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Ask HN: How bad will the 2020 economic crisis be?
196 points by p0la on March 22, 2020 | hide | past | favorite | 167 comments
I run a ~40ppl business in Europe (Fr & UK). While young and in a trendy sector, we aren't a startup, in that we invested a lot in being profitable and using our profits to fund our growth. I'm trying to get a sense of what's to come.

Our revenue this week is down 20x compared to the average of the past 4 weeks. In France, many local businesses are basically down to 0 turnover.

We can read here and there that the economic downfall will be worst than the 1929 crash. What will be the chain of events? How bad unemployment can get? Should we expect the real estate market to crash too? In 1929, what kind of businesses were affected the most, should we expect something similar here?

Hopefully everyone will keep in mind that bailouts should go to the citizenry at large to resurrect demand, not to large multinationals which need to pay off debt they should have never incurred in the first place (and which was spent on high-risk growth projects or shareholder buybacks).

"Take Boeing. The aerospace giant of course wants a $60 billion bailout. Financial problems for this corporation predated the crisis, with the mismanagement that led to the 737 Max as well as defense and space products that don't work (I noted last July a bailout was coming). The corporation paid out $65 billion in stock buybacks and dividends over the last ten years, and it was drawing down credit lines before this crisis hit. It is highly politically connected; the board of the corporation includes Caroline Kennedy, Ronald Reagan’s Chief of Staff Ken Duberstein, three Fortune 100 CEOs, a former US Trade Representative, and two Admirals, one of whom is the board’s only engineer. Using the excuse of the coronavirus, Boeing is trying to get the taxpayer to foot the bill for its errors, so it can go back to making more of them."


Exactly this. This is not a financial crisis, corporations bailout without Demand will do nothing and we’ll have wasted all that money.

Boeing's market cap is $54 billion. They need $60 billion??

someone should start an online petition that prevents any bailouts to Boeing. Is there any official government online portal similar to change.org? hopefully, the politicians may limit the bailout amount if lots of people raise their voice.

Obama had made an official system like change.org, but Trump killed it. He didn't pay any attention to it anyway, and it didn't really have an impact and was also being abused a bit

They will pass whatever corporate bailouts they want, and they don’t even have to worry about mass protests like occupy Wall Street this time because of social distancing. Who knows where this is going... scary times

More than these bailouts, I am worried about rights being suspended. There is already talks about indefinite holding of people and such. And what if the election gets suspended/postponed?

Scary times indeed

How can giving money to people resurrect demand if people aren't buying anything right now?

People aren't buying anything because they don't have any money or they are in fear of not having a paycheck sometime down the road.

There are plenty of people buying plenty of necessities. That being said, if your job is not essential prepare to be laid off and without work for a long time.

I've heard economic forecasters predict that the economy will spring back once the crisis is over. Their reasoning is that the crisis is an external issue, not a problem with the economy itself, as with the housing crisis. Once it becomes more contained and controlled, there will be work for people to do, and people available to do that work, and the economy will just start humming along again.

I'm more pessimistic. The extent of the layoffs, even if temporary, is just too large to not have a lasting impact. What happens when people with inadequate emergency savings get laid off and can't pay their bills? There's a cascading effect. Maybe they owe a landlord with inadequate emergency savings who now can't pay his mortgage. Maybe they owe a bill to a small business operating on small margins that can't stay afloat. Maybe they owe a corporate behemoth that has aggressively taken on debt and now needs to lay off a bunch more people to be able to pay off that debt. The federal government's mortgage deferral solution might help homeowners, but it's not going to solve the problem that people are going to continue to need to buy things and not have the money to buy them. Even those of us who are fortunate to have some emergency savings will see those savings dwindle down if we're laid off.

And keep in mind that in a lot of cases, when people lose their jobs in the U.S., they also lose their health insurance. Not a great position to be in during a public-health crisis.

During the Great Recession my employer at the time laid off a large percentage of our staff that they had wanted to layoff for a long time. Due to the nature of their industry, the appearance of stability was very important so they never did layoffs before. Any accumulated excess workforce had to be reduced through attrition or gross misconduct excessive enough for warrant being fired for cause. During the recession though, banks were failing left and right, unemployment was going up, mass layoffs were happening every day, and total economic collapse didn't seem out of the question. While the layoff did make the newspaper that day, it was considered a minor story with no follow up. During good times it would have been the top news story of the week and scared many of our clients. I wonder if this current crisis will allow for similar workforce reductions by companies seeing it as a good opportunity to reduce labor expenses without eroding public confidence in their company.

I also wonder whether this obscured and now accelerated "structural unemployment" - combined with a greater acceptance of remote work - will further shift domestic jobs overseas.

I actually wonder if the pandemic will discourage globalization. The NYT Podcast last week had a great segment on pandemic’s negative effects on globalization, specifically, the global supply chain. It postulates that the longer the supply chain is negatively impacted, the more likely corporations will try to localize.

That being said, 60+ days of lockdown, and Wuhan is only now starting to consider easing restrictions. Other countries’ responses have been half measured compared to China, so we might have a longer period social distancing. CDC estimates will need the current measures through July. Other articles I read say we’ll need on-again off-again social distancing for the next 15 months as the virus surges and wanes.

This is my greatest fear as an American engineer.

When corporations finally realize remote work is just as valuable as in office work they'll start to wonder why they are employing US developers for $XX,XXX to $XXX,XXX when they could pay a European developer a low five figure salary in a weaker currency and get the same results.

I'm more worried about tech losing its status as investment of last resort. Who knows how much of the industry is propped up by the flood of easy capital in the last few decades. We just watched all that capital dry up with everyone's liquidity.

Software engineering already went through a wave of offshoring in the 2000s and the whiplash from that was enough to make many a freelancer/agency/startup rich. We learned that many knowledge and service jobs can't economically be offshored because the benefits of locality (whether thats due to the trust from face to face interaction, efficiency of communication, etc, depends on the field) far outweighs the extra cost.

I could see aggregate investment in tech go down, but relative investment no way. Automating all processes with technology gives benefit in all industries. Our skills will be lucrative (relatively speaking) until they figure out how to automate the building of somewhat complex systems.

> tech losing its status as investment of last resort

What do you mean by this? Investment in tech companies by retail/institutional investors, or investment by companies in their own proprietary tech?

> accumulated excess workforce

"If they would rather die," said Scrooge, "they had better do it, and decrease the surplus population."

Being fired is not a death sentence.

For some people it is. It depends on their level in the food chain, and - if they're near the bottom - their willingness to take criminal risks.

Occasionally, yes? It remains unhelpfully melodramatic to talk about layoffs as equivalent to murder.

Our society has a variety of safety nets to prevent this from being the case. It might need more or better safety nets! You can make this case! Nevertheless, I would opine that it works better when this happens at the government level (paying someone unemployment insurance) rather than at the firm level, for a variety of reasons.

I would add that even after the crisis is more under control, people will still avoid any not necessary spending for a very long time and this will keep the economy to restart. Also most of them will have depleated all savings at that point and will want to rebuild them aggressively, further reducing spending

On the other hand i predict there will be a huge surge in tourism and partying.

