
Worst economic crisis since 1930s depression, IMF says - pmoriarty
https://www.bbc.co.uk/news/business-52236936
======
swsieber
At what point does fallout from trying to avoid covid-19 deaths cause more
deaths than covid-19. We're talking domestic violence, starvation abroad (due
to local hoarding, which has begun), and actual crop failure (due to a
shortage of transient labor). There's also suicide, depression, etc.

I'm not even saying let up on all the social distancing measures. I think
social distancing measures are good, but perhaps over the top. Nowhere have I
seen a discussion of where to stop with the measures because of diminishing
returns and increasingly negative economic (and indirect human life loss)
impact.

~~~
lisper
If you assume a mortality rate of 1% (which is probably in the ballpark) then
you can expect 75 million deaths without intervention. So far world-wide we've
had about 95,000 deaths. So doing nothing would result in about 700 times as
many deaths as have occurred so far. I'd say it's probably to soon to throw in
the towel.

~~~
chrisco255
No, because it's unlikely that 100% of the population will get infected. What
disease has ever infected 100% of the population? None. Diseases hit an
inflection point in spread, before they fall off. At any rate, how many people
died in the wake of the Great Depression? World War 2 was indirectly caused by
it. We lost 85 million people when the population was only 2 billion. And
that's not even counting the people that died in the subsequent decades when
communism took over China and Mao and Stalin had their reign of terror.

~~~
pengaru
> What disease has ever infected 100% of the population?

Most people are infected with some form of Herpes virus AIUI, from Chickenpox
to Cold Sores, it's _very_ common.

------
mLuby
And yet the stock market is already recovering. I guess "worst crisis since
Great Depression" has been priced in?

~~~
baby
The increase we’ve seen in the last two weeks make zero sense to me. It’s
almost making me lose trust in the market as I feel like it’s rigged. We’re in
a complete state of unknown, nobody knows when this will be over, unemployment
raises like crazy, the US now realizes that coronavirus is hitting them the
hardest...

~~~
blhack
The increase in the last two weeks is because it's becoming obvious that:

1) The US's response to this was competent.

2) The measures put in place are working.

3) The projections are improving _substantially_.

4) The time horizon is shrinking.

5) We are starting to understand how to treat this.

(+ "in the us").

Two weeks ago we were looking at places like Italy, and extrapolating that the
US could see deaths in the _millions_. A week ago that projection went down to
100-200k, and yesterday it went down to 60k. _Obviously_ that is still a
massive catastrophe, but it's nowhere near the catastrophe we were fearing two
weeks ago.

Additionally, the writing is on the wall that manufacturing is going to be
moving away from China as much as possible in the near future. Much of that,
for American companies at least, is going to come back to the US, probably at
the hands of massive tariffs.

That's all good news for the US economy.

>US realizes the coronavirus is hitting them the hardest.

Where did you hear this? It is absolutely not true.

~~~
andbberger
The US's response could not be described as anything even approaching
competent. This is still just getting started.

Let's check back in a few months and see how this comment has aged...

~~~
blhack
What should the US have done that other countries are doing?

We closed travel early, we started closing businesses early, and we hold daily
press conferences with multiple medical and financial experts that are
directly informing the entire population of what measures they should be
taking.

edit: it seems like the general response to "what should we have done" is "the
_federal government_ should have shut down travel/businesses nationwide".

Is that even legal for the federal government to do? I know that when Trump
floated the idea of travel restrictions for NY, Cuomo called it an act of war
([https://www.cnn.com/2020/03/28/politics/cuomo-ny-
quarantine-...](https://www.cnn.com/2020/03/28/politics/cuomo-ny-quarantine-
cnntv/index.html)).

~~~
three_seagrass
The federal government should have enacted stay at home measures.

By leaving it up to the states, it's been bungled and the covid outbreak is
lasting longer and killing more people. This leads to stay at home needing
extensions and a further drain on the economy.

~~~
jandrewrogers
The Federal government does not have the authority, it is expressly
prohibited. What you think “should” have happened is literally impossible
without dissolution of the US government. This is not remotely controversial,
the Supreme Court has visited this many times. States are sovereign and
autonomous entities for this purpose, same as for most things.

A surprisingly small number of Americans have any understanding of the
structure of our government, a glaring failure of our education systems. It is
no wonder that foreigners have so many misconceptions about the nature of US
government given how few Americans understand it.

