familiar).
Does that mean the government should force McDonald's to serve healthier foods? And force McDonald's to stop using all the shitty ingredients and chemicals they put in their food?
Or maybe the government should regulate Coca Cola, which is infused with so many chemicals that it is a proven toilet cleaner?
Hundreds of thousands of people a year die from obesity, because of these food corporations taking advantage of human taste buds and making these terribly unhealthy foods which taste great and provides an overwhelming amount of calories.
If the government makes it illegal for people to consume over a certain amount of calories or forcibly regulate certain fast food or junk food companies to make better food, I'm sure they can save hundreds of thousands of lives from an early death to obesity.
Another example - hundreds of thousands of people die from vehicular accidents per year in the US. Should the government quarantine all cars? After all, if we don't have cars, there would be no deaths from car accidents.
Fact of the matter is, the government can regulate many things in an attempt to save lives, but there are many consequences, especially on the topic of individual freedom.
Me personally, it's not about saving the economy per se, it is more about having the freedom to choose what I want to do. I want to be able to eat like shit, I want to be able to drive, I want to be able to run my business when there is a somewhat dangerous virus running around.
"Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety." - Ben Franklin
This is literally "but what about ME?!???"
There's a fundamental difference between the underlying freedom that facilitates a choice to exist and the topic/behaviors relating to the choice itself.
We've been in a recession for a while now, and a global one too. The IMF and other such organizations have been saying it for over a month now. Why has the US been trying to deny it for so long?
April was much worse, without a doubt. Anything between a -25% and -50% GDP decline seems possible for April.
If there was no Coronavirus, then maybe.
With Coronavirus it is just as likely that the economy is going to rebound once the worst of the virus passes. People stopped buying stuff but rest assured, they will make up for it when they finally can.
Apart from the people who were laid off, or spent their savings because they had no income, or lost their businesses because they couldn't pay their debts, or ... well, it's a long list.
People who think the world is just on pause and everything will bounce back to normal in a few months need to look outside of their filter bubbles.
Maybe pump up the economy with trillions of dollars in credit but doesn't this sound like a bubble waiting to pop?
I am also putting off repairing my car until after all this passes. Yes, car repair shops may be at loss now because I decided not to do business with them, but my car is still broken and I will probably have to pay premium to get my favorite mechanic to take a look.
This is "economy" we are talking about. It is an average over a lot of individual cases. It does not care that a lot of companies will die if the ones that survive get more business.
We're a massively long way from that, plus the contrarian ignorance embedded in GOP politics now that are allowing / half demanding their cities open back up for business are going to all but ensure the USA has the biggest death / infection / economic hit of all of the countries in the world.
Will people resist sheltering in place until the end of the year? I for sure won't. (and I'm not in the USA).
When things recover, a lot of people will be sinking money into late rent payments and credit card bills, not spending.
A lot of people cleared off their credit cards of anything not critical. Will I go back to the gym? Maybe. Will I turn back on Amazon Prime or half the other subscriptions I cancelled? Nope. Will I eat out as much now that I've had a month and a half of eating healthy at home. Probably not.
I cringe when I think about how much money I'm spending on food and how unhealthy I'm eating. But I can't stop, I'm addicted to food delivery wtf.
But I bet you are wrong. The destruction of the energy industry will last into 2021 and that alone will drag the economy down. There are also 26 million people who have been out of work and some non-zero percentage of those people won't be able to find work when or if the national economy is full reopened. Then there is the phenomenon of people retracting from spending after big financial events.
...and people are going to be scared for a long time, probably until there is a vaccine. I saw Reuters poll yesterday that indicated 40-60% of people would not go to the movies, a concert, sporting event, conference, or other large gathering until there was a vaccine. To expect that there won't be a trickle down impact from people retreating into their homes is... optimistic.
...but I hope you're right. The pessimists (me) dominate the headlines but the optimists are right more often.
I think people underestimate how difficult it is going to be to fight the virus. I think it is pretty much too late now. Only early and very decisive moves would have been able to stop it, the way China did, but it is way past that point.
But, I think we underestimate how people can learn to live the new normal. There will be people hit very profoundly, but overwhelming majority will adjust. We have maybe stopped spending for a bit fearing the worst, but now it seems we already reached the worst and so people are going to learn and resume their lives.
If as looks likely they trail on for months, the second order effects will mean that unemployment and misery spread from industries like travel to every other industry (for example no airlines means no advertising on travel, which means Google takes a huge hit on profits Q2, which means they freeze acquisitions, which means funds are reluctant to invest in startups as there are no exits, which means startups in every industry stop advertising, which means Google suffers more).
So recovery may not be quick unfortunately, even well after Coronavirus is mostly over.
However, I think two factors make that unlikely now. One is the inadequate, spotty government intervention. They should have strongly pressured banks and landlords to just extend mortgages and defer or suspend rent. They should have encouraged utilities and other large, stable suppliers to stretch bills. And then they should have paid workers to mostly stay the fuck home.
The other is inadequate, spotty government response to the virus. When you look at SF and Seattle vs NYC, it's pretty obvious that strong, early government intervention can make a huge difference. And when you look at S Korea vs the US, it's even clearer. If we'd had good test-and-trace capacity ready, or if we'd locked down while quickly developing it, we'd be done with things by now. But governmental half-assing of this means that we're looking at a much larger impact than is necessary.
I think the first failure means that both businesses and consumer spending will be slow to recover once the crisis is past. And I think the second failure means it's going to be a much larger crisis. So I'm now expecting a much more significant reaction than I was 6 weeks ago.
If the future is bleak, they won't have confidence, and cuts their spending, which reinforces the prophecy.
There's no way out of this loop except by massive government intervention. The great depression only ended because of WWII. Now, hopefully we don't go to war this time, maybe try going back to moon?