Also, not everyone has insufficient savings.

68% of Americans dont have enough to cover a $500 surprise bill [0]. A lot will rely on credit availability which will worse that impending crisis.

0: https://www.forbes.com/sites/maggiemcgrath/2016/01/06/63-of-...

I am willing to bet more than 50% of people have not enough saving for a crisis long 8-12 months

More than 50% of Americans making less than $50K say they can't afford to miss a single paycheck.

About 30% say they have absolutely zero emergency savings.

I would expect that the number of working Americans with emergency savings to cover even six months of expenses is fewer than 1 in 10.

Granted, there are options such as HELOC, tapping 401k, etc.

But most of us are grasshoppers, not ants.


That’s an easy prediction I think nearly half of Americans don’t have 500 in savings. That number is 80-90%

Anecdotal but my eBay sales have been way up this last week. Although honestly I suspect it’s Amazon having problems shipping things.

I’m better a lot of other online sellers are seeing the same as people stay indoors and change how they spend. Of the items I’ve sold they were all hobby items.

If people plan to not go out fora while, maybe a hobby would be wise investment to keep their sanity.

Yesterday, I was looking at eBay for lockpicking trainers.

Oh man, lockpicking is something I got sucked into years ago. Lots of fun and really impresses/scares people when they see how "easy" it is.

Sentiment momentum. No one is as confident about the economy as they were two months ago, and forward spending will reflect that.

I believe in a bounce back also, but I don't think we will bounce back to the same state. A couple of examples...

Many companies will have figured out how to run leaner. So post recovery, they may not bring back everyone that was laid off. Lean is good, of course, but unemployment isn't.

Competition will go down. Not every company in every space will survive. So things will consolidate down to the survivors. This probably hits small businesses especially hard. Again, Darwinism isn't inherently bad, but it could, for example, drive wages down.

In short, whatever emerges will not be what we had, and will take some time to adjust to.

That’ll look like a good case for UBI if we go down that route of leaner businesses. Also given that a reduction in consumption was needed short term for climate it might have indirect middle long term positive effects.

A situation like this one may actually speed up the need for many business to digitize their business models.

> I've heard economic forecasters predict that the economy will spring back once the crisis is over. Their reasoning is that the crisis is an external issue, not a problem with the economy itself, as with the housing crisis. Once it becomes more contained and controlled, there will be work for people to do, and people available to do that work, and the economy will just start humming along again.

Though I'm by no means an economist, I'm with this. What's more I have the feeling the economy might come out even stronger here is my reasoning:

A lot of young people are confined to their homes at the moment. I'm talking about anyone in the 25-36-7-8-9 range(being a representative myself). Fair enough, take away the people who have families and children out of that group and you have a substantial number of people. And in that group are the most active members of society, which in normal circumstances, have plenty of entertainment in their lives outside their homes and work environment(contrary to popular belief). Yes, many spend too much time on social media, but plenty do not. In the additional spare time we have (at the expense of time spent at bars, restaurants, cinemas, shopping centers, etc.), many are occupying themselves however they can. Myself including - I'm almost out of books to read. I've enrolled at several online courses, I'm working on personal projects, including writing a book(which I intend to open source once complete).

My point is that in that additional time, plenty of people will have time to work on current and potentially future problems and open markets that currently do not exist. Sure, many will fail, as usual, but some will succeed. The truth is that multi-billion corporations started as black swans. Stephen King has a brilliant essay called "On being 19". I don't remember the exact quote but it went something along the lines of "When you are 19, you believe that the whole world is at your mercy and no one should mess with you". Which is rarely the case. Companies and entire industries around them(Facebook, Google) might have been started by 19 year olds but they are the Black Swans. The truth is when you are 19, regardless of how smart you are, you lack experience and by implications, adequate amounts of knowledge. Most people have tried multiple times when they were in that age group and 99.99999% have failed. Now people with experience have the time and nothing better to do then use it to the maximum. I'm not looking at it as a Black Swan phenomenon but the next step: Antifragility. If anything, I believe that now is the time to pay close attention and use your resources, knowledge and experience to capitalize on it.

building anything takes years. this may plant some seeds but they will take a long time to mature.

Every noncash nonmanufacturing problem can be solved simply by running up debt and sorting it out later. Remember, debt is imaginary! The real part is doing somproductive work for someone else who owes you back. The worst you lose is what you got by working for someone else instead no yourself, not the essentials of life. Debt doesn't hurt anyone. Only forcibly collecting debt payments hurts people. Debt is the buffer against external shocks. That's why it exists and why it was invented even before money was.

What you are saying, basically, is that due to money flow halting, we will enter a deflationary period?

This is why fiscal stimulus in the form of checks to every citizen is a brilliant idea. It doesn’t matter if they “need the money” it matters if they spend it and productive capacity can meet the demand.

In that case, it seems like they should be debit cards with a 6-month expiration date rather than checks.

Granted, it's still possible to cash those out and save the money, but there's a little more friction involved.

The Fed could drop a bag with a million freshly-printed FRNs in it on my doorstep, and I'd simply take the bag and put it in my bedroom. A significant number of people aren't going to spend the money no matter how much it is.

Just due to being on HN, you're statistically likely to be someone who has plenty of savings already.

Most of America does not.

If people are getting laid off en-masse, the majority of those people will, within a few weeks, not have enough money to afford basic necessities. Giving each of them $1k/month would soften the blow considerably.

Giving them $3k/month would, for most of them, get them back close to where they were before the layoff, and keep the economy functioning.

Hmm. I am not sure one can have it both ways. Either most people will save a government handout, or most people live paycheck to paycheck and will be severely affected by losing their job/an economic slowdown.

Of course there will be some people who will immediately save any check from the government, but that's a disjoint set from the people who are in dire need (laid off or reduced hours).

I agree. There is substantial economic damage being done and it won't just undo itself. Lots of businesses are going to fail, those people will not find work so easily as they would have before the crisis. Also, I think this is going to last longer than most people realize. Countries that use this time to get their act together so that they can use South Korea style controls maybe will get their economies restarted sooner. Places where the only strategy is to shelter-in-place until there is a vaccine will see economic disruption for 9-12 months. The damage from that will be staggering.

I’m an economist and I wish I had some guidance to offer, but unfortunately I have none. I’m struggling to get a grip on this situation.

Firstly, though I have not worked there for six months or so, I am Italian (from Milan, in the north, the worst-hit area). The economy there has basically shut down. Consumer spending has collapsed, production has collapsed, and logistics are increasingly untenable.

What can we expect? Six months of this (and some people are projecting up to eighteen months) are going to shut down demand. There’s a term going around now “demand destruction” — I’m not going to pretend to know more than I do, so I’ll admit forthright that I had never heard it until a few weeks ago — that seems to meet the requirements here.

It’s uncertain whether the supply side of the economy will be similarly affected. Probably yes, as governments curb production to slow the spread at the workplace.

