BTW, the St. Louis Fed has one of the biggest blessings for your "I can't afford neither Bloomberg nor Refinitiv" amateur economist. The amount of time series and the basic ability to do pointwise arithmetic operations is great!
Seconded. I (think? don't remember) I did Fed Challenge back in the day, and the econ resources I trusted most was Bloomberg/Economics, CNBC/Economics, and FRED by far: https://en.wikipedia.org/wiki/National_Fed_Challenge
I second that. When I did the College Fed Challenge, FRED was my team's go-to source, followed by the Bureau of Labor Statistics and National Bureau of Economic Research. We had a little pipeline where we'd take their data and make nicer-looking charts in Excel that we could import into our slide deck. When I'm taking to laymen about economics, I still refer to FRED charts because they're so accessible and the number of series is enormous.
America has given full unemployment plus extra money, plus free money. How is that different from privatizing payroll?
Why is an 'employment guarantee' any better than what is happening in most of America -- layoffs with an explicit promise to rehire once the business is allowed to operate? It's not like paying companies to keep people on payroll in jobs that are not producing economic value really reduces unemployment anymore than not testing for coronavirus makes it go away.
I don't know why americans are so afraid of 'mass unemployment'. Most businesses will survive this crisis, due to debt suspensions or new debt at a very low rate or via direct government aid (which the government has so far provided plentifully, and will likely do more). Businesses have promised to rehire. However, a business that cannot right now provide a job that has value to the business ought to lay off people and let the social safety net take care.
The articles make some good points regarding healthcare, but aside from that, it makes no good argument why unemployment + the unemployment insurance that workers have paid into for exactly this scenario is worse than paying businesses to keep people on payroll who wouldn't be there otherwise.
> Why is an 'employment guarantee' any better than what is happening in most of America -- layoffs with an explicit promise to rehire once the business is allowed to operate?
Unless those promises are binding (they aren't), then they're worthless. A lot of people who have been laid off because of coronavirus will discover in the coming months that their job is actually gone, because businesses will be conservative and not rehire as many people as they had prior to entering the throes of the recession. Also, not all businesses will return to employment at the same time, so there's going to be massive turnover as people who were out of a job for awhile change employers and take the first job that becomes available, not necessarily the job that they already had.
And keep in mind, the layoffs Americans are facing now are real. They're losing their benefits, their health insurance, their vacation days. There's a real friction in both firing and hiring someone and we'll be paying it on both sides.
All told we're going to be seeing massive disruption in the US labor market, which would've been avoided had everyone just had a temporary government-paid furlough while maintaining their job and benefits.
Employment guarantees may include benefits (FMLA/Healthcare), which you definitely will not have with unemployment. The American system of tying healthcare to employment is showing it's huge weakness right now - when Americans need healthcare the most, they lose it.
"Rehiring" can also be slow because it forces employers HR departments to screen candidates all over again. If employees stay on the payroll, they can all report back to work once the crisis has passed. Instead, businesses that survive have to spend their first weeks "hiring" back employees if they can, instead of making profits. This delay will hurt the recovery further.
The POV that there will be some idealistic point in the future where companies call all of their employees back is absurd. There might be some chance of this happening, but it's not large. And the times we're wrong then we're very wrong.
This isn't going to be unpaused. The economy will be spun back up gradually for everyone's safety. People will likely still be getting sick. Some at-risk people may not be able to safely re-enter the workforce for a long time.
What’s the rationale for hiring when economic circumstances don’t locally justify it? Is it charity? You want businesses to engage in idiosyncratic, ad hoc charity as part of the national strategy? Then just tax them and make it Not idiosyncratic or whimsical.
This is an economic shock unlike what any current unemployment infrastructure in the US is designed for. What we want, as much as possible, is a total economic pause. Paying companies to keep their employees on payroll would come closer to accomplishing that than mass layoffs. With mass layoffs, there is no un-pause. We will start out in the middle of a depression.
A depression in which everyone is going to be rehired the moment business is allowed to operate? Of course there's an un-pause. Companies know who they fired. They'll just call people up and rehire.
They likely won't be rehired; some of those business will not exist. Some companies will not try to hire everyone back. And with so many people out of work, there will be less economic activity, period. If the government had funded companies to keep their employees on payroll, we could have an un-pause scenario. We are unlikely to have that after the mass layoffs. The economy is a system, and will be in a state with much less employment and money flowing.
This isn't going to happen outside of rare cases. Lots of companies are not just laying people off, they've folded entirely. People I personally know work for companies that have closed shop entirely in recent weeks. Those jobs are gone.
Of course, plenty of companies will not bankrupt, but of those that don't, they aren't going to be expanding their payroll anytime soon after the stock market just took an absolute pummeling and removed years of economic gain in days.
The market is currently being propped up by the federal reserve providing unlimited quantitative easing at the cost of inflation, not a long term solution. Even if we gave everyone a cure and vaccine tomorrow, we are on shaky ground because of what the fed has been doing, for better or worse, and will be in a recession for years.
>I don't know why americans are so afraid of 'mass unemployment'.
In the United States, health insurance is provided by your employer. To purchase it without their leverage is prohibitively expensive without a sizable, reliable income.
Yes, I agree about the health insurance. Government should pay COBRA or figure something out. But why that system needs to involve paying businesses to nominally keep people on payroll (and thus provide health insurance) is what I'm missing. Why is that better than government directly replacing the salary and health insurance? Why should businesses have to deal with the administrative cost of a government decision
We can freeze the economy, or allow it to form a cocoon like a caterpillar.
Freezing the economy would be paying businesses to pay for overhead and labor. This would ensure everyone's job is frozen in place while furloughed.
What we have instead done is try and form a cocoon like a caterpillar does. If you don't know about how a caterpillar becomes a moth, well it basically just dissolves completely into goop in that cocoon and forms an entire new animal out of that goop. We are allowing the economic structure to dissolve into goop while paying everyone to keep alive while at home inside the cocoon. However, since we've eliminated the structure, what emerges will not look the same. It will be much smaller as capital moved to safer investments. People will not be able to get their old jobs right away, if at all. They might have to change fields. It is going to suck and a lot of people will end up set back in their lives and careers as a result.
becauae we would provide other monies to the business of it can rapidly reopen. I’m sure a business will be happy to take on the overhead if it includes gov support for rent, etc.
