Is the economy actually bad? Tech stocks are down recently, but are still above where they were 2 years ago. Unemployment is under 4%. I don't understand all of the doom and gloom in VC and startupland.
- housing issues are reaching levels we’ve never seen. Not just buying, but renting is becoming exceedingly difficult for some. The fed raising interest rates so far has done nothing to level home prices.
- supply chains are crumbling. It’s nearly impossible to find a new vehicle. Used vehicles are selling for more than new ones. It’s yet another bubble that will burst miraculously.
- gas prices are still through the roof. It’s not uncommon to see $6/gal on the west coast (in any of the three states).
- the baby formula shortage is actually much worse than people realize. It went from hard to find to literally no one has any over the course of 7 days.
- stocks and crypto are tanking. Yes, some stocks aren’t seeing it as bad as others, but it’s not insignificant.
- food prices are increasing, and it’s very noticeable walking around a grocery store. Meat is $1-3/lb higher than it was 6 months ago. Certain produce is either not available or marked up 1.5-2x what it should be.
Now, a lot of these are going to get much much worse. The government seems content with really doing nothing other than seeding billions to countries not named the United States.
I think it’s fair for financial analysts and investors to be in full on bear mode.
They've barely raised rates! 0-1% federal funds rate is not a normal range, especially when inflation is ~10%
I think this isn't quite accurate for a variety of reasons, much of it is that the federal government actually has significantly limited control of the above + what control it does have it has to pass through a hostile senate to accomplish.
- The federal government cannot force local government to build housing to increase supply, it can only try to incentivize, and housing can't be built fast enough to offset current demand
- The federal government cannot factories, particularly overseas ones, to produce more
- The federal government can, at most, go through a faster approval process for foreign baby formula; it cannot force current domestic makers to produce formula
- The federal government literally doesn't control crypto that's what the attraction of crypto was lol; its bombing is entirely crypto's fault; and the stocks have been pushing back against government regulation for ages already
- The gov't cannot set food prices
So precisely what do you expect the government to be doing here?
Federal gov'ts could do all these things, and did, before the advent of the current neo-liberal governance in the 80s and 90s. The choice not to be able to do so, to strip governments of planning and industrial policies, was a conscious policy choice made by several consecutive administrations and governments across the whole G20 (at least).
Even more so federal governments especially did these things during war times. And we're basically in a proxy war with Russia (and IMHO, for the first time in my memory this might actually be a conflict with an actual morally justifiable cause), yet governments in the west have not put themselves on a footing yet to really weather such a war.
We should have put ourselves on that footing during COVID. Or hell, to deal with the climate crisis. And now here we are with this latest situation in Ukraine...
eeeeeeeee
> The federal government cannot factories, particularly overseas ones, to produce more
I am assuming you mean 'force'. Trump literally used the defense production act to keep hamburger patties flowing when workers were complaining about COVID.
https://thehill.com/homenews/administration/495175-trump-use...
While keeping hamburgers coming was the purpose of this EO. This act allows the president to force producers to change production to benefit the defense needs of the united states. To produce 'more' of something through retooling or other means.
https://en.wikipedia.org/wiki/Defense_Production_Act_of_1950
> - The gov't cannot set food prices
Please see a history of price controls. The article literally has a poster prohibiting charging more than govt set prices. Not saying price controls are a good idea, but do not claim something easily disproven with a google search. I learned about this in middle school.
You'd be "relieved" to know that some places in Europe saw 8$/gal in the past weeks.
The retail investors don’t have any desire when the stock market is tanking to buy stocks in money losing former unicorns. The investment bankers who organize the IPO also won’t see the initial “pop” that allows them to make a quick profit.
Of course the employees who sacrificed real compensation in cash or RSUs in a public company in lieu of statistically worthless “equity” come out on the short end as the companies repeatedly delay an IPO waiting for the “environment to improve”.
All this to say, if you want to be a founder, go for it. But unless the startup you are thinking about has enough funding to compensate you as an employee at market value in cash, skip it.
Yes, and the good new is these companies have been paying significantly more cash in the last few years. It may not be enough to justify moving or staying in the Bay Area, but many small companies are paying the same remote, which seems like a better deal than the big tech companies in the short term, if you're looking to cut costs while their equity is down.
There's a lot of bad jobs out there right now, but if you're not in a gambling mindset, there are some good opportunities to improve your overall financial position.
Local restaurants that survived Covid are shutting down due to cost of food. Others are adding x% to food bill to cover cost. Things are rising so fast they don’t want to keep ordering new menus.
I have to imagine consumers will become tired of the cost increases - we put up with it a few months, and decided "no".
lower tariffs, subsidize capital investment into production of lumber/housing, aggressively push and fight for higher density residential zoning, limit leverage allowed for investors of buy and hold rental properties, eliminate capital gains tax advantage for income above $1 million/year, enact temporary taxes on non essential consumption items, restart student loans (billions a month in excess spending for consumers). Etc etc
Instead they keep trying to tie BBB to inflation fighting, when its provisions are nothing of the sort.
They handed consumers far too much money, and need to suck it back up in a way that targets discretionary spending (vs essential spending). Too bad they won't...
But they are proposing BBB, not these things. Reconciliation does have limitations in that the matters must be budget related, but seems pretty easy to fit most of these under that umbrella.
They can resume student loans at the stroke of a pen
Innovation used to save our bacon, but now you have to innovate just to stay in the same place. Just pouring money on the problem doesn't work, it increasingly won't with climate change.
So we are between a rock and a hard place, inflation and recession. Choose your adventure. If the future could vote it would vote for curtailing demand across the globe.
Agreed, though that includes not just the supply of things, but the supply of money as well, which is also being reduced as the Fed raises interest rates.
An increasing and rapidly growing part of the economy is Services and Services are not that dependent on supply chains.
Also supply chains were disrupted mainly due to the world economy being overly dependent on China and China being shutdown.
In the long run this might actually be bad for China as countries pass laws to not be so dependent on China.
The financial markets are used to facilitate the operation of this economy and my argument was that it should not be seen as the economy itself.
The current inflation is because of China, Russia, the pandemic, lack of investment into the supply chain (during deflation, resilience being seen as inefficiency, preference for stock buybacks), bad investment (during the pandemic), lack of innovation and increasingly climate change. Something weird is going on with the fuel prices too.
The people that get screwed are cash users/holders and maxed 401k holders. EG People about to hit retirement paying rent. Young people working two jobs to trying to pay bills. There will be nothing but rent hikes for years - shrinking ETFs, with tight restrictions to become debt holders. As usual the poor guy gets shafted. :(
https://www.youtube.com/watch?v=Q-5US4J03Wo
I'd say we're in the mid-stages of what might be called an "economic crisis"; that doesn't necessarily mean riots in the streets and stocks plummeting to zero. But it means severe transformations that will displace the way things are done.
In most crisis it's usually the working classes who suffer first and most deeply. And that's been happening for some time; long prior to COVID, probably dating back to 2008. Once the upper and uppder middle classes start saying things like what you see above, you're already in the trenches and now shit's gonna get real.
Maybe.