Even three months will be dreadful.

Now, let’s think of a few things: governments are stepping in with public support to support businesses, provide liquidity, and support workers that do not have income. That means debt. That means interest payments in future, for those businesses that are fortunate enough to survive. Taxpayers will be on the hook for decades.

The situation is so severe that German economists are proposing a 1 trillion euro Eurobond issue to help support the economies because the southern economies cannot hope to cope with this.

I guess I’ll sum it up thusly: this might turn out to be a “great pause”, but economies and demographics cannot idle without incurring enormous financial costs.

Enormous liquidity injected into the system along with lower production suggests high inflation in the future after the crisis is over. Do you think that will likely happen?

Note: Above is not a value judgement. The measure is necessary to prevent the system from completely breaking down.

To be honest, it seems that the basic tenants of inflation have been violated since the 2007/8 crisis and the subsequent massive influxes of liquidity (primarily through the various quantitative easing programmes), so I really cannot say with any certainty.

There’s an enormous amount of money already sloshing around in the systems, and it seems to be pooling at the top (hence all the inequality).

On one level, somebody could argue that all the typically ‘renter’ activities (rents, licenses, et cetera) should be suspended during the period of crisis to prevent those who “profit from standing still” to absorb more liquidity and boost their wealth whilst the scurrying masses are bled white, but I don’t think that’s practical.

A key reason why this time might be different: A call for helicopter money even among some fiscal conservatives.

Before this, such as in the 2008 crisis, much of the liquidity injection didn’t flow down the bottom part of economic hierarchy. Thus, they haven’t had much increased spending power. So, no inflation of common items. The prices of trophy and other assets preferred by the wealthy did rise up greatly in the past decade.

If the helicopter money plan actually happens in substantial quantity, then inflation of everyday items might occur this time.

...Can you clarify "helicopter money"? That's not a term I've heard before.

It's a term coined by Milton Friedman many years ago


I think it’s a term for any kind of unconditional stimulus; everyone getting automatically it as if it was cash dropped from helicopters.

I read an interesting article a while back that posited that we have seen inflation but it's been masked in the regular basket of consumer goods by cheap imports from China. Meanwhile we have seen significant inflation in housting but it's not really recognized as such.

I second this concern. We haven't had much inflation for years in the US, and I wonder if this crisis will turn it up?

Maybe a pause of all rent activities combined with financing only vital industries could work. The costs would be limited to a few select industries, and while huge it would be nothing compared to gouvernement trying to maintain the whole economy afloat.

Hopefully taxpayers and business wont be on the hook for the loans - it's up to negotiation now. Personally I hope the large corporations getting 'bailouts' would be required to pay back with interest and or government ownership but any company under a reasonable yearly revenue would be forgiven. I don't know but I would guess they call it a loan is so treasury can leverage an appropriation into a much larger loan amount.

One of the things being negotiated right now is a loan in the amount of current payroll to smb's that would be 100% forgiven if they retain 90% employees. They're completely fucking it up right now but that would be great - if the timelines are good (e.g. keep loaning until this is over, the 90% requirement is so long as $ is loaned).

I am hoping - slight optimistic but scared nonetheless - that passes and we could use. It would remove a lot of stress and given we have low overhead (digital services) even if the worst happened it could keep us afloat almost indefinitely.

BUT fucked up partisan delay + Republicans demanding scary terms are create huge uncertainty which will likely hit markets hard tomorrow.

As written it looks like Mnuchin would have full discretion on who gets loans. Who knows what timeframe or bureaucracy needed to get loan. Even the most optimistic estimate of the individual checks is 2-4 weeks which is not quick enough. Doing a SBA loan is a huge process that takes a long time.

What will it take to get the ECB to print money?

For better or worse, most of the medical costs are going to be spent on the older generation. More debt will become the burden of the current taxpayers and then the next generation.

I am not an economist but by virtue of working in the fintech space for many years, particularly in credit, feel this specific point acutely-

"economies and democracies cannot idle with incurring enormous financial costs"

This is what worries me about this crisis more than the myriad other issues, like-

-the end is unknown bc we dont have an antiviral treatment or vaccine, and we dont know how long immunity lasts

-we have generally awful, sociopathic high level leadership (I am in the US) and while local leadership may be exemplary (I am in NYS) the ongoing contagion factor means there is no isolation

-so many entities have already been broken that will never return and the implications from which have not begun to be counted

-we have such an awful information availability and consumption imbalance, which will perpetuate bad decision making

Those issues above I believe CAN be dealt with over time, with study, process, mobilization, etc in the course of this pause.

But that work has to be FUNDED.

We DO NOT KNOW how to fund this without

a) creating future "costs" / "obligations" that will weigh on future flows for decades

b) destroying current asset stores in a way that increases uncertainty

I mean, this is what "assets" are for- they are there as a store to create future flows. So for instance I am in favor of a very long block on evictions and foreclosures- 2 years- because many renters have lost jobs and will not be able to find them, in order to force landlords to, where necessary, waive rent and themselves take out mortgages to pay for their own flows. That is what the "value" of their property should be used for, and in times of strife, drawing down on asset stores is sensible.

But that imposes future costs- the mortgage- and even if the mortgage is at 0% there is still principal that has to be returned. And debts are the highest priority obligation.

IOW, we dont have an economic and accounting system where we can just stop, timeout, change the rules, get back on feet, and start again. In our current model the timeout still has to be paid for in the future. And while history is full of debt foregiveness regimes, those were all local. We don't have even the beginnings of a model to institute a global forgiveness regime.

At any rate, the human side of this looks very challenging, though I have optimism that good wins out- but I worry about the accounting side. The rules have to let good come through.

A comparison I would look to here are historical economic recoveries, after near-complete destruction of physical capital, e.g. Germany and Japan in 1946.

weren't both of those heavily propped up by other countries in the aftermath?

Some thoughts:

- Short term we need government to step in and avoid a large-scale meltdown of businesses that would be more catastrophic than the virus itself. This will likely involve taking equity stakes in airlines etc. Warren Buffet might also be willing to help here again, he has 128 billion USD saved up for times like these :)

- Stock market likely hasn't seen the bottom yet. There will be more deleveraging and panic selling. Long term (10+ years) it's still a good point to buy (perhaps with one third of the capital you do not need anyway)

- Western countries might lose some civil rights that are necessary to quickly control new outbreaks (e.g. analysis of cell movement data to locate all places an infected person visited)

- There will be long-term impact with regards to stricter controls necessary to quickly contain new outbreaks. This will increase costs for a few, potentially a lot of industries (everything travel, potentially logistics)

- I have some fear that some countries which are simply not able to get the virus under control will be disconnected from the rest of the world economy, since no one wants to risk importing the virus from them again.

I hope most of the countries go the way China went in Hubei: Take the most radical measures immediately - i.e. total lockdown, government backs the economy. This will make it possible to lift them after a very short time and affect the economy the least while controlling the spread of the virus.