The approach of keeping people employed with their current employer sees value in maintaining the existing arrangements of employers and employees during the period of suppressed economic activity. Therefore it's a more socialist perspective, viewing a large part of economic value as derived from the common social fabric, and not just the capital of the business. The forgivable small business loan parts of the CARES act seem to be somewhat modeled on this concept.
The approach of firing idled staff and just having them collect unemployment doesn't value the preservation of the employer-employee relationships, and assumes that if they are broken up, they will all re-emerge naturally if necessary after the lockdowns are over. This is a more libertarian approach - no guarantees to employees (but still not totally as it still involves government backed unemployment insurance programs).
>There's not enough pressure on politicians in both parties to ensure a solid and fast as possible recovery.
Oh I disagree, I think there is plenty. Every politician knows that incumbents are more likely to lose in a down economy. That's why they just passed an unprecedented stimulus bill
This isn't stimulus. It's temporary economic relief that doesn't continue for as long as needed. A bandaid at best.
You also can't stimulate an economy that's paused.
This bill was stripped down compared to what European countries are providing because of a lot of vocal politicians worrying about creating disincentives to work which is such an unfathomably stupid thing to worry about during a pandemic.
I don’t think any of their models can accurately predict what will happen. We don't have any good prior examples to base the models on. I don't think the economy will recover, but I also don't think it is possible to guess how bad it will be.
I don’t think there is any model that can predict pent up demand.
I know a lot of my friends who still have jobs are talking about going out every night when the quarantine lifts so they don’t have to cook.
If a lot of people do that, we’ll suddenly need a lot of waiters back. And then they’ll have money.
Or maybe everyone will have learned that they love cooking at home and never go out again.
I don’t think there is any way to tell. We don’t have any good prior data.
All the previous models assumed unemployment claims and stock market drops when it was possible for everyone to work.
Right now there are a lot of jobs that are temporarily suspended skewing the numbers.
But will your friends get haircuts, manicures, massages, etc every day when the quarantine lifts? Pent up demand only helps certain industries, unfortunately. Imagine being a hair dresser with a stack of bills from the shutdown and no big boost to income after the quarantine lifts to help pay things off.
It'll be interesting to see if habits change. It takes 30 days to change a habit. Will people just get used to not eating out. Personally I am enjoying this lack of unnecessarily bullshit spending that is imposed by the quarantine.
I think the change in habit will have catastrophic impacts in the short term. Landlords seem totally willing to let prime restaurant real estate sit open. In my neighborhood several storefronts have sat vacant for years waiting for a tenant that can survive more than a few months. Rents continually increase. This drives up food prices and landlords have become accustomed to those rates. Post-virus the new demand will not support those prices.
I am enjoying spending less money to eat but restaurants will not be able to reduce price to meet the lesser demand because their rents will not go down any time soon. The current restaurants will have to fail and that property will have to sit for potentially years before rent is reduced.
We need a penalty (additional property tax?) on vacant real estate to drive prices back down with shifting demand.
Yes a vacancy tax would help in that scenario. But why would landlords leave the place empty rather than taking some rent. Are a lot of them without debt and own the buildings outright?
There is a coffee shop down the street that couldn’t pay their rent a couple years ago, way before coronavirus. They started a gofundme to bail themselves out and promoted it on the hyperlocal blog. The nouveau riche giddily bailed them out. Landlords here seem to know, consciously or not, someone with money to burn will pay the price.
I’m personally aware of several small businesses that are simply burning capital from family or friends to stay alive. Almost all of it goes to rent.
For us, this was the catalyst that really got us to stick to "no eating out, no takeout, and eat leftovers". We've been trying to do this for months with spotty success. But this has forced our hand.
I've really noticed it in our trash and recycling bins. They've been half full on garbage day since the quarantine. Usually we have more than we can put in them. I'm hoping this behavior sticks for us, but I kind of doubt it.
Also try composting if you can, it has reduced waste going into the bin by about 50%, and that compost can be used to grow more food in a few months time. Most of that compost is the parts of fruit/veg not eaten, such s carrot peel or broccoli stalks.
> Imagine being a hair dresser with a stack of bills from the shutdown
Presumably all of those bill are owed to other businesses, who are run by people. People with empathy. People who realize that keep a good customer is better than losing them, even if it means cutting them a break.
I think people will surprise others with how this pain will spread through the entire supply chain so it does't kill any one business. I think all the businesses in the supply chain know that killing everyone at the end of the chain isn't a good idea.
The current business model in many companies is to run it with the money from the bank and minimal stocks ("just in time"), so there is no buffer and the impact is going through the entire chain until either kills everyone or hits someone with some buffers. If that's the banks and the government is trying to put some buffers there, it's a good enough plan, if not then it looks like doom for many companies.
But those people also have bills to pay and so on down the line. Without some kind of debt jubilee, we’re going to be paying the consequences of this one way or the other.
Yes. The moment this quarantine lifts, I'm going to go to a proper barber, get a great haircut, and likely pay for extra things like shampoo and shaves which I don't normally. I'm so sick of having to do everything at home, including my haircuts, that I really just want to spend my money.
Are a lot of your friends the same people that think the shelter-in-place will end soon? Given the situation, even when the shelter-in-place ends (let's say May 1st). No way in hell am I going to go back eating in a crowded restaurant or going to crowded places. No, the recovery of this will take months and by that time, fall is ending and winter is here and the next round of flu/Coronavirus season is starting. I know this is a more pessimistic case but it just doesn't make sense to even think the economy will recover in a couple of months. There is going to be over 100,000+ deaths. You don't just recover within a quarter or two.
the constant stream of articles on here about how folks can't pay for any emergency bills would have us believe they're all broke anyways. doesn't seem to have been a problem for the restaurants.
> I know a lot of my friends who still have jobs are talking about going out every night when the quarantine lifts so they don’t have to cook. If a lot of people do that, we’ll suddenly need a lot of waiters back.
What percentage of the U.S. population can actually afford to eat out every night?
Median U.S. household income is about $62K.[1] If you spend only $15 a night eating out, that amounts to $105/week or $5460/year, which is a good chunk of the median household's income, and an even bigger chunk of their income after paying for rent, utilities, taxes and other necessities.