~~~
DiogenesKynikos
Germany also has a strict Federal structure, but they managed. They called a
meeting of all the state governments, together with the Federal government,
and agreed on a set of procedures. Each state does things a bit differently,
but they're largely on the same page now.

Why wasn't anything like this attempted in the US?

~~~
jandrewrogers
The US Federal government is similar to the EU; member States have
considerable amounts of absolute sovereignty, their own forms of government,
and their own legal systems. Importantly, the Federal government cannot
operate in a State except with consent of the State, which is withheld in
numerous instances. The Federal government works for the States, not the other
way around, and the States are free to ignore requests by the Federal
government on most matters. Why wasn't the response coordinated across the EU?
Same answer applies to the US. It would be like herding cats. The Federal
government can ask nicely but no one is required to listen

Externally, the US presents a common negotiating front. Internally, it is 50+
separate countries. Americans interact almost exclusively with their State
governments when in the country, not the Federal government. This explains,
for example, why there is no "national" ID in the US. Americans are citizens
of their States, first and foremost, and each State has their own independent
ID systems. What makes the US somewhat unique is that Americans have an
absolute right to change their citizenship among the member States at any
time. There was a time not that long ago when many Americans more closely
identified with their State citizenship than their Federal citizenship.

~~~
DiogenesKynikos
The EU is not at all comparable to the United States. The US is most certainly
not composed of 50 sovereign countries, and the US has a powerful central
government - something the EU almost entirely lacks.

A much better comparison is the Federal Republic of Germany, which has a
strongly federal constitution, much like the United States. The Federal
government in Germany has very little formal ability to impose quarantine
measures on the states, but it effectively managed to do so. The Federal
government called a meeting with all of the state governments, which are
individually run by different, competing political parties, and managed to
have all the states agree to take a similar set of measures.

The Federal government in the United States could have done the same, but
chose not to. The political reason for that inaction is clear. The President's
#1 priority is the economy and, specifically, the stock market. He doesn't
like the idea of quarantine measures, because of their impact on the economy.
He spent two months downplaying the virus, and has now shifted to blaming the
WHO for his own government's failure to contain the outbreak.

> There was a time not that long ago when many Americans more closely
> identified with their State citizenship than their Federal citizenship.

That time was over 150 years ago.

~~~
jandrewrogers
That is a strange but understandable misunderstanding of the relationship
between the Federal government and the States in the US, it is not remotely
like Germany. German states are much weaker both in theory and practice. The
Federal government often cannot intervene unless the States ask them to, and
the States control the terms of that intervention. People raise this issue in
every major natural disaster under every administration, baffled why the
Federal government doesn’t do more, oblivious to the legal and practical
structure of the US government. In my own lifetime there have been many cases
where States actively restrict Federal operations within their jurisdiction,
with full support of the Federal courts.

By convention, the States typically allow the Federal government to operate
freely within their jurisdiction, but it is not an obligation as it is
strictly at the pleasure of the State. When there are strong disagreements
between the Federal and State governments, this is a major point of leverage.
Many Federal programs have been successfully killed by States prohibiting
Federal operation in their States.

~~~
DiogenesKynikos
I'm very familiar with the constitutions of both the United States and
Germany. From what you're saying, I strongly suspect that you're only familiar
with one of them.

The German Federal government is highly constrained in what it can do in many
areas of life, because those areas are under the control of the states. This
is why there are 16 different high-school diplomas (Abitur) in Germany, for
example.

Formally, there is a strong division of powers and responsibilities between
the federal and state level in both countries. But in both countries, the
Federal government wields a great deal of informal power. The Federal
government has access to much greater financial resources, which it can wield
to coerce states. My personal view is that this Federal power is even greater
in the US than in Germany, due to the enormous political power of the
President and the greater financial power of the US government (Germany has to
deal with the ECB, while as Trump has shown, the President can directly bully
the Federal Reserve).