That's a joke. Big airlines are terrible businesses, Warren Buffet would never invest on them like this, unless he has gone insane. Also, those billions is from Berkshire, they won't invest the money of their shareholders into bad businesses, I don't see that happening.

Second thing is that you suppose that there will be forever lockdowns. We're only having it because the current health system isn't able to handle all the patients given this exponential spread. Once we finally manage to handle it well and enough people get infected and cured(yes, it is also important). We will move on... until we find a new kind of virus.

Buffet's already done it for Delta beginning of March: https://www.foxbusiness.com/markets/buffett-coronavirus-batt...

I'm not assuming there will forever be lockdowns, quite the contrary, but for that there needs to be an effective system for responding to these kind of viruses so there doesn't have to be a full lockdown again. Basically you have to be able to quickly follow up on each case, and this will require things like determining where someone has been the past 10 days or so, and also regular controls (no more flying with any fever?)

As others have said, this is largely a guessing game right now. How swiftly and how boldly governments act is going to determine a lot. In 2008 you had people like Paulson and Bernanke who studied the Great Depression and desperately wanted to avoid the mistakes of the past. They saw those mistakes largely as a failure to act quickly. I’m not an economist, but in my humble opinion what we need is cash in the hands of working people who are losing work at an alarming pace. What I’m seeing is too much feet-dragging, means-testing, and timidity. This is a situation where every second counts, so for the best sense of how this all resolved, once again, pay close attention to how swiftly and how boldly governments act to provide stimulus to help people weather the next 18 months.

Just giving out cash isn't going to fix the problem. It is however one required part of the solution to prevent the situation from spiraling as hard as it otherwise would.

The crux of the issue is that economic activity is severely hampered due to the paralyzing fear of the coronavirus. Even if the government pays out benefits as though everyone remained employed as they were a few months ago, that's not truly economically productive activity. It's an economically-neutral but socially-positive action.

Economic value is generated when people exchange goods (in a better example to reflect modern life, money for goods and vice versa) such that every party is better off. Shuttered businesses prevent this value generation. I live in NYC and most non-food/beverage stores are closed.

I have no expertise in any area, but I would like to put down my thoughts for posterity (and feedback).

I think we will see governments in the coming week or two start doing broad randomised samples of the population for antibodies and realise that many many more people have been infected than previously thought.

Meanwhile fears for the economic consequences will grow larger. Also (hopefully) countries like Germany and the UK will not see Italy levels of death and misery.

Around the mid of April when spring in the Northern hemisphere is really kicking off people will have been socially distancing/quaranting for 4-6 weeks and will be really tired of it.

These factors will start to lessen the public support for social distancing and life will start to return to normal. Big events will probably still be canceled, people will not travel for holidays etc but economic activity will start to pick up in some sectors.

Some sectors like hospitality (which employs many low skill workers) will continue to see very low demand until July/August (or possibly even longer). If the important summer season doesn't deliver, these industries will be doomed. While many other sectors will get a swifter recovery.

A litmus test for the general economy will be sales of new iPhones this fall. I suspect it will be slightly below last year, but not like 50%. If it is, my predictions were completely wrong and we are probably much worse off than I expected.

> A litmus test for the general economy will be sales of new iPhones this fall.

I actually would go with the sales numbers for the new PS5 because:

- People who already have a console and are stuck home will not buy a new one because the cash is not there.

- PS5 is a nice to have but not a necessity. Though the iPhone is in the same category but at a much higher price. The PS5 is estimated to be sold at $470-$499 while the new iPhone is much more expensive $799 up to $999.

- People who don't own a console will likely put this off and buy it next year and focus on more necessities.

- The entertainment industry is hit massively by this crisis, and this will be a good indicator of where things are going.

Going back to the main subject, I believe the economy may well bounce back. The issues that may arise may be more related to security and politics. If things go on like this, there could be worldwide riots, or even revolutions in some places.

Let's just hope a vaccine is found quickly.

How can UK see less numbers than Italy when they imposed a cuarantine much later at the exponential curve? It's just impossible mathematically

These are very different cultures. London allows to work from home, or to be off work when sick, and does not force employees to shake hand or hug as a matter of courtesy.

Besides, the UK didn't quarantine officially much later than Italy. Not to mention that the the larger corporations instructed employees to work from home week(s) before the official lockdown.

nice story, take a look at the London subway today around the news and social media that falsifies all your hopes. Welcome to the harsh reality and good luck.

The tube (subway) has been at half capacity for weeks.

If you're seeing photos of it being busy 'around the news and social media', it's either false, or TfL has overdone it in reducing service and so caused usual levels of crowding.

Excerpts from most recent service update email:

> Ridership on our services has fallen dramatically over the last few weeks.

> Some Tube stations that do not interchange with other lines will have to close until further notice

> From today, Friday 20 March, the Waterloo & City line will be closed and there will be no Night Tube or Night Overground services until further notice. Emirates Air Line will have a reduced service until 20:00 today

> From tomorrow, Saturday 21 March, Emirates Air Line will be closed until further notice

> From Monday 23 March, we will also gradually reduce other services across the TfL network

More here: https://tfl.gov.uk/campaign/coronavirus-covid-

I work in Canary Wharf, the financial district. All the major companies with a skyscraper have their employees working from home now. Quite a few have been doing it for weeks not waiting for the official lockdown. It is a ghost town now.

We of working age need to be thinking of ourselves a the rebuilders.

Let’s get through this, support each other, and be doing everything we can to be ready to spring back into economic action when COVID gets under control.

I think it’s entirely up to the people’s response. The spirit of the country (and govt policies) will determine more about what happens after then pure economics can tell us.

I personally don’t think there’s a good economic analogy so everyone is just guessing.

Yes. I guess the post-WW2 rebuilds of Germany and Japan are good examples of this.

U.S. focus: Right now the biggest issues are demand and liquidity. Demand fell off a cliff. When demand falls off like that it screws up working capital flows so now there’s a huge demand for cash. That’s why the fed stepped into the treasury, money market, commercial paper and municipal bond markets. It also looks like they may try to step into the corporate bond market to keep it functioning. Prior to all this the general consensus was that markets were priced to perfection, highly priced but not unreasonable given growth. The market needed growth to function. The risk of defaults will be delayed a bit but severe when if/it hits. Much of the market is covenant lite so by the time you report financials, break covs, get through the cure period many businesses will have the entire capital structure wiped out. Events like this tend to have lasting impacts on people, it changes their consumption and savings behavior. People will demand that certain industries have more resilient supply chains and larger economies will take protectionist stances in those industries. There’s so much to unpack here...

It's going to be bad for the following reasons:

1) Governments are not shutting everything down fast enough. Many countries are in the phase of "oh, we only have 200 cases, not a problem, look at Italy". They are just a few weeks behind Italy.

2) Some people, especially young ones, are not following quarantines. All it takes is one super-spreader to start another wave of infection.

3) People will run out of money soon. Governments will have a choice of either

    a) printing money

    b) distributing food and meds to everyone

    c) letting people work in masks / googles / gloves
4) Not nearly enough testing is done. South Korea and China are the only countries that did it right. Italy is not testing everyone suspicious (though more than other countries).