It's hard to find data, but in mid 2018 a survey found that 33% of Americans dined out every day at least once. In 2019 a few surveys found that people who eat out at least once a week tend to do it at least 3 times a week, and 10% ate out 5-6 times a week.
So before all this, quite a lot of people dined out a lot.
> 33% of Americans dined out every day at least once
My guess is that most of those meals are people going out for lunch while they're working, and most of those people are grabbing a sandwich and bringing it back to their desks, which generates no income for waiters.
>If a lot of people do that, we’ll suddenly need a lot of waiters back. And then they’ll have money.
By that time every restaurant will have had all its fresh food expire and will need to predict when the demand for it will return. If they do not do this accurately, they risk wasted capital that they'll need for when the demand does come back.
They'll have had to been paying rent or mortgage on the property they currently occupy, with only the revenue they're able to make on take outs.
Depending on the structure, I predict most restaurants won't survive this. Any restaurant with a dining room is toast. The world will look different after the crisis.
The world will look different after the first of the very next month.
> They'll have had to been paying rent or mortgage on the property they currently occupy, with only the revenue they're able to make on take outs.
Everyone keeps assuming landlords aren't people. If you own a commercial building with say six storefronts, once the SIP lifts, you have two choices:
Demand immediate back rent from all your tenants and then evict them all, leaving a completely empty building, or work with them so they can remain open and at least give you partial rent for a while until they can pay you back.
Yes, the government will need to step in and declare mortgages were on hold and no back payment is necessary, but that's already in the works.
I think landlords are smart enough not to just evict everyone as soon as they can. They know that no one will come and take that spot.
It's better to have partial rent than none at all.
>give you partial rent for a while until they can pay you back
And this is the happy choice! Existing businesses will be saddled with the debt of operating through the crisis. New businesses without that debt will have an advantage.
When bankruptcy is logistically more advantageous than debt service, bankruptcy naturally follows.
This is absolutely correct. If all we're going to do is defer expenses, then this will ruin small businesses. We might see a wave of entrepreneurs opening up restaurants at bargain rents, but I don't know that the demand will be able to support them. Existing restaurants are toast, unless they get assistance (not zero loans) to keep running. Zero interest loans still mean debt.
This is looking ahead to next quarter. Optimistic estimates of when things will open back up are looking like "May or June," so I don't think it's plausible to believe in a total recovery by the end of Q2.
Well, a totally naive model would be a uniform prior bounded between 0 and 1. The blog post says that they think it'll be between 0.1 and 0.4. That's more narrow than the naive model, but it's still pretty large error bars. I don't think they have spoken with much more certainty than is justified.
You can create models with various assumptions to arrive at worst and best case estimates.
They're also very much away of these various factors, but know better than to assume there will be major pent up demand with an economic shock of this nature.
These jobs are not temporarily suspended unless the government intervenes on the scale that European governments are. They will be lost, leaving scars on the economy. No one will be willing to endure this again, when needed again in the future, if they have to sacrifice everything all over again.
> I know a lot of my friends who still have jobs are talking about going out every night when the quarantine lifts so they don’t have to cook.
Most of the demand shortfall we're going to experience in the coming months will come from people being out of work, not from their being quarantined. That doesn't create pent up consumption that can unleashed at a later point in time.
Right by my point is that those jobs didn't go away, they're just temporarily suspended. We have no idea how many of those jobs will come right back when shelter-in-place is lifted. It's not a "normal" downturn.
A lot of small businesses will no longer exist after this is over. That is one reason. But it seems unlikely we'll be able to exit this without deep structural damage that takes a significant amount of time to repair; there are negative feedback mechanisms that are difficult to overcome even with well-targeted stimulus. The most basic is that unemployment reduces consumer demand which reduces employment demand. It doesn't just go away some sunny day in June either, the slack demand directly due to the virus is likely to be with us for many, many more months to come.
What is happening to the US economy is completely unprecedented. The comparison I most hear is to WWII - but instead of pivoting to support sending people to war and supporting their needs, our economy is pivoting to sending them home.
But as near as I can tell, we only ever sent about 10% of the population to WWII. This is 3x the hit of WWII! (I get that we don't have to make guns and tanks for people, just feed and house them).
Instead of pivoting to support the needs of Americans, we're shoveling money into massive corporations. Obviously it's not the American labourer who needs help. No, it's the shareholders and execs who run big companies. I love this country!
This is truly insane, the most impacted people are the ones who are living paycheck to paycheck, and leading small businesses. Yet, the only thing the government cares about is SP500. This truly shows how corrupt the establishment is.
This is a common misconception. The Fed doesn't care about the S&P500 (the president does, though, judging by his tweets ...). You may be projecting because you care about it.
Fed cares about the credit market, not the stock market. It's amazing how many people don't even know that the credit market is much bigger than the stock market. Since these days everything is an ETF you can look up $LQD (investment grade corporate bonds) and $HYG (low grade/junk corporate bonds) to see "what's really going on". You can also look up spreads for each rating grade on FRED.
When even the investment grade (look up LQD; was recently bailed out by the Fed) gets beaten up like that you know that your money isn't safe anywhere. Not in any money market fund, not in your bank, not in any CD, not as "cash" in your brokerage account. I bet that most financial institutions are technically insolvent right now (or at least were, a week or two ago).
Also, there's only so much the Fed can do, it really is just a bank that deals exclusively with other large players by sending pieces of paper around (or these days - data packets). That's it. The rest is up to the Congress, the Fed has already printed the money for them, and will surely print more if needed.
Ultimately it's a medical emergency, not a financial one. It's up to the doctors and people in charge to help fix this mess. The "money people" are merely dancing to the spectacle.
So I was piqued by your post, and actually looked it up. It looks like the bond / credit market in the US is just under $40 trillion [1], and the value of the US stock market is $37.69 trillion [2]. So they look pretty close?
In WW2 we sent women to work and eventually every able body contributed somehow. We have exactly none of that happening right now. As many people are being told not to work as we reasonably can. More people every week are told to shut down now where I live.
The most infuriating part of the shutdown is the disconnect I see between comments on Twitter, where the shutdown is basically a game because everyone has a WFH-capable tech job, and in real life, where I have family members suddenly unemployed, with wild uncertainty about whether they'll get their job back (in a month? two? three?). It's incredibly stressful, and not a fun joke.
