Our crash may come in the fall when UI payments stop and the rent floats become unsustainable. About the time the second wave hits.
https://66.media.tumblr.com/bbbf0aec68490ae2679ef489709c3d18...
And yet the economy is staggering and it's likely to get worse. Why? Because people have stopped doing things
We've built an entire economy around people doing things they don't really need to do. In and of itself, that's not so bad, but we've also built an economy with so little resilience, so much fragility, so little spare capacity that the mere fact of people stopping doing a bunch of stuff has the potential to cause complete economic disaster for, what 15-20M Americans?
Citation needed. Things seem to be functioning pretty well, all things considered. I can still buy virtually everything I need from the local grocery store and Amazon.
I've lived in third-world countries where regular products would be out of stock for months at a time under normal circumstances.
To me, the economy looks insanely resilient in a global pandemic.
> the mere fact of people stopping doing a bunch of stuff has the potential to cause complete economic disaster for, what 15-20M Americans?
That's just how it works, if people stop buying the stuff that 20M people produce, the work for those jobs stop existing for the moment. That's neither good nor bad, it just is. There's literally no way around it.
The problem isn't fragility or doing unnecessary things. You just need a social safety net, which Europe has been better at providing than the US, but the US could easily provide if it wanted.
If you want to have a conversation, the one to have is about social safety nets, not an "economic resilience" bogeyman.
It does seem having a large part of the economy focussed on frivolous endeavours has given us a fairly big buffer. We have seen formula one teams making medical equipment, supermarkets hiring restaurant staff, hospitals hiring air stewards (after the opposite in recent years).
It looks to me like the developed world will cope with this (some countries better than others of course).
We’re still in the early days of this pandemic, as it usually takes many months for the upfront shocks to fully process through the economy. Numerous reports detail a potential collapse of the commercial real estate market, the government is signaling that it is going to hand out any more stimulus money, and health experts are warning about a second wave. Economists aren’t ruling out 40% unemployment down the road, which puts us firmly in depression territory.
I have no idea where you live, but I live in Austin, TX, a fairly affluent city, and the changes to the city have been dramatic and very visible. So much retail is still closed, and many thousands are out of work with little opportunity to renter the workforce and likely without future stimulus.
Just look at the George Floyd protests, there’s an inherent economic component to American racism and Covid provided a lot of fuel that the senseless killing of Floyd ignited. Those events did not occur in a vacuum, which is partially why we’re seeing unrest that we haven’t witnessed in 60 years.
Not to mention that millions never recovered from the last major crisis while politicians and big business pretended like everything was back to normal after the big market rallies.
While I'm happy to bail out workers, can we please simply bust out the overleveraged on assets for once?
Part of the reason why the economy has no resilience is that we keep bailing out the irresponsible so there is no incentive to be responsible. Why keep inventory and cash reserves when you can go into 3x debt and get bailed out? Why be responsible when your competitor is basically going to get loan forgiveness instead of going bankrupt and you being able to buy them?
How about some "trickle up"? Bail out the individuals who are basically unleveraged and let the leveraged compete to try to stay afloat or go bankrupt and release the assets to those less leveraged. The real estate doesn't suddenly lose it's value because the owner got busted out.
It's what capitalism is supposed to be--risks are supposed to get upside AND downside.
Porque no los dos? You say you've lived in third-world countries, surely you can see the utility in a conversation on both and how much overlap there is between the two hemispheres of that particular socio-economic Venn Diagram..I'd hope?
citation needed.
100,000+ people have died because our country is fragile. unemployment is somewhere between 15-25%. a virus is about the dumbest enemy we could ever hope to face, and we've failed.
the u.s. is in massive debt, the highest in the world. the u.s. has no socioeconomic safety net, and i question your claim that the u.s. could easily provide one if it wanted. the existing "safety nets", such as social security and taxes, are so abused and misused that they serve as explicit counter examples to your claim. roads and infrastructure in the u.s. are falling apart.
in no household would it be advisable to have massive debt upon debt while the house is falling apart and you're living paycheck to paycheck. and yet, that is exactly what the u.s. is doing.
in many respects, the response to the virus has been both the u.s. didn't want to react to it and that the u.s. couldn't react to it. the u.s. does not have the organizational capacity to handle it.
Approaches like just-in-time manufacturing or loading up on debt in a good economy to expand faster work out great... until they don't. And when things go bad, they can go bad quickly.
I've heard a number of people referring to COVID-19 as a black swan event, but it's really not. Pandemics are a known risk that have happened many times in the past and will happen many more times in the future. The fact that such an unsurprising disaster has stressed modern economies so tremendously makes me really pessimistic for our society's long term prospects.