5) Most countries are not ready for thousands of patients requiring an ICU. No country is ready for a million ICU patients.

I think our only hope at this point is one of the drugs works very well. People suck.

> 1)

I'm just a rando from the internet but my suspicion is that governments could be intentionally trying to slow the infection rate down rather than stop it completely. If you perform a perfect shutdown with 200 cases, lets say another 400 are identified since, all 600 recover/don't make it, but once you stop the quarantine everything will be back to square one - someone will spread it again eventually.

On the other hand if you let it spread a bit, then shutdown, high but manageable number of people will get sick and recover. (I will be less efficient so some transmission will still occur, eventually ensuring everyone either recovered or died, with as many as possible getting the medical care)

>intentionally trying to slow the infection rate down rather than stop it completely

The individualistic attitudes in the US (and probably Europe, although I'm not an expert there) were never going to lead to the infection being stopped entirely. I can't imagine anyone was actually worried about being too effective in containment.

>I can't imagine anyone was actually worried about being too effective in containment.

It could have been when we had just a few cases, but you're right.

The more effective the quarantine is, the longer it will take, creating more stress on the economy.

UK government was open about that. (It spread faster than anticipated though, so was dialled back and we're now in 'lockdown'.)

There are some trends since the seventies: higher productivity per employee and for marginal groups more and more difficulties to get a job. The pandemic economic crisis accelerates these trends.

Let's have a look at company A and company B. Company A employs many people and is not able to offer remote work. Company B doesn't employ many people and can offer remote work. If these companies compete it is clear that company B will grow during the crisis, and company A won't.

In other words, we have structure change bombed upon us.

CEOs and owners say, let's see, a pandemic and suddenly labor disappears. How can we mitigate such problems in the future?

My hunch is that after the crisis is contained economy returns, however it will be even more difficult for people to have a job than before. If the state doesn't help the people, economy will stay depressed because people are laid off and just don't have the money to buy things.

Edit: many little improvements.

We are in uncharted territory. At this point it's just guesses (educated or not).

Some will have better predictions than others. I'm not an economist so at least a few answers in this thread will be more accurate than my expectations.

Either this thing is "The End of the World As We Know It", or it is not.

Give it another week or so.

This advice does not work.

I have been "giving it another week" for 3 weeks now, trying to figure out which direction it is going to go.

It's unknown at the moment, but I doubt the bad guys win.

Pessimism isn't my style.

Who's the bad guy? Viruses don't have intentions

Some spreading them may.

That's a pretty useless dichotomy. You could say that about pretty much any problem of any size, and it would be technically true.

Enough of the dramatization. It accomplishes nothing but stress.

The one thing I'm confident in predicting is that things won't be as they were.

To what extent is impossible to say right now.

It won't crash now, we are just weeding out the companies that aren't working. Real estate will drop, the money men will become king for a while, manufacturing pulled most countries out of the Great Depression after sometime of struggling trying to get it started.

Save emergency funds and in the next decade of growth and stockpile for the 30s, when we hit real trouble. Find a currency or commodity that won't be washed out, silver kept China out of trouble in the 30s until the US raised demand for it so much that they got dragged in too.

It doesn't have to be bad, on the contrary. Black Death in XIV century have invigorated European economy.

Think of it as much needed reset on multiple levels. New supply chains will be created, new business opportunities. Capital re-allocated. It is going to be wonderfull times.

Also historically plagues allow for great upward social mobility which is kick-start for the economy.

> Also historically plagues allow for great upward social mobility which is kick-start for the economy.

This certainly happened with Europe in the Black Death. I would argue, however, that the present is not a good analogy.

My knowledge of history is a bit sketchy, but from what I understand -- prior to the Black Death, times were rough for ordinary working people. Subsistence farming, in particular, was stretched to its limit; for many peasants, not all that much separated them from starvation.

The Black Death caused a truly massive number of fatalities. Afterwards, when the same total amount of natural resources were available, people had breathing room and the economy was able to expand.

Covid-19, while terrible, is not forecasted to be nearly as bad as the Black Death. The fatality rate is expected to possibly reach 1%, most of that concentrated among the elderly. Although this would be a catastrophe, it doesn't seem likely to have the same direct economic impact. The main economic impact is probably going to come from what is happening now -- bars, restaurants, concert halls, hotels, and such all being shuttered. Especially if this needs to be maintained for a long time.

Moreover, economics are different. So much capital now is concentrated among very big businesses. They'll be fine, especially since there is talk of bailing them out (e.g. airlines in the US). I doubt they'll change all that much, unless coerced by a radical change in public policy. But meanwhile, a lot of small businesses will go under. New ones will start, but I'm afraid (for example) that independent coffee shops will go out of business and that Starbucks will take their place.

I very much hope I'm wrong.

> The Black Death caused a truly massive number of fatalities. Afterwards, when the same total amount of natural resources were available, people had breathing room and the economy was able to expand.

The number of fatalities appears to have increased the bargaining power, wealth and social mobility of the remaining agricultural workers [0], amongst other things.

[0] https://en.wikipedia.org/wiki/Consequences_of_the_Black_Deat...

I think it will fundamentally reshape a few aspects of life - and not all is bad.

Needless, gratuitous (business and other) travel for one - which in turn will lead to much better housing prospects for young people. Treating a house as investment was the most damaging trend of the last two decades.

The loss of accumulated wealth also reduces inequalities.

Wasteful practices will be affected more in all walks of life.

Reducing the carbon footprint is also a massive benefit. We will reduce that more than by any other measure we would have taken.

>the loss of accumulated wealth

If only. I but I think wealthy individuals and companies with huge cash war chests are going to be just fine.

Oh yes, that’s a great example: “so many people died that the two-thirds that survived enjoyed benefits for generations”.

Yes, it’s accurate... but I think it also somewhat misses the point. The unexpected consequences of a mass culling several years down the line probably is of the “extremely bad” persuasion.

According to some historians, OP is right about the Black Death. For example, it has been suggested that it led to the Renaissance. See for example here:


The Black Death was horrific, but had what I would argue were some very positive long-term consequences.

I am absolutely certain that the OP is correct, I don’t dispute it

But telling somebody who is managing a 40-people firm facing 20x revenue drop that “it might work out as well as the Black Death did” is... kind of missing the whole point, to be perfectly accurate.

And how long was the period between the Black Death (1347-1350) and the Renaissance? That’s what matters to the people alive today.

Arguably the same after WW2, so I wouldn't be surprised to see a new generation of 'boomers' if our societies go through that kind of phase again. Pure speculation though, and I'd personally rather hope that aspects of our society can reform without a major death toll.

How many years down the line? Because for the environment, I can’t see anything better than a “mass culling” (since the only way energy and other resource usage will go down is a reduction in population).

How will capital be reallocated exactly? How will the new supply chains be created? We're heading into a long depression. The remaining wealth goes to bailing out and ventriloquizing the failed system until its next crisis iteration.

Through inflation from real estate into productive economy for example.