Like, independent of whether you think the shutdown is the right risk / reward tradeoff, please at least think about the 70% of the workforce that cannot work from home, because they work in restaurants or physical service jobs. If you are still working (or at least pulling a paycheck), you're incredibly lucky -- please don't act like you have the only voice of moral authority about when and how this should end, and the calculus that goes into that tradeoff.
Thank you for stating what my mind couldn't quite put into words. I see lots of people with professional-class, WFH jobs being very sanctimonious about any suggestion that we should in any way take into account the financial impact when making the risk-reward decisions. Which, taken to its logical conclusion, would suggest that a worse-than-average flu season should also shut everything down, since tens of thousands of lives could be at stake. If this were somehow a pandemic which impacted the professional class more than the working class, I suspect we would see a very different moral calculus at work.
Pretty soon many of those WFH pros in the big multinationals will also be furloughed or laid off. It hit mine because all forecasts show this will outlive June. Factories are closing, supply chains are drying up, and business to business sales have all buy stopped for a huge part of the economy. Given share prices also ranked, what do we all think is going to happen for all but the cash rich enterprises that can gobble everything up.
Totally agreed. I hate to repeat a phrase that's essentially a right wing / denialist talking point, but, at a certain point, the cure is definitely worse than the disease. You can see this pretty obviously if you imagine shutting down literally everything, so that GDP drops 100%. Clearly, people will die in that scenario.
So, the question really is: at what point is the cure worse than the disease? To answer that, you have to look at the impact of people at the very bottom of the socioeconomic ladder, not professionals who are WFH and largely insulated from it.
This is asking for a lot, but maybe this crisis will help Americans re-evaluate why we think it's such a good idea to set up society without a safety net, such that temporarily shutting down the economy for a few months is such a disaster. Can we make structural/political changes that reduce the impact of such shutdowns? I know this is expecting way too much outside-the-ideological-box thinking from politicians, but maybe this kind of thought will inch toward the mainstream.
That is probably asking a lot, but maybe we might get at the very least a re-evaluation of how we look at sick time for food and service industry workers. It's not just a job benefit, subject only to negotiation between employer and employee. It ought to be a public interest question, affecting lots of people other than employer and employee, so it ought to be handled more like social security or unemployment insurance. Even that is a stretch, but I could see it potentially happening.
I agree with the grandparent that we aren't worried enough about the large percentage of people that can't work at home but your statement that "would suggest that a worse-than-average flu season" is not backed by any science. There are 12-60k deaths a year from the flu according to the CDC (last year is in the 24-60k range). There are 37k deaths from COVID right now and the number is still increasing at non-linear rates. This is /on-top/ of the flu deaths. So this isn't just "a slightly worse flu season".
I don't mean to suggest that this won't be worse than the flu when all is done, but you're comparing global COVID-19 deaths to US-only flu deaths (US COVID deaths are about 3,000 right now, not 37,000).
Poster above was not equating COVID to Influenza. They were making a point that at a certain point we have to weigh the tradeoffs of halting our economy versus saving X numbers of lives.
My company is healthcare adjacent so we've actually seen an uptick in business - but my wife had to lay herself off as the small manufacturing plant she works at has no incoming business.
I think it's important for us to band together and make sure we can all make it through this stress together and I don't mind if, as someone on just barely in the "haver" side of thing, I need to surrender some of my stuff to make sure those worse off do well.
That all said, I'm up in Canada where I don't gush lovingly over the government, but I find it to be reasonable and well intentioned... And I think the US has a real problem coming up where nearly nobody wants to help the common good because both sides have been constantly fed that the government is terrible and only acts in the interest of big businesses (which, generally, it does).
Our government just initiated massive federal unemployment benefits, grants to small businesses who keep their payroll going, a moratorium on foreclosures for federally backed home loans, and temporary UBI. The primary focus of any complaints I see are about the bailouts of the investor class.
I'm between jobs and I'm likely pretty fucked, but I take no issue with people using humor to get through this stressful period and wish them the best.
If you want to get mad, get mad at incompetent politicians who aren't doing enough to ensure a speedy recovery.
Um no. Pension funds rely on interest from banks (collected from mortgages and other debt-based securities) to pay out senior pensions. People rely on interest from banks to pay their annuities. Banks rely on mortgage payments to be able to have cash on hand to give to customers withdrawing money.
I don't disagree that we will have to figure out how to make all this works without collecting 100% of mortgages, but the idea that it's so easy is crazy.
Every comment I see and make asking the question of what the appropriate measure of response should be is grey.
It seems as if the HN community feels very strongly that either this should not be questioned or that the only acceptable response is nobody should die from a virus, no matter the cost.
This is not an official St. Louis Fed calculation. The post is titled “back-of-the-envelop estimate of unemployment”, the data sources are from two blog posts, and it was written by a researcher on their blog. This is not an official document, and appears that it likely wasn’t vetted.
If you believe the conclusion that 50% of small businesses don't have cash reserves for a month(https://news.ycombinator.com/item?id=22719981), and ~50% of Americans with jobs work for small businesses, it's not far fetched to think that 25% of people will soon be unemployed. Add in the people working for larger firms, like travel and vacation related firms, and you can easily get to 30% unemployment.
Several businesses near me immediately announced on social media they were permanently closing for business, the moment the lockdown was announced. They must have been struggling prior to the lockdown and knew there would be no way to recover.
In fairness the author also gave a massive error bar "between 10.5% and 40.6%." So whether or not the stimulus is sufficient to avert the worst depends on where we sit between "mild recession" and "social collapse."
True, but I think there's more metrics to a recession than peak unemployment. It took years for unemployment to dip below 8% after 2008, but only time will tell what the recovery looks like here.
I don't know if it's true, but I'm hoping that we as a society have a lot more resilience now than back then. There's going to be misery, for sure, but in extremis, my entire extended family could probably move into one house and be fed on even one median salary. I don't know if that was true during the Great Depression.
Except this unemployment is mandated by the government, whereas during the great depression, the government was trying to do everything to stop it, and could not.
Which is why the "model" is 100% certified organic horseshit. If they want to tell me that a temporary pause in the roaring economy is worse than the largest systemic collapse to ever happen to it, I say "GTFO".
