
This Is Not a Recession. It’s an Ice Age. - spking
https://www.theatlantic.com/ideas/archive/2020/03/quantifying-coming-recession/608443/
======
Barrin92
I think there's a difference between an economic depression for fundamental
reasons or say overleveraged finance and due to an exogenous shock like this.

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

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

~~~
panarky
_> even if businesses are closed down temporarily, no assets are lost_

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

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

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

~~~
Barrin92
None of those intangibles are lost either though. The visionary chef is still
going to be a visionary chef once the pandemic is over and things return to
normal, it's not like knowledge workers or artisans all turn into permanent
forklift drivers or something.

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

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

~~~
nate_meurer
> _government can and will step in to stabilize demand._

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

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

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

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

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

------
Zenst
Only 30 days ago I was pondering the thought - will this virus be the catalyst
that causes a global financial recession:
[https://news.ycombinator.com/item?id=22363059](https://news.ycombinator.com/item?id=22363059)

Interesting how trains of thought have quickly changed in such a short time.