> Black Death in XIV century have invigorated European economy.

So did the spanish flu. Everyone forgets that we had the roaring 20s ( one of the great economic, societal and cultural growths ) right after the spanish flu.

Odd to bring up the economic gains of the Roaring 20s without mentioning the Great Depression that immediately followed.

There was also WW1 at the same time.

I live in SF. The company I worked at, which you’ve heard of, shed all its contractors on Friday. One week into the shelter in place. i just moved back here to take the gig a few months ago. Now I have a Bay Area rent obligation with little probability of finding a job until this is over, and then some.

I keep saying wait one or two “1st of the month” milestones, see how things look. That’s where my own decisioning is headed.

Chance of 1929-style Economic Depression: ~60% (Recession chance: >95%)

Make sure you have the cash to live properly and satisfy urgent needs if necessary over the next 6-12 months or longer. Only invest the remaining in highly-rated bonds or great stocks with long-term resilience.

The world is facing a liquidity crisis, along with both demand & supply shocks that can’t be easily fixed by governments.

We are in a war with the virus and, in most of the world, we are losing.

Global economy can be rescued only if we can mostly mitigate the virus impact. The other 40% is for the case where we found a way to do that and the liquidity injection & fiscal measures are sufficient.

> Chance of 1929-style Economic Depression: ~60%

How did you arrive at this probability?

You've called it a war, which is just an analogy, but aren't actual wars sometimes good for the economy in certain ways, like generating economic activity? Is there a chance that could apply here?

Though maybe the work of fighting a medical war is more narrow and specialized than the work of fighting a literal war. For example, you cannot institute of draft and make people into doctors in time to fight this. Whereas with an actual war you can stick people on the front lines with a few months of training or put them to work in a factory.

Problem is that in war, you can still go outside in your home country and do work.

Way too early to tell what’s going on but worse than 2008. Everyone is too busy writing bullshit about covid to see the 2nd and 3rd order effects. Italian and Spanish banks have been near insolvent for a good part of a decade they are going to completely blow out. A lot of other Banking institutions will fail as well because levered bets got blown out and we had a 3 or 4 sigma event nobody headges for not to mention lack of payment that will show up on balance sheets 4-6 months from now.

I doubt anyone is going to be super keen on investment in that money loosing miracle startup now money will dry up soon it’s just been so sudden people haven’t really adjusted yet. I don’t think it will be as bad as the depression of 29 though. There is plenty of food available and some limited safety nets will keep people from starving. The gears of forclosure are so slow many will stay in “free” houses for 2-3 years. The real question is jobs, will Americans work the fields? Or Will they just sit on government benefits? Will manufacturing come back? How do we deal with global labor and ecological arbitrage. Honestly I don’t think trump or Biden are going to be capable of addressing these Structural issues so we’re gonna loose 4 more years and risk a second smarter and more dangerous Trump in 2024

The Big One is coming. This is just gonna be a recession, no one is going to lose their retirement or social security this time. Still, big banks like American Savings and Chase are going to be buying up lots of property ("seizing" is probably a better word for it). When The Big One comes, we will all have to forfeit our property to the Federal Reserve, and they will start the cycle all over again.

I think the cycles are getting shorter, because of computers and the internet which allows this manipulation of the economy to literally happen at the speed of light.

It is possible to maintain our current standard of living without the work of the Federal Reserve, but such would require drastically cutting military spending and other uneccesary expenses (conversation for another time). One way to cut the military budget, without actually reducing our firepower would be to merge all branches together into one command structure to facilitate interoperability between machines. For example, military contractors will sell the DoD 3 different copies of the same helicopter with slight differences which make it hard for them to interoperate; you would need 3 different mechanics/computer techs, with 3 different sets of parts and tools.

Specifics about how to make the military more efficient are probably out of scope (and out of depth for anyone here), but I agree we should spend less on it (and I think we could, without making any other changes, and still remain the dominant power by a wide margin)

I think there are a lot of ex-military, active duty, and military contractors using HN at the moment.

If I was running a company of any size and revenue dived by 20x I would probably consider emergency measures. Skeleton crew of only the most essential employees, unpaid leave for the rest (that will accept it) and underline that these are temporary measures to keep the company alive.

Some will inevitably look for and find other work, but if the whole company goes under everyone will be in the same boat. I'd say this is not going away in the near term and if you're not acting like it's a crisis now you may be unprepared for a sustained or even worse drop in revenue.

Just my five cents, obviously noone can predict this with any certainty.

I expect things to get much worst before it gets better, but I do believe some industry will profit of the situation, like food delivery, some will adapt like services switching to remote ans some will strugle and eventualy die.

Well the stock market is now down below what it was when Trump took office, so we've already lost 3 years worth of gains in one month, which is pretty poor.

Goldman put out a note saying the GDP would dip about 9-10.5% over the first quarter of the year, which is almost the worst we've ever seen. And that's a single quarter, a single quarter. US GDP maybe down 20% by the time this is over.

And keep in mind no doctor that I've talked to thinks this will be over any time before mid 2021.

And probably the worst news is that this is the type of drop that won't be V shaped, for all the talk of 2008, atleast it went down and then went right back up.

Most recession affect a specific geographical area or market sector, This pandemic affects the entire world at the same time, which hasn't really happened since the 1970's gas shortages.

The recovery here will not be V shaped, it will take years and years to recover. People have spent their savings just to survive, governments are delaying tax payments and throwing money at the problem.

This recession/depression will be with us for years to to come and will be the worst thing that anyone alive can remember.

Can anyone make the case that the recovery will be quick? Because I haven't seen anyone make that case yet in a believable way.

The US stock market always seems wildly optimistic. It was still near its all-time highs while it was already seeming quite likely that the virus would be a serious problem. The Australian stock market is now at 2013 levels.

On the other hand, once there's a sign that the end of the pandemic may be in sight, I expect that the US markets will overreact on the side of optimism, regardless of the actual economic damage that has been done. Bear in mind that governments are adding to the vast stockpile of paper "wealth" that's already out there, and that tends to cause asset inflation.

No economist, so take that as my personal opinion.

I see two extremes, a restart without to much issues. Laid of people are hired again quick. And after some time of rebuilding savings people start spending again. I would say that is not the most likely outcome, unemployment in the US is rising, this will impact the world economy. Remember, all it took 2008 was mortgage defaults in the US and Lehman Brothers to send world economy into a downward spiral.

On the other extreme, the crisis shows all the cracks in our global economy. Some of them fail. Basic dynamics change, and there is no way of predicting what will happen.

The only constant seems to be cheap money. No idea if that is a good thing...


The core of the issue is that there is neither a vaccine or a test, combined with asymptomatic carriers. Hence, the only way to combat this virus is a quarantine for the whole population, which causes severe economic damage.

Once you solve either of these issues (e.g. South Korea), there might be a fast recovery. Did South Korea enter into a depression?

In any crisis, it is easy to assume that the last crisis results will occur, but everything depends on the context.