"Temporary pause" is an incredibly naive way to describe what's happening. Millions of people (and businesses) will miss their rent/mortgage payments that are due Wednesday. Some not-insignificant portion of those missed rent payments will result in more mortgage payments being missed. Many who've lost their jobs and rack up debt during this won't be able to find a job when the economy is able to be spun back up. It seems obvious that there's going to be terrible cascading effects.
* The correlated decline in productivity, the gaps in mortgage and rent payments, and so on do not result in our financial system breaking in surprising ways, like how a small increase in mortgage default rates did with synthetic collateralized debt obligations in 2007-2008. An increase in fixed rate mortgage defaults from 5% to 10% contributed significantly to the largest recession in nearly a century. I don't think anyone can say with certainty that nothing like this lurks in our financial system, this is like a bug in a program which requires dozens of different code paths to all enter into an invalid state simultaneously, and only then do you see the result.
* That we can actually restore everything to normal by June with the development of a cheap and easy to administer vaccine, which seems extremely unlikely to materialize in only 2 months.
Nah. Most people are going to forgive debts in the interrim. It only makes sense.
> like how a small increase in mortgage default rates did with synthetic collateralized debt obligations in 2007-2008.
What you fail to mention is that most mortgages in 07 and 08 were perfectly fine and you could find alternate home owners willing to actually pay. This is completely different. The government has shut down the economy. It's not like there are a lot of people you could sell a home too. Most debt collectors are going to let the debt go and not demand it, realising they cannot find any alternative.
> * That we can actually restore everything to normal by June with the development of a cheap and easy to administer vaccine, which seems extremely unlikely to materialize in only 2 months.
Unlikely that there is a vaccine, but we won't need it. The country has gone through much worse pandemics, and they typically do not cause great economic harm. In fact, they often lead to boom timse.
> Most people are going to forgive debts in the interrim
> Most debt collectors are going to let the debt go and not demand it,
I find it hard to believe you're familiar with debt collection in the United States!
> Unlikely that there is a vaccine, but we won't need it. The country has gone through much worse pandemics,
If we're willing to just let lots of people die, then sure, we "won't need it".
The case fatality rate (CFR) depends on ventilator and ICU capacity. We'll have a better estimate for US case fatality rates due to the outbreak in New York soon, but so far it seems to be that even though deaths lag cases, deaths have been roughly 2% of confirmed cases for a few weeks. If that holds up as confirmed cases rise into the millions, that would put this on par with the 1918 pandemic. If it doesn't, New York will give us a better idea of the CFR in a modern American city's medical system.
"The government response - or lack thereof - to the 1918 pandemic was good, actually" wasn't a take I was expecting on this site, but perhaps I should have.
I didn't say it was good. I just said that -- after the flu was over -- it did not lead to sustained economic depression. The bounce back was phenomenal. The roaring 20s represented a level of wealth that has henceforth been unmatched.
I think you're wildly optimistic that "people are going to forgive debts." Perhaps they'll defer them, but forgive? Not a chance. American business has shown that it can be both shortsighted and ruthless.
Imagine you're a property owner with a small strip mall. You've got mortgage, taxes, insurance etc that have to be fed by rents. So you tell your renters "Don't worry, I've got your back." You get a zero interest loan from the SBA, and everything is fine. Except your renters have their own rent/mortgage/insurance/taxes to pay. And they need to eat and pay medical bills. But the government only gives you a max of $3400. That lasts you 3 weeks. So this renter gets his own SBA loan, yeah at 0%. All good except he has no customers.
This goes on for 2-3-4 months. Things open up, and the renter tries to restart his business. But now he's burned through his SBA loan. He's burned through his $3400 check, and he's burned through his savings. So he has no capital, except maybe some biz equipment. He can't swing another SBA loan because Congress can't agree for more intervention, so he shuts down. Now he has a debt to the SBA, and "forgiveness" from you. End of the story is that he's out of business, all his employees are fired, and you have an empty slot in your strip mall.
Nope. Most people will say screw it and let everyone die by the end of May. I don't think it's necessarily right, but most people have no discipline. We already see it in China and Italy.
It could happen... but that won't make things go back to normal. People will be keep getting sick (and dying.) Others won't go out due to fear or quarantines. It will be a slow spiral downward.
Real damage is happening. It's nothing short of hugely multiple swearwords level wrong if you think this is a mere temporary pause where everyone can pick back up where we left off.
Well of course it is. The market will rarely screw itself over so much that businesses are forced to stop at once.
If anything, this 'recession' shows the scary power of the government, and of authoritarianism. With the stroke of a pen, the government of the United States and its states can inflict economic damage worse than any market-based recession. That is truly scary.
Of course, in this case, this temporary suspension is probably worth it, but it is an easy counter argument the next time someone attempts to explain why government economic control would lead to fewer recessions and depressions than the market.
Can we get a title change? The actual title of the article is "Back-of-the-Envelope Estimates of Next Quarter’s Unemployment Rate", which is emphatically not the St. Louis Fed estimating anything.
many businesses may send workers home with pay instead of laying them off outright.
Others may get some other benefit, like the friend of a friend who gets health insurance but no pay through the beginning of June. Not sure how it impacts unemployment benefits. I think the hope is that this thing will cycle through, the economy will recover (like after 9/11) and people can be brought back to the same job.
What is their track records for these estimates? Have they accurate in the past? My impression from GDP growth estimates is that everyone stays close to the average growth, but actual growth is apparently much more volatile in a random way. Similar with EPS estimates from stock analysts.
If it's raining you bring an umbrella, if it's hot you wear shorts, if there's a pandemic you wear a mask - everywhere all the time. They shouldn't of let people on airplanes, buses, buildings, etc.. without a mask. Don't have one? Here's some scissors cut up a tshirt, or use a scarf. It doesn't need to be N95 perfect. Just a barrier to keep you from touching your face, and to catch a good amount of spit flying out of your mouth every time you open it. Grocery stores, gas stations, offices that are still open, private social gathering, etc.. still no one is wearing a mask (in America at least) Asia was way ahead of us with their health culture on this one, we need to step it up. Unfortunately it's a message that really needs to come from the highest levels. The politicians, news casters, etc.. on TV need to be giving announcements with masks to get the point across.
It seems like the authorities in the US tried to downplay, even discourage, using mask if you're asymptomatic to prevent people from stocking up and depriving medical professionals of them.
