samsonradu

While it sounds doable in theory, it’s hardly doable in today‘s (well, yesterday’s) market conditions.

Low interest rates and an abundance of cheap money looking for yield distort the environment. Your debt-free, slow growth company will be wiped out by some bilion $ valued cash-burning startup.

Armchair economist here, but isn’t Japan a surplus country with a very strong (safe-heaven) currency? Does that not impede inflation to take off?

https://tradingeconomics.com/japan/current-account

On a more global note, each economy is different and one can’t expect the same results from similar measures. The MMT advocates saying that ‘The economy is not a household’ and ‘Deficit does not matter’ advocate for a very dangerous path to walk for many countries that can’t print a strong currency.

There was this joke running on Twitter:

If aliens invaded us today our first reaction would be to lower interest rates.

Then it would be 70% accurate

I'm guessing they travel a lot and meet/shake hands with people all around the world?

With the recent movement restrictions I would also expect the car crash death rate to fall considerably so the numbers might be skewed. For 2018 there were 25100 deaths reported for the 28 EU states [1].

[1] https://ec.europa.eu/commission/presscorner/detail/en/MEMO_1...

I'm sure a buyer can be found at the right price, it's called supply and demand.

We wanted a free market for housing and ended up with EUR 500k studios in Paris. Can't people wrap their minds around the fact that house prices also go down?

> Usually they don't say the quiet part out loud, and yet here we are.

I can’t wrap my head around this. Why would any sane person say this out loud, regardless of their opinions?

Don’t these people have PR consultants around? What am I missing?

They can always sell their property and rent for a while to weather the storm. Relative to the tenant, at least they have something to sell.

Joke aside, you’re spot on in that the economy can only bear a certain level of rent-seeking. That level is going down now, which might also be seen as a return to normal.

Pumping money in ETFs and real estate (aka passive income) can’t enrich everybody, productive output is required.

I don't mean to be rude but relying on collecting month-by-month rent from your tenantS to buy your groceries seems like poor financial management.

You've bought an asset which is not returning as expected for the time being, but has for the past n years. What do you expect now, a bailout?

You're right to question this. It has been analysed by every executive body around the world. A few observations:

- The simulation of how this plays out on a 6M/1Y run might show that the economy will go to a deeper hell otherwise. After seeing the medical system overwhelmed and people starting to present breathing difficulties in the subway at rush hour, many will isolate themselves and reduce economic activity anyway - going out/trips/restaurants for a long time.

- The UK economy is not insulated. If the other countries manage to contain the spread - and they probably will at some point - they will have to stop people coming from the UK since they will be very likely to carry the virus.

It's a very unfortunate trade-off but we need to live with it for the time being.

My 2 cents on low inflation:

- Inflation gets 'exported' along with production to countries with lower manufacturing costs (because globalization). So no inflation but no working class either, resulting in income inequality - a problem of its own.

- Depending on jurisdiction, inflation should include or adjust the weight of house prices (Eurozone), education costs, medical costs. These are goods that cannot be outsourced, hence they reflect higher inflation.

- Shrinkflation - https://www.economicshelp.org/blog/24369/inflation/shrinkfla...

And that’s why it’s so close to zero - because there’s the gov/fed safety net.

Sorry but I just can’t see this play out.

Consumption will suffer. When foreign tourists stop booking rooms in Copenhagen hotels, how/why keep people on the payroll? Also, isn’t it dangerous to distort the market to such a level? Maybe there are more productive activities for those employees to engage.

There will be dislocations of the workforce. Considering the ongoing crisis I would take official statements with a grain of salt also. They need to convince people to comply with the rules.

Can’t help seeing the irony of the US being bankrupt by an ilness - someone on Twitter

Indeed, I've also seen some scary declarations. I was thinking if it wouldn't have been better to be more upfront about the planning fe.:

Guys, we either let things run as usual and wait for the virus to spread - and it will spread and damage the economy + the health system to an unknown degree - or we do our best for a while to delay things until we get better prepared to handle the ills.