If Trump had made strong statements about the need to impose quarantine
measures early on, that would have had a big effect. There are many
instruments at his disposal that he could have used to coerce recalcitrant
state governments with. Instead, he downplayed the virus until mid-March, and
has continually argued against the shutdown (see his Twitter thread). In
Germany, Merkel met with the state governments, they agreed on a set of common
measures, and she gave a televised address explaining those measures. She's
been pretty consistent in her messaging, unlike Trump. Maybe that's because
she's a physicist, and he's a real-estate mogul, or maybe it says something
about what plays well in each country.

~~~
jandrewrogers
I was born a citizen of both Germany and the US and have worked in both
countries. Using Germany as your exemplar was to your disadvantage. I have
also worked internationally for the UN, and with multiple major governments at
a high level. I am under few illusions.

That aside, you did not actually provide evidence contrary to my assertion.

~~~
DiogenesKynikos
You vastly understate the power of the US Federal government when you compare
it to the EU, and understate the power of German states. I don't know what you
mean by "evidence" here. We're not discussing some sort of experimental
result. We're discussing the basics of the American and German constitutions.

------
TechBro8615
Ok, but how noteworthy is this really? I mean, what do people expect to happen
when 90% of the human race stops going to work for multiple months? And in the
US, the government has incentivized small businesses to furlough employees so
they can collect unemployment benefits. I realize that was not Mnuchin’s
intention, but it seems to be widespread in the service industry, for example.
Because of this, unemployment data is unfortunately meaningless for the time
being.

I’m optimistic we’ll see this elusive “V shaped recovery.” But we won’t have a
clear picture of what this recession really looks like until people are
allowed back to work and we can see what the unemployment numbers revert to.

That said, I’m also worried about downstream effects like changed habits after
quarantine, and avoidance of activities like going out to dinner.

------
yumraj
And the market in the US went up today.

Are people in denial, algos are driving this, or something else?

~~~
tim333
It's not all bad news out there. Didier Raoult was reporting today the results
of testing anyone who turns up and treating with hydroxychloroquine and z-pak.
Looks like 0.5% mortality mostly in the over 80s, and the infection rates for
Marseille as a whole coming down I think from 350 cases a day to 100 or so,
the ICU emptying. I know people are saying it's all unproven but at some point
they'll probably say oh look it actually works, kinda.

------
noway421
'Market learned to smooth out crises, because so many happened' is now least
true than ever.

~~~
ekianjo
Let's check how non-capitalistic countries do after the crisis, for good
measure.

~~~
dang
Please don't take HN threads further in a generic ideological direction. That
leads to the night in which all cows are black and all threads the same.

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

------
galacticaactual
How a pandemic of this nature was not planned for, war gamed, and drilled
until we could gain SOME intuition as to the optimal actions and effects
countries should take to avoid economic meltdown while doing the vulnerable
population right is beyond me. The U.N. was created to promulgate this kind of
cooperation, and here it has utterly failed.

~~~
magicsmoke
The UN was created so countries like the US and USSR could have a forum to
talk with each other and avoid nuking the entire world. How well do you think
the UN would have helped those two cold war superpowers coordinate on a global
pandemic? What you're looking for is a world government, not an international
forum.

~~~
galacticaactual
One would surmise that when such a forum exists, it should be utilized to plan
for global events that affect every country, regardless of what the original
intentions were of setting it up.

~~~
magicsmoke
That assumes the countries of the world have enough common understanding and
respect for each other to actually create and execute such a plan. They don't.

~~~
galacticaactual
One of the great things about HN is that ideas are put forth and discussed on
how much better the world could be, not simply state how terrible it is.

------
dmfdmf
I predicted this 2 weeks ago;
[https://news.ycombinator.com/item?id=22699657](https://news.ycombinator.com/item?id=22699657)

Addendum; With the Fed printing money like there is no tomorrow the US dollar
could lose reserve currency status and if that happens then it will make the
'29 crash look like a cake walk. Overnight the US standard of living will drop
20-30% and slowly grind even lower over the next decade.

Silver lining? It will finally put an end to the parasitic Military Industrial
Complex and endless "regime change wars" (as Tulsi Gabbert would say) but also
end the welfare state overnight. There will no longer be Magic Monetary Theory
money to fight over for either political party.

Losing reserve currency status is not a fait accompli at this point so watch
the dollar/bond market and price of gold as this will tell the tale. Because
there is no real alternative to the dollar at this point, they could still
pull a rabbit out of their hat and save the system. Beware that your precious
401K/IRA money is not your money and is the only pile of cash that the
politicians can use to slow a dollar sell off. Look for bank bail-ins and
mandatory 401K/IRA purchases of US Bonds as cover for Fed bond buying.