Like I said, they should of said don't buy a mask - use a tshirt or scarf. You can't get on plane or go into a store without covering your face. Perfect is the enemy of the good.
I think we underestimate how many of these things are actually floating around. Tons of people have some for painting, sanding, wildfires, construction, etc. They're used extensively in all kinds of jobs. Just 3M, before the crisis, was making 50 million masks a month.
People need to dig around in their garage and get these things out, and then start wearing them. Even the disposable ones can be reused many times, particularly for someone that is just at the grocery store and not intubating COVID patients or something.
I'm sympathetic to the argument that healthcare workers need them, but healthcare workers also need people to wear them so that they don't get sick and show up at the hospital!
And of course, if you discourage mask buying you're discourage mask manufacturing. The Noble Lie from the High Modernist civil servant versus the free market and a world that's far too complicated for him to understand.
There are two exceptions: one, people who can manufacture masks at great expense but not at market prices. Two, people who could stock up on masks for the next pandemic but now won't because they'll expect the government to disparage their product.
Masks are made by manufacturers with the intent to sell them, so if you reduce mask buying and force down mask prices you will reduce the manufacturer's incentive to come up with amazing ways to turn out massive quantities of masks, and you discourage them from preparing in advance for the next pandemic.
Yes, face masks are common sense measure to prevent respiratory illness from spreading. Yet, U.S. CDC kept saying don't wear masks even till this date, kept giving Americans the lies of "false security" of wearing mask. I get the intention of preventing a run on precious N95/surgical masks that hurt healthcare workers - but come on, we should have use Defense Production Act to compel factories to make masks and increase productions as wells as impose strict purchase limits and regulate the market on the masks instead of telling people masks are unnecessary. This is to me the 2nd biggest failure of CDC leadership after screwing up with the COVID-19 testing kits.
By the way, we learned that a century ago during the 1918 Spanish flu pandemic - wearing masks help, even with non-N95 masks. Influenza could also caused by corona viruses, also transmitted via droplets primarily, just like the SARS-CoV-2
The only thing the Defense Production Act is going to help, is placing the federal government at the front of the queue. You can’t spin up a factory that makes X into one that makes Y without months or years of retooling.
By the time more mask factories are up, the capacity will no longer be needed. Same goes for ventilators. Too little too late; shouldn’t have outsourced manufacturing to China a generation ago.
If we had that manufacturing capacity here we would face similar issues since those factories would ideally be shut. If not shuttered, their labor forces would be suffering along with productivity as everyone gets infected.
The better solution is diversification of global supply chains which benefits all countries long-term.
It's OK using same mask every day. It still helps the virus stay local. CDC should tell everyone to wear masks right now.
If we just tell (or force with fine) everyone to wear a mask and have their mouth covered whenever in close proximity with some other person, we can go back to usual life. What's so hard about this?
Like I said, the mask doesnt need to be perfect. A cut up tshirt, bedsheet, or scarf is fine. The point it to keep people from touching their faces and to serve as a barrier for a majority of the large particles exiting your mouth when you open it.
However we didnt, so stop promoting ordinary people wearing masks.
[1] Masks protect other people from you spreading the disease if _you_ are sick. This is true, unless you spend your day around covid-19 infected individuals all day long for your job.
[2] Doctors and nurses need that mask. They are the ones who spend their day, risking their lives and their families health to treat these people.
Even now the risk of contracting the virus, if you are following isolation protocols, is extremely low.
Self-isolation reduces the risk by the largest factor, maybe up to the 99-99.5% level. Guess who cant self-isolate? Doctors.
Wearing a mask, if the entire population is infected, provides a benefit because you are surrounded by infection. Guess which person spends 8 hours a day in a highly infected population? Doctors, especially in the intensive care unit.
If you were worth as much to humanity as a doctor, as an ordinary person, your logic would save fewer lives. However it would increase your chance of being saved.
Stop lying to people that masks aren't effective. Not only does that put people in immediate danger, it makes it more difficult to walk back that advice in a few months, when we're definitely going to want everyone to wear masks when in public.
Doctors and nurses need that mask
So make your own. Even half of a t-shirt is much better than nothing.
It's not a joke, what WHO did was clearly on purpuse, there's enough evidence now. ,,joke'' would mean incompetency, but what's happening is much worse, and closer to cold war.
Thought experiment: Take a small sip of beet juice and then simulate a sneeze or a cough while standing several feet in front of your clean white wall. Next, take another sip, wrap a handkerchief around your face and then sneeze / cough / spit. See how far that "virus juice" flies when you wear a mask?
If everyone wore a mask, then all the people who are sick are effectively increasing their social distance from the healthy people. Even if the sick person walks within 6 feet of you, their effective social distance might be greater than 6 feet if they are wearing a bandana, t-shirt, surgical mask, etc.
Wearing a face mask works on a population scale. Everyone should be wearing a mask.
> if there's a pandemic you wear a mask - everywhere all the time
I thought the expert advice from the WHO is to not wear a mask?
> There is no specific evidence to suggest that the wearing of masks by the mass population has any potential benefit. In fact, there's some evidence to suggest the opposite in the misuse of wearing a mask properly or fitting it properly.
Yes, it's absolutely essential in these uncertain times that we do not allow ourselves to be led astray by our own best judgement or common sense, but instead rely upon the expert guidance of organizations such as the WHO.
Sometimes you have the luxury of multiple trustworthy parties having already each done a large sample size peer reviewed double blind study on just the question you want to know the answer to and have all come to the same conclusion.
Other times that hasn't happened yet and you still need to make a decision about what to do today, not after six months of further study.
from other experts give reasons why it is effective:
Q: What mistakes are other countries making?
A: The big mistake in the U.S. and Europe, in my opinion, is that people aren’t wearing masks. This virus is transmitted by droplets and close contact. Droplets play a very important role—you’ve got to wear a mask, because when you speak, there are always droplets coming out of your mouth. Many people have asymptomatic or presymptomatic infections. If they are wearing face masks, it can prevent droplets that carry the virus from escaping and infecting others."
// end of interview comment.
Could it be that CDC knew knew masks worked, but didn't want people to stockpile them? Or could it be that most people won't wear them effectively? No idea which, or both.
I believe the right thing to do is to ramp up mask production and try to get a very small number per capita (after healthcare workers have sufficient) to the sick and general population, especially around areas like NYC. Then educate people on how to wear them.