My view is that this isn’t an underlying financial crisis. However, of course the temporary disruptions will be of such magnitude that they will create one. Worst case IMHO is that it could be way worse than the Great Depression due to the very tight coupling, high leverage, high overhead and JIT nature of the global economy today. There will be a huge cascading failure effect.

That said, interventions can have a huge impact on the extent of that. Interventions that delay/defer/mitigate economic damage at the entity and individual levels I think can do the most to simply “pause” the economy and prevent underlying degradation while we deal w the pandemic.

Imagine the benefit of just all debt being rolled over month-by-month to the end of the loan term, and similar for renters. Defer irreversible economic decisions and go into subsistence mode. I think that will be the best best for the maximal eventual recovery. That will be the difference in a return to prior levels taking 6-12 mo vs 5-10 years.

Sadly I don’t think the US is heading in this policy direction. I half wonder if we should just do it grassroots and then there will be ample support to reimburse it via tax or other incentive.

That’s how I am thinking about it anyway.

I realized I didn’t answer your specific q. Whatever impact you see in your business, assume it will continue for at least 3-4 months. If that is unsustainable then the sooner you deal with it the better.

Not sure how unemployment insurance works in your country but in the US I spoke to restaurants and they just terminated people so that they could collect unemployment at a higher level than the business could provide income (salary or tips). Do what you have to do fast, and do it empathetically and in a way that preserves your options for restarting / re-hiring when things eventually improve.

The individual countries of the EU have not coordinated on this whatsoever and I can't see it remaining in its current form post-crisis. We're probably looking at a more loosely-defined trade union and a trend away from further integration. I'm not sure if this will be good or bad for the European economy, but it will certainly affect it in the short-term.

I am of opposite opinion. Being a strange unprecedented political lifeform, the EU might be further defined in some of its instituions after this crisis. After the collapse of the USSR and German reunification they defined one piece, after the 2008 crisis some other piece, and so on.. maybe the EU can only be shaped crisis after crisis, being so particular a political entity. Look for example at how they are now discussing the Eurobond issue (means: moving a bit toward fiscal integration).

It seems IMHO that such a historically new process cannot proceed linearly but only via sudden accelerations determined by the occurrence of crises (and talking about crises, I guess that in the next decades there will be enough of those)

Or maybe not.

I see it more of a restatement of the status quo. For all the talk in the UK of an EU superstate etc, each member state remains a sovereign country and can unilaterally shut its borders if it wants to. Yes it’s probably clipped the wings of the federalists but they never spoke for the whole EU.

I found this article to be insightful re the economic impact: https://www.economist.com/business/2020/03/21/much-of-global...

What I want to know: With all this god damn quarantine and stay at home, what's to prevent one sick person to go out after the all clear and just reinfect everybody. This stay at home situation is not sustainable. Is this an economic war from China?

Everyone is going to get sick unless we find a vaccine or a cure. That is inevitable. The idea behind isolation is to spread out the cases in time so that supplies/treatment are available for you when you get it. If you get sick right now and need an ICU, you might just flat-out die because there aren't any ICU resources for you. If you get sick 6 months from now, there will be more resources.

Just focus on the strength and depth of the government responses, most especially the establishment of martial law. No sector is actually an island because the economy is an abstract concept used to describe certain types of interactions that impact resources. It isn't like you can just turn the A/C in a car off to make the gas last a little longer because it isn't a singular, engineered thing with clear systems. It is a system more complicated than anyone understands.

It may depend on the time frame. The markets were inflated, with a lot of voices telling how unsustainable things would be soon enough, and then this black swan happened.

The current situation will last at least a month (and how bad it will be while it lasts is yet to be seen), and after that keeping social distances, and closed borders will remain for many months.

The rules will be just different. It may be very bad for some old industries (travel, tourism, are easy ones), and good for some of the emergent ones.

I have been wondering: Isn't this (likely) downturn a chance? Don't we need to rebuild our economies anyway given climate change? Maybe it is a good thing that airlines are going away because you shouldn't be able to fly from Paris to New York for 400€. It seems that we now have a chance to build something new so instead of rescuing these companies we should let them shrink and support former employees to transition to less carbon intensive sectors.

Last crisis (Spanish flu) caused a 5% decrease in global GDP and that was without widespread shutdowns and an already depressed GDP from the first world war.

I think realistically the drop in demand, the onslaught of bankruptcies, the stopping of lending and the depletion of consumers' and corporate cash savings will lead to a prolonged recession of at least 5% GDP decrease.

On the upside, climate change is now within bounds for the coming years.

The crisis is tied to an ongoing pandemic whose scope and consequences are global, but not predictable. No one can credibly claim to know the extent of the disruption, other than the simple observation that large parts of the economy have stopped and might not come back for a while. Anyone who claims to know more is guessing.

I'm not well versed in economy and I have a maybe dumb question: how would large public infrastructure projects financed by the government in the post-crisis period help with keeping people employed and help the economy spring back? Edit: are there historical examples relevant?

This crisis will be very large and also very drawn out because of all the debt and other economic overhang. The thing to focus on the most, though, is that there will be recovery and with that great opportunities for buying stocks and lows and expanding into markets as they regrow.

If we look at previous five years, basically there was constant increase in consumer demand and the supply did reflect to fulfill the same. To come back to that condition will take another five years.

> Our revenue this week is down 20x compared to the average of the past 4 weeks

What industry are you in that things are this bad? Surely it must be one that's directly impacted by people not going out?

It’s probably going to be worse than the Great Depression.

Yes, brother works as corporate lawyer. Their office is overflowing with bankruptcy cases...including the very law firm he works for.

Something thats flown under the radar of this is the new “Families First Coronavirus Response Act” which provides 12 weeks of “paid leave for those affected by Covid 19”.

Most (90%) companies will be bankrupt by week 3 or 4, therefore most are now contemplating just declaring bankruptcy now to avoid any further bleed.

It’s easy to write laws such as this, but where does the money for this 12-weeks come from?

> Their office is overflowing with bankruptcy cases...including the very law firm he works for.

I don't understand this. Why would they file for bankruptcy if their office is overflowing with cases?

because (a) what happens after this single rush of cases, and (b) are the clients they are doing work for going to stiff them

The viscosity of information is much more favorable now than then.

Even if peak unemployment is similar, the recover is likely to be snappier.

The heat of the forest fore opens the pine cones, and there is new growth.

I think that's clear as COVID-19 has seemingly impacted every single country in the world already, and we've yet to see the worst effects.

Meanwhile, not all countries were impacted by the great depression, Spain being one of the countries not impacted because of the isolated economy at the time.

Unlikely. One reason the Great Depression was so bad because there was an environmental catastrophe (the Dust Bowl) which made agriculture very hard at a time when agriculture was still a really, really big deal. The virus does not make normal economic activity particularly hard; we are avoiding economic activity for mostly humanitarian reasons, and we can resume economic activity either when everyone gas been infected anyway (yay pandemics), or when testing and treatment is more readily available.