Despite all the disruption, I'd be surprised if it were on the whole more efficient for companies to optimize for resiliency... for an event that happens once in 100 years.
Rather than fall back on central banks & governments, and expect them to throw everything and the kitchen sink at it.
Ideally, though, what the government will and won't do should have been communicated well in advance of a pandemic, so that everyone had an even investment playing field. Piecemeal bailouts are asking for insider trading.
The aspect of the Black Swan theory where you point to the data after the fact and say, "We should have known" is very similar. For example, countries that experienced SARS and MERS where very much more prepared for COVID-19. Other countries which didn't have many problems did not prepare. This is because they didn't realise that they should prepare. For them COVID-19 was out of the blue -- a complete shock. Of course, we should have looked at the original data and if we had, we could have improved the outcomes. But we didn't have that experience and we didn't know when to expect a large problem.
The Tohoku earthquake in Japan in 2011 was similar. Earthquakes of that size hit Japan about once in 1000 years. We know it will happen. We don't know when. We don't know if it will happen in our generation. Should we prepare for it. In hindsight, yes, of course. At the time, it was a shock.
Is that a black swan event? I don't know. However, I don't think we need to have much of a distinction. Even if we should know, the fact that we don't know is all that matters. It is still a surprise.
One I'm familiar with moved to a LEAN system where they did not keep large inventory of supplies. There was some protest about not keeping essential supplies on hand for the lab etc.
And now we see the problem with this. Profit margin over safety.
> We've built an entire economy around people doing things they don't really need to do.
Even hunter-gatherers spend a great deal of hard-earned resources on things "they don't need to do," such as art, music, parties, luxury foods and jewelry, and so on. This is human nature. It has nothing to do with how the economy is structured. The stuff we're not doing that "we don't need to do" is not economically redundant make-work symptomatic of an inefficient economy. It's symptomatic of us being a species that prefers nicer digs to "a cave with access to rice and beans."
In any economy, activity shuts down if individuals fear an active plague. Human nature also entails people being scared of choking to death on their own lungs.
The last paragraph here is trying to sound profound but it's really just catastrophically stupid. There's really no such thing as an economy that has the "spare capacity" to offset 25% of the workforce being furloughed. There are political economies that can adequately respond to this shock - perhaps with a large Keynesian stimulus - but that's very different from having an economy that's somehow structurally immune to the impact of widespread inactivity.
Unless its author means "give people free money until the crisis passes", the comment you're approvingly citing badly misunderstands what an economy actually is.
The latter two aren't really necessary, but we gave them jobs because it looks good when you report the quarterly unemployment stats. Think about who would be the first to be let go in the case of any economic disruption that impacted that grocery store.
> The latter two aren't really necessary, but we gave them jobs because it looks good when you report the quarterly unemployment stats.
I don’t even know where to start with this. Clearly you have never worked in a grocery store. Beyond that - why would private businesses agree to hire unnecessary workers to juke unemployment stats? This entire argument makes zero sense.
It seems like you have some strong views about the economy but they are disconnected from the facts.
All kinds of jobs are at risk in this type of environment. Service will be hit hardest but there are ripple effects that will impact pretty much everyone to some degree.
The grocery stores obviously don't care about unemployment stats, but federal government incentivizing "job creation" without getting into specifics about the utility, necessity, etc. of those jobs is a real problem. Everyone who drives for Uber has a "job" but that is hardly anything to survive on.
private businesses really couldn't care less about those stats. they will hire the minimum number of people necessary to perform their service, at the minimum cost that they can.
The infrastructure may not be physically destroyed, but it is effectively out of commission. Same with everything from warehouses to meat cutting plants. You could make the same argument if a gas attack were used on a factory instead of a bomb.
I’ve seen virtually no impact on the services I depend on locally (except toilet paper for a few weeks). Some supply chain delays on the business side, but it’s delays due to temporary shutdowns rather than permanent factory closures. The orders are still coming through a few weeks later than expected.
The resilient parts of the economy are already planning for EMP protection from disruption and developing space exploration economies.
However, many other industries are still business as usual. E-commerce businesses might actually be doing better than ever.
I tried to schedule a few contractors to get work done recently, thinking they’d have additional openings with the slowdown. Turns out, they’re booked farther out than ever. Everyone else working at home had the same idea to schedule that work.
This will clearly shake a lot of businesses, but the real question now is which ones survive and which ones can’t come back. I suspect a lot of the businesses that don’t make it were nearing the end of their viability anyway.
My city has been in lockdown for two months, yet I look out my window, and see a full freeway of people going to work, going from work, transporting goods, transporting themselves...