The one thing I learned from this pandemic is to distrust scientists at the WHO and the CDC and to read the primary literature directly. These folks are far too involved in politics.
Everywhere's the same on this, back and forth about this need vs population at large.
Obviously there's a need that's not being met, but it's nearly two months since masks became hard to acquire.[0] Can we not change the official recommendation to "make a cotton mask and wear it if you go out for groceries; here's a template. Don't use N95 masks, instead donate them"? It would be great to have numbers on this.
One way to address mask hoarding in the Czech Republic has been a ban on selling any masks in the categories needed by medical personnel to anyone else than the state, which then bouth the remaining stocks a redistributed them to hospitals, first responders, etc. Similar thing has later been done also for some medicaments that looked promising for treating those seriusly sick with covid-19.
Doing this really seem like a much better way to handle the situation than giving a really really dangerous false advice like this.
I don’t know anything about you but I really struggle to understand that you’ve got some insight into the literature that the professionals at the WHO are missing.
Seems to me that the biggest problem we have is lay people thinking they know better from reading random isolated papers without context and doing their own thing against advice designed to make everyone safer.
Did you read the paper I linked? Read it, and then tell me what the facts are. Whether or not they are offering advice based on facts or political considerations is a matter of debate. There is no real meaningful debate on the mechanisms of influenza transmission. 1 mechanism is decidedly airborne. How else can you reasonably explain infection rates? Hundreds of thousands of people are letting other people sneeze directly on them? The literature is clear about this, frankly I have no idea what the WHO is smoking.
Yes, I work at one of the major universities in the US. Watch over the next week as the guidance on this changes.
Frankly, you don't need to be 'qualified' to read review articles in this area--I encourage any logical citizen to do so. Specialist articles?...sure, it's unlikely you will gain much from reading those.
WHO said January 15 that there was no Human-Human spread of SARS-CoV-2. They are a politicized organization and you should not depend on what they have to say for unbiased factual information.
There is ample scientific evidence that masks work both to prevent being infected and to prevent infecting others.
The argument seems to be "there is sufficiently low risk from normal daily activities that it's not worth wearing a mask." If that's the case, why can't I leave my house except for groceries? How did all of those people catch this thing if the risk is so low? The reality is that the risk for everyone, given the severity of COVID is high. The risk for healthcare workers is beyond extreme.
>I thought the expert advice from the WHO is to not wear a mask?
From what I gathered from their guidance the basically say masks are not effective enough to protect you & people do not know how to use them.
Well, the problem is that how well the mask protects you is at this point int time actually a secondary concern. The biggest issue is protecting others from you when you are infected and do not know that yet, which is a very big problem for covid-19 due to many asymptomatic carriers.
Even a piece of cloth covering your mount and nose can reduce the amount of infected droplets you generate be sneezing and breathing significantly if not totally stop transmission barring really close physical contact, so there is really no good reason for everyone not to wear a mask.
That WHO is totally neglecting this aspect of the mask protecting others is almost criminal negligence.
> From what I gathered from their guidance the basically say masks are not effective enough to protect you & people do not know how to use them.
Why give them to nurses and doctors then? It would suffice for the patients to wear them. If they do work at protecting you, then let's say a patient can't wear one, should you wear one? The answer is yes. Therefore the only logical conclusion is that an N95 mask protects you.
My interpretation is that initially the public needed sit back and let healthcare providers acquire masks, but now it's time to cobble together something to wear when leaving the house, while still observing all other protocols.
HN has featured multiple studies on the effects of wearing a cloth isolation masks. They all found it reduced the chances of catching it by over 50%. That's well worth it in my opinion.
And to add to that - the other if not the main benefit of masks is it reduces the chance of transmission from infected people, if they do not know they are infected but wear a mask.
My wife was a nurse in Japan (a big mask-wearing culture) and I was always skeptical of it but from reading some articles of late, I've changed my stance on it and do believe that masks help. Here's some articles I've read lately that discuss this topic:
> Some people with swine flu travelled on a plane from New York to China, and many fellow passengers got infected. Some researchers looked at whether passengers who wore masks throughout the flight stayed healthier. The answer was very much yes. They were able to track down 9 people who got sick on the flight and 32 who didn’t. 0% of the sick passengers wore masks, compared to 47% of the healthy passengers. Another way to look at that is that 0% of mask-wearers got sick, but 35% of non-wearers did.
> ...the vice president of Taiwan, a prominent epidemiologist, gave regular public service announcements... These announcements included when and where to wear a mask, the importance of handwashing, and the danger of hoarding masks to prevent them from becoming unavailable to frontline health workers.
>Unfortunately it's a message that really needs to come from the highest levels. The politicians, news casters, etc.. on TV need to be giving announcements with masks to get the point across.
This is how it happened here in Czech Republic - one day as part of the emergency measure face masks (including home made ones) have been made mandatory in public, fullstop. Don't wear one & the police will request you to put on one or face a fine.
This we we went from you in public getting weird looks if you have a mask to anyone not wearing a mask getting weird looks in about two days.
Since then the neighboring country of Slovakia to the east adapted the same rules for mask wearing in public and most recently Austria to the south adapted mandatory mask wearing in shops.
It doesn’t help that almost every news outlet in the US, including medical professionals, said masks are useless if you aren’t sick. I followed that advice unfortunately.
Went to the UW* ER, not for corona, wearing a mask. Doctor came in, gave us funny look, "Why are you wearing those?" Doctors and nurses weren't wearing masks within the ER area. They said that if you have corona, or symptoms, they give you a mask, so when he came in the room and saw us in masks, was worried there had been a mix-up.
Perfect is the enemy of the good, that's why people are obsessed with surgical masks and n95 masks. Simple homemade masks are good enough. Plus they prevent people from touching their own faces.
Are things still open where you are? I've legitimately been WFH for the past two weeks and have avoided going into public except when absolutely essential. And that's in line with everyone I know up here in Canada.
The two runs we've done were to the super market & pharmacy (about a week and a half ago) and to my wife's office building since she needed records of employment to let folks start collecting unemployment. At this point a mask is a good idea - but simply not going out is a better one.
Very good idea for those things you need to go out for (like groceries) though. And as the OP says, if it came from the top that everyone should be doing this, using homemade masks if necessary, the social norm could be turned around overnight, just like it was with social distancing.