Another reason the Great Depression got worse than a normal depression was that the Hoover administration unwisely decided to make money and credit less available during the crash. Today's policy response is more about throwing money at people (sometimes just at the politically connected, sometimes fairly). One can and should question many specifics (the response is not super coherent) but at least it is the opposite of fiscal and monetary tightening.

Another reason the Great Depression stayed so very bad for so very long was as a consequence the FDR administration's unprecedented intervention into the economy. I don't mean Social Security, either, I mean things like the National Recovery Administration, which explicitly sought to turn the US into a planned economy, with minimum and maximum prices for everything, run by local politically-connected cartels with their own police powers.

When the NRA was declared unconstitutional, its practices were shifted into other places. A few of the more ridiculous practices led by other agencies are still around. For instance, the Supreme Court only killed the USDA's Raisin Board in 2015 when a raisin farmer objected to them seizing 89,000 tons of raisins (30% of his crop) to give away for free in school lunches. (The USDA of that time was also great at encouraging the big agribusiness factory farming and pushing out what small farmers were still able to operate.)

None of this planned-economy stuff is on the table today — not in the US, not with this administration anyway, and not with the current US senate. There's an outside shot of a fully nationalized health system if Bernie Sanders wins and Democrats take the Senate, and that's the most ambitious plan, and even if we assume the taxes to fund it were quite stultifying indeed, it's unlikely to be as harmful. No one is coming for our raisins.

The Great Depression was global. It affected much more than the US. The dust bowl was local colour. The premise of your entire analysis is faulty.

The Great Depression was global, but much of the damage was US-led, so the factors that made it a great depression, not just another footnote in economic history, are relevant worldwide. The world economy was already integrating, particularly in the areas of banking and finance, so US monetary tightening affected many European economies and currencies, causing crises in European banks and currencies worldwide. Meanwhile foreign direct investment from the US dried up, neutralizing what had been a major source of European productivity growth in that era.

Today, everyone's quit the gold standard and the forex situation is very different, blunting impacts of wild currency movements. US and European banks are not at risk of bank runs (as they are stabilized by general government policy and specific interventions), and whatever chaos we see, a ~35% contraction in the supply of USD is not on the table. If we are beset by deflation it's going to be puny in comparison.

It is worth mentioning that the Depression was also associated with major breakdowns in international trade, in part due to lots of tariffs. The bad news is we're tariff-happy again, but not as bad as Smoot-Hawley for now? The protectionist impulse bears monitoring.

And I'll finally clarify that we will still have a recession, and it might be pretty nasty. It's just not going to be Great Depression bad where we can't recover for a decade, not with just what's happened so far.

The Dust Bowl was a US catastrophe that made the Depression worse here. But the Depression was a worldwide phenomenon.

I’m betting on a V-shaped recovery. Reasons:

1. There’s so much friggin stimulus coming that something big will happen. The (U.S.) Fed is buying trillions of anything resembling bonds at the moment. Treasuries, commercial paper, muni’s. And doing a trillion PER DAY in the repo market. Plus $2+ trillion coming from Congress, which includes checks directly to consumers and also up to $4 trillion more in direct lending to small businesses with forgivable loans. Not to mention interest rates at 0% and gas prices at $1.50/gal. The financial sector is healthy. Big tech companies are still sitting on a few trillion in cash.

2. Everyone has cabin fever and missed their spring breaks and perhaps summer vacations. Prices on travel and leisure are at an all time low. A weeklong trip to Hawaii for a family of 5 is down to like $1500.

3. At some point (I believe in days/weeks) there will be a medical breakthrough. Hydroxychloroquine+Azithro has had stunning results in South Korea, China, and France. Many US docs are already prescribing now. Even if this works only 40% of the time, that’s significant enough to flatten the curve and most importantly lower the death rate around the seasonal flu. Early anecdotal evidence suggests it’s been effective in 90%+ of cases.

4. I think by mid-April folks especially in the U.S. are gonna say enough is enough and break containment. The rest of the 80% of America isn’t willing to shutdown the entire economy for the 1% who face almost certain death from this disease. I know that’s crude and sounds cold-hearted, but Fox News is going to be very convincing that we should just resume our normal way of life and let the chips fall where they may. Election season starts in earnest in mid-Spring and Trump I believe will end the shutdowns and tell us to go back to living our lives. Biden will almost certainly do the same with a focus on rebuilding America. People can shut down for a week or two, anything longer than that and you face rebellion. School has been out since early March and the soccer moms here just want to go back to being normal. Expect a presidential candidate to jump out first with a “let’s get America back to work” strategy and end the shutdowns and maybe only recommend quarantines for the at-risk population.

What about putting everyone in chômage technique ?

Oh it has just started. 2008 will be a fart in the wind compared to the shitstorm we're heading towards.

It would be wise for mostly everyone in the West as an investment for the medium and long term status post the pandemic to start learning Chinese.

Oh it has just started.

The Buffett Indicator.

It will be as bad as 1974.

Why are you posting this question as if anyone here knows the answer?

How would anyone check if there's an answer to a question without posting the question?

This isn't StackExchange, we're allowed to just discuss our opinions.

The more the economic crisis worsens, and the more people have to watch their parents and grandparents die prematurely, the more virulent the global anti-China sentiment will get. The #fuckchina hashtag is really popular (not trending though, probably due to censorship) on Twitter:


I don't think the CCP realizes yet just how harsh the backlash is going to be. China has zero soft power now. Expect to see supply chains being rerouted.

Don't think that will happen. China will clean up the root cause of the virus quickly (wild animal markets). They seem to have the outbreak under control now, are ramping up production again and are in excellent position to help other countries dealing with the crisis now, which is exactly what they are doing:




The Chinese have apparently quit testing, so naturally it seems they have it 'under control' since they report zero new cases (detected).

And the live-animal markets have produced disease before, every year in fact for decades, and not been 'cleaned up' so far. I have little confidence in any of that happening.

I have no problem with the Chinese as people, but their current government is not to be admired.

I'm also a bit surprised by the low number of reported cases (there were some, but apparently only from foreigners - which was heavily publicized)

Certainly there are new infections but I'm optimistic that they can and will be contained. They simply have too much to lose here to just "manipulate the numbers"

> The Chinese have apparently quit testing, so naturally it seems they have it 'under control' since they report zero new cases (detected).

That's patently untrue


Foreigners only?

No, here's a report of an indigenous case:


This is exactly what you expect to happen when efforts at containing the virus have been successful: the number of new cases gradually tapers off, until it reaches 0 or almost 0, and most new cases are due to people coming from areas of the world in which it's still raging.

The outbreak started earlier in China, and it's thus unsurprising to see that they reached this point earlier than in other countries.

Really? I understand that Trump is pushing a lot of anti-chinese rethoric, but outside of the US the optics are pretty different.


Chinese companies are sending stocks of masks to help Italy to recover.


China is also sharing the expertise of their medical team with Italy...

Compare with the US:


They deprived Italy of half a million testing kits, in the area in which they are most needed!


And they're trying to deny the vaccine to other countries...

If anything, I expect people to be furious at the US, after this whole event will be over.

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