Look through the list of essential activities in your local shutdown orders. By the time you get through all the pages of it, you'll be wondering what the hell is left that's non-essential.
Lol this is condescending, this isn’t due to millennials forgoing their avocado toast
They've been building up a drum beat about debt and deficits over the last several weeks
FTFY
... every time there has been a Democratic president.
I'm actually more concerned about what happens if Biden wins in November, and the Republicans feel incentivized to let the economy crash and burn.
Wile E. Coyote only has problems because he is aware of what a huge mistake he’s made.
I don’t know what the behavior analogous to road runner is in an economic sense. Perhaps suspending capitalism? I can’t imagine anyone going along with that.
The economy is unhealthy but people can be convinced to ignore that because it's not easy to see the holistic conditions of the US economy on a day-to-day basis, and the way we summarize it in public discourse and media (looking at indices of the stock market) are assuaging any fears that may arise.
Personally I find the analogy perfectly apt.
The metaphorical business cycle plays out in every episode: Coyote puts his trust in the Solution To His Problems; he spends money and time buying and setting up the contraption that will Solve His Problem; he deploys it, but because of external (usually environmental) conditions it fails; Coyote is worse off than before because he over-extended himself. Coyote in this case would be a small business owner or similar everyman who is trying to figure out and out-play the game to get rich.
I guess the lesson here is to create an economy that is amenable to the localized, instinctive decisions made by each of its participants, and not to spend time on manufacturing conditions for success by setting up extremely efficient but otherwise very finicky systems, but rather to pursue it step by 3-toed step. The fancy contraptions (quantitative easing being an obvious and recent example) never end up working as intended and instead make life harder for workers in aggregate.
It seems we should rethink the game if it falls over every few years and fails to serve the majority of the players.
Since money is a human invention, if everyone pretends that these are not handouts but just a lot of debt, the economy can keep going and those loans will be repaid slowly or it will be a figure somewhere of how much debt the public is in.
As is, only some of those things were done in some places, which almost certainly leads to conflict.
In particular, the conflict I mentioned in the last sentence was directly alluding to the problem of only giving a rent holiday without a mortgage holiday to go with it. It's actually kind of hard to believe you read my really short post in its entirety, because you're arguing quite a strawperson here.
For banks or lenders that don't have direct access to the central bank's reserves they will need to sort that out between themselves or possibly with further legislation, but it's a much much easier problem to solve than individual renters going insolvent en masse because their landlord is still demanding rent while they can't leave the house.
I really feel for both renters and small-time landlords. I've been in and/or known people who've been in tough spots on both sides. But I have limited empathy for those who have no empathy.
I still had more viable options and was in a better place than most people living paycheque to paycheque are if they're renting and their ability to work is interrupted for months.
All these situations are not equal, and if your 'empathy' tries to force them all into the same bucket, that's a problem.
Especially in times like these, we should be trying to find common ground with one another, not putting up walls and saying "you aren't allowed to think you understand what I feel" or "your problems are insignificant because mine are worse".
If they work together as human beings they might find a solution that works with the means of each party, but if they start a hardship contest then they both lose.
And yet every reply comes in crying about mortgages, which I said right in my first post should have a holiday as well because otherwise there's conflict.
There's a knee-jerk reaction of empathy for people holding property that isn't being extended to renters here in this thread. It's showing in where people stop reading and hit the reply button. If you can't read past "rent holiday" to see the next part, you aren't spreading your empathy evenly, let alone fairly (which is not necessarily the same thing).
We could of course just give everyone what they would have made, based on last year’s tax returns or whatever, of course this has its own problems (inequality, inflation, etc.)
[1] - https://www.cdc.gov/coronavirus/2019-ncov/hcp/planning-scena...
[2] - https://www.cnbc.com/2020/06/04/astrazeneca-is-set-to-make-t...
[3] - https://www.statnews.com/2020/06/01/gileads-remdesivir-shows...
[4] - https://www.msn.com/en-us/news/politics/the-us-has-thrown-mo...
The CDC says CFR -- deaths out of cases that involve symptoms -- could be as low as 0.26% but this is bonkers. New York City has seen 16,992 deaths plus 4,760 probable. The total city population was 8,336,817 as of last July. So if we assume every single man, woman and child in NYC was infected and symptomatic, we get a death rate of 0.204% using only confirmed deaths, and 0.26% by adding in the probable cases. (Note that this doesn't include excess mortality, which could add thousands of deaths.)
Of course, antibody tests last I checked were only at about 20% for NYC, and presumably many of those people were asymptomatic. So the rate is potentially much, much higher than that. But even under ridiculously "optimistic" assumptions, the CDC's lower bounds are crazy.
Edit: calculators are hard, fixed a bogus number.