Emphasise on 'our best' because if we don't then the lockdown will be both bad and useless.

We got your back through fiscal stimulus during this time. As soon as we see that the lockdown causes more harm than it solves we will obviously lift it and try other measures.

EDIT

What I meant with Real Life™ is that I believe it cannot be shut down, it can only be changed. Sure, as we speak, people can't have 3$ Starbucks drinks but will still go to the park (groups of 2 max) and have a chat while walking/running.

I think everyone agrees (govs included) that this situation is temporary. As soon as the balance inclines the other way as in less damaging overall to actually let the virus spread than current lockdown, the restrictions would be lifted. Why would people not resume life?

We need to get the timing right, how much we can bend the curve without causing more harm. A matter of choosing the lesser evil.

I don't agree here. There's the economy as we know it, which might crash/malfunction but then there is the Real Life™. It might seem that the two are very interconnected and society cannot function without a healthy banking system. Reality however proves different.

Let's take a look at Iran, a country under heavy financial and commercial sanctions (for quite a few years), partially at war, with widespread riots brewing up until just one month ago and with little control over the virus's spread. Life goes on, people still eat, speak to each other and most continue their day to day activities. Same goes for Venezuela or Lebanon.

Sure, some people will need to adjust from selling derivatives to more 'core' activities, but the world will not end. The social system is more resilient than it looks.

EDIT

From a longer-term/big picture point of view, I think it would be healthy to debunk this 'myth' that somehow the world cannot survive a big bank going bust. Let's not mistake preserving status quo for a functioning society as a way going forward.

Well, there is no silver bullet here is it? If we're to solve this we'll probably need to tackle it from all sides - isolation, vaccine and treatment.

My knowledge about industrial manufacturing is slim to none so can someone explain please why is it not possible to (globally) ramp up production of face masks and ventilators to a virtually unlimited quantity?

What exactly is the bottleneck? Are we lacking materials, labour or the technical know-how? Are the factories currently producing them so advanced and hard to reproduce?

> I'm shocked that anything works at all, and increasingly I suspect that it does so only because of the unsung heroic efforts of silent minority...

I also have the sentiment that many organizations/processes are deeply rotten and dysfunctional.

The only explanation I can find for it is that the society/people are extremely resilient and adaptive - much more than it seems. One of the other days I was watching a WW1 documentary, seeing all those scenes with men fighting in the trenches for months and many who were lucky enough not to be killed came back.

Meanwhile I was thinking to myself - Fuck, if I don't have coffee and some food by noon I'm completely useless. The reality however is that under those circumstances people change and adapt. And it works the same in modern society - there are people living on the streets for many many years, under very harsh conditions. Good or bad, working or not things just move on.

I'm not sure you're assessing the damage that Airbnb inflicts to locals and the lower/middle class in major European cities - which also happen to be touristic hotspots.

> Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate?

So buyer beware does not apply to housing? In case you buy the wrong thing or in the wrong place or the wrong time you just get reimbursed?

I’m sorry to hear that but you are spot on. Some decisions require cold-blood and we can only hope we chose the lesser evil.

> Right now there is not much fundamentally wrong with the economy, there is just a temporary setback because of the Corona lockdown.

A very bold claim there. There are a lot of things 'wrong' with the economy, starting with negative-yielding sovereign debt, corporate debt, repo markets, politics interfering with Central bank decisions, PE levels and ending with 30% stock market gains in 2019.

Sure is a hell of an experiment. Can't help seeing the irony of the situation though, 2 months ago it was all climate, "The Green New Deal" and flight shaming. Well, enjoy.

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

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

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

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

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

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

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

Seems to be going as you say:

https://www.cnbc.com/2020/03/15/coronavirus-germany-tries-to...

The S&P 500 returned 30.43% and not that much fuss was made about it - except for 'best economy ever'. Now 20% down is the end of the world and the US administration is floating gigantic tax cuts - so much for price discovery and 'free markets'.

The market after 2008 has been on a historically low volatility and a record bull run isn't it?