Hacker News Reader

Comment by jedberg | Hacker News Reader

This is my third downturn. So far this one doesn't look much different than the others.

A lot of businesses that could only survive on VC money have/will collapse, and the good businesses will stay good, albeit maybe with slower growth or smaller margins.

The large companies will power through, and maybe even hire up some of the really great talent that was at now-defunct startups.

Some new businesses will spring up to address our new realities.

The lockdown will end one way or another. Maybe some things will be forever different, like after 9/11. Maybe we'll have to wear masks in public forever. Sounds like a great opportunity for a fashion brand. Maybe we'll have to take our temperature to enter a public place forever. Sounds like an opportunity to make rapid temperature scanners that work on crowds.

In the grand scheme of things, this won't make a huge difference to the business cycle.

Some companies will die, others will be born.

View on HN

Also my third downturn. The thing is, during the second downturn, I thought "We'll probably make it through this one okay, but it'll fatally weaken the system such that the next one may be the final one." We're at the next one now.

Most of the issues I identified in 2009-2011 haven't really been addressed, and if anything have gotten worse. My thesis was that by bailing out the financial system, the government couple trust in the government with trust in the banks. The banking system was saved, but the price of this was that a large section of America gave up trust in America.

Nothing has been done to restore that. If anything, it's gotten worse, with the Snowden disclosures, increasing media polarization, the election of Donald Trump, the impeachment procedures, and handling of coronavirus. Then add rising income inequality, inflation in critical need-to-live goods (health care, housing, and food), political polarization and tribalism, increasing publicity around the misdeeds of certain sectors (tech) that were considered the few bright lights in the American economy, skyrocketing national debt (which will increasingly tempt the federal government to monetize it), and decreasing economic and physical mobility, and you have a powder keg.

My sense is that this is the start of something bigger, and that we're going to get a series of cascading failures until eventually we get a collapse of critical monetary or government infrastructure.

You had asset prices and rates at much different levels during this downturn vs your three downturns. You haven't had asset prices correct to what economic reality is (not saying they should necessarily but that's what's needed for a healthy business cycle) and rates can't really go in either direction without things getting really bad. I agree with your general comments 100% but this can be a much different business cycle as far as length and phase.

>In the grand scheme of things, this won't make a huge difference to the business cycle.

This is my third as well. Echoing others, the money will dry up because folks become risk averse, but it'll eventually flood back in as those same folks get FOMO.

Reply on news.ycombinator.com