* 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.
> 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 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.
which we got through without state-wide lockdowns.
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.