You should not let people in planes in a pandemic, face mask or not; even with a mask the risk is simply too high for spreading the disease during all the touches during boarding, seating, opening/closing storage bins etc. Even with gloves it is not safe enough.
A full bio-hazard suit is too expensive and quite impractical, less than that is not safe.
Perfect is the enemy of the good. The point is to slow the spread, flatten the curve. Eliminating it is not an option. Shutting down all travel 100% is not an option.
Mandating everyone in airports, on planes, etc.. must be wearing a mask is 100% possible and would have slowed the spread. Don't have a mask? Here's some scissors, cut up a shirt in your luggage and make one.
T-shirt fabric was found to be 75% effective at stopping droplets from spreading in a study[1]. That’s pretty remarkable considering and 95 masks are 95%! I guess that makes them N75 masks?
the "95" part of N95 means it filters 95% of particles smaller than 0.3 microns. A sieve that can filter 95% of rice particles doesn't make a N95 mask either.
I agree, in fact I think it’s a perfectly reasonable stance. I’m just asking about the implications of widespread mask use to a society that generally does not use them. I’m not discouraging the use of masks if it benefits public health.
I was responding to a silly post with a silly (though good faith) retort.
The OP posited that China's practice of selling animals in open air meat markets as being a cultural distinction that makes the US entirely different. There are plenty of open air meat markets in the United States, and we've had plenty of issues over time with this.
Maybe it would've been simpler to say "Making jokes and insinuations about bat soup (or whatever other Wuhan memes are currently popular) is to intentionally downplay what actually happened in this scenario. Congrats on the reductive racism, you've established that you're superior to others and your culture is surely blameless in the spread of this GLOBAL pandemic."
Woah. Easy there. Your assumption that my post was not in good faith is a bad one.
I disagree that it’s reductively racist to observe that bringing, selling, and butchering live, wild animals in wet markets is a bad hygienic practice. It is just a bad idea for the world we live in. That’s true regardless of the country or culture, though it is especially prevalent in Asia for historical reasons. I think that’s a reasonable statement in the interest of public health, just like I would argue against anti-vax cultures. Calling out behaviors that are not conducive to public health should not be shamed or called racist. My post was meant to be silly but in good faith, as you described yours was also meant to be.
Lastly, if you are aware of regular occurrences of comparable practices (butchering of live, wild animals) in markets in non-Asian geographies other than Mexico, then you should go add whole paragraphs to the geography section of the Wet Market Wikipedia page and enlighten us all here.
Masks largely protect other people if you are sick, yes. Even if you don't know you are sick. They do also provide some protection for you against others. And finally, it doesn't need to be an N95 mask, or even a surgical mask. A scarf or piece of t-shirt still blocks a lot of droplets. All the actual studies I've seen suggest that masks are indeed effective. I suspect that the reason it's been suggested they aren't is due to fear of the shortages you mention. So yes, people shouldn't be hoarding masks. While there's a shortage, non-medical professionals should use homemade masks when they have to go out for essentials.
The isolation measures are doing a lot more than this. Given that you are promoting every one doing this, I would wager that people who are busy or do not understand this guidance would believe they are protecting themselves by wearing a mask.
This false sense of security erodes basic isolation and sanitary measures which are more protective.
I understand people want to feel safe, its better for them to be safe.
People should avoid public spaces where possible, yes. But we still need to get groceries, maybe go to the doctor, a lot of people still have to go to work, etc.
Right now they are scrambling to cushion the blow on the hospitals but by doing so they are putting off the inevitable need for people to get and defeat the virus so we can have herd immunity. Without this old people are still going to be at serious risk once we let everyone out again.
Step 1. Avoid old people and just do normal life, build an immunity.
Step 2. Now enough people are immune we can hang out with old people again.
But we are at Step 0 and are making a big delay for steps 1 and 2 which will still need to happen. There’s a big risk the second wave will be more tragic than the first if people don’t realize it.
The reason why this plan doesn’t work is because 20% of people who get this disease (regardless of age bracket I believe) require hospitalization and a good number of them require an ICU bed. There simply aren’t enough beds or health care workers to address the demand shock that would happen without social distancing, which means people dying at home waiting for a bed.
What is the alternative? Shutting down doesn't work either, because it's not possible to shut down until cases worldwide go to 0, so won't the outbreak just start again after things reopen?
The whole reason for social distancing and #flattenthecurve is to delay mass infections long enough for the scientific/medical establishment to develop a vaccine or, failing that, effective treatments. There's an understanding among policymakers (though perhaps not in the general public) that either everyone's going to have to get it, or a vaccine's gotta be developed. The problem is that with a 2% mortality rate, "everybody's gonna get it" is 140 million deaths, the largest mass casualty event in history. This is a lot like one of those movies where an asteroid is hurtling to the earth and a bunch of random oil roughnecks need to detonate a nuke inside it - it's a hail mary, but not doing anything is not an option. The hope is that the biomedical industry can develop a vaccine, effective treatments, or at least a lot more ventilators and hospitals to blunt the impact before everyone gets it.
It's not just old people who are at risk, BTW. With medical treatment the death rate of under-40s is about 0.2%, 30x less than the ~6% of over-65s. However, young people are still hospitalized at roughly half the rate of old people; if the hospital system is overwhelmed we can expect a death rate of ~5% of young people. That's about a 10 million young people in America alone. That's why it's so important to delay the epidemic long enough to build enough hospitals and ventilators to treat everyone.
> The whole reason for social distancing and #flattenthecurve is to delay mass infections long enough for the scientific/medical establishment to develop a vaccine or, failing that, effective treatments.
This is extremely unlikely unfortunately, most flattened curves end up overtaking the populace at large - the more crucial element to control is the proportion of the population that's sick at any given time to avoid overwhelming healthcare or logistic resources.
I think the factor you're missing here is the hospital bed ratio. When folks, even healthy folks, get Covid-19, it can go badly - so all this social distancing is to let it spread really slowly through the populace - maybe so slow we get a vaccine, but probably not... And while it is spreading we'll ideally have enough healthy people to actually care for the sick ones because if you and everyone around you is bed-bound then people can die from pretty trivial complications of the disease including just starving to death.
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I wish other central banks (in other countries) stepped up to this amazing level.