Hacker News Reader

Comment by ChrisMarshallNY | Hacker News Reader

I'm not surprised (unfortunately, and I am truly sorry for this).

Don't look to the 2008 recession for an idea of how things may go. Look to the 2000 (Tech Bubble Burst) recession. In that one, the bottom dropped out of the tech market. Web designers were especially hard hit.

I have family that works for Intel, and they say that Intel tends to actually increase hiring in bear markets. I suspect that's because they are getting bargains, and preparing for the inevitable upswing, so they will be in a position to jump on the up elevator when things turn around.

I guess it depends on the company. Companies that are running on fumes (highly leveraged) are likely to have a tough time. Companies with conservative approaches may do better.

View on HN

Biggest difference between now at 2000 is companies have real customers and revenue. 2000 was a completely different beast and conditions that set that off aren't anywhere close. Doesn't mean it can't get bad but 2000 is not the place to look for a playbook.

Some companies can certainly justify their frothy valuations, and a bunch certainly don't. Many of these companies need the capital infusions to stay afloat, and I can see a bunch folding as capital market risk tolerances start to contract.

Two more key differences:

- In 2000, people were talking about the future being about outsourcing engineering work to lower cost-of-living countries. To some extent that's happened, but companies also see tech as integral to their survival and have realized that their core engineering teams need to be in the same time-zone. - In 2000, tech was for tech companies. Now, every large bank has a huge technology team. Every company in logistics has a large tech team. Every retailer needs good engineers. In 2000, there were a few niche websites online. Now, a strong online presence is essential even for stores like Home Depot.

There's no question that the market was overheated, but it's too early to call doom here. The NASDAQ is still up about 50% from where it was 3 years ago, before COVID, even after the recent drop. That's a 14% yearly average return... still a crazy amount. At it's peak, it was up over 100% from May 24, 2019... a level that just wasn't sustainable.

This is true. The biggest issue imho is people expecting their comp to be unimpacted. A company like DoorDash or Uber has a ton of revenue, for sure, Uber just loses a ton every quarter. They won’t go out of business but they may drop another 90+% in value from here.

I think what's looming feels worse than 2000. 2000 was just a hype bubble of the previous 2-3 years that burst. That actually worked out great for me, as my company just offered unpaid-but-full-benefits sabbaticals.

This feels like the debt bubble that was launched by Reaganomics is now imploding, we're reeling back into the 70s stagflation with lame-duck / impeached leaders, increasing inner-city violence, race riots, cold war. Except this time we will already have trillions in deficit and won't be able to pull any Reaganomics tricks to get out of it.

I don't know about your experience, but 2008 was devastating to people just starting out in their careers. So far, the current economic situation feels mild in comparison.

Just before ‘08 fuel prices sharply rose because OPEC was fucking around.

Currently, fuel prices sharply rose because Russia is fucking around which is also causing food prices to rise due to fertilizers and a lot of grain not able to make it to market.

I can tell you from the last time when people couldn’t afford to buy gas to get to work and they were interviewing truckers on national news programs on how they will have to park their trucks if fuel prices go any higher things are definitely heading in the wrong direction.

Add in inflationary pressures eating away at peoples’ reserve savings (those lucky enough not to be living paycheck to paycheck) and things are probably not as mild as they seem if you have some cushy job sitting behind a computer screen — just saying to put it in perspective not trying to insult anyone, the “view from the trenches” is vastly different IMHO.

Is there strong evidence yet that this is a 2010-bubble-pop vs a 2020-bubble-pop? The last few years were particularly nuts in a lot of speculative markets. Big difference between back to normal or even a bit slowed from 2019 and a huge downturn, but I'm not seeing indicators yet that things are gonna fall off a cliff. People are still spending a lot of money and demand for a lot of things is still high - that might not continue, but I don't know what people are basing the "worst in a century!!" type reactions off.

Edit: the worst case certainly might come true, but people are pattern matching on like n=1 scenarios here. That's why people have been predicting collapse as long as I've been alive... but the more people are prone to jump to conclusions and panic immediately, the more it might be self-fulfilling.

> People are still spending a lot of money and demand for a lot of things is still high

Yes, that is how you create a gigantic crash. Look at this graph, click 25 years, does this look to go in the right direction? The US economy is shifting more and more towards consumption of imported goods instead of producing things itself, this isn't sustainable. You see how the 2008 crash got the curve back and track, a similar thing should happen this time around as well.

https://tradingeconomics.com/united-states/balance-of-trade

I mean, the crash, by definition, is when the demand stops, yeah? "A crash is coming because currently demand is still high" is a bit incomplete as far as theories go. That graph matches my original point about the last two years being very different from 2010-2020 - but it doesn't tell me anything about where to expect things to "correct" to or whether or not such a correction would be good or bad - a lot of people would love to see a US spending shift back to spend on services/experiences rather than manufactured goods. If you look at the 2000 dot com bubble, for instance, that line didn't move as much as in the 2008 crash. Does that tell us that tech valuations popping doesn't affect other things as much as other crashes might? I don't know - but I don't believe you can know for sure either on knowing what'll happen next. We've been defying predictions for years!

Is that crazy luck, or is it that the predictions are extrapolating from small samples against an ever-changing background and so basically just throwing darts? Everything is unprecedented, both good and bad, at this point in human history.

Yeah, it could play out differently. But it could also play out to be the largest crash in American history. We don't know, so don't bet anything important on it not being a crash.

Worst case the graph tells the story of the rest of the world shifting their industries to be less dependent on the American one, ending American dominance, that is how this would lead to the biggest crash in American history. Best case USA just slowly starts to shift back to producing things internally and creating new goods others wants to import and things stabilize.

We will see what happens, but it is very rare for curves to shift without huge consequences.

You're looking an a macro economic indicator that only politicians seem to care about, Most other countries don't even bother to measure it.

Trade deficit is just as much an indicator for foreign sentiment to hold US cash, as it is to import non-US made stuff.

All that indicator says is that consumer behavior changes during a recession.

You can argue the same thing with private debt.

https://tradingeconomics.com/united-states/private-debt-to-g...

https://www.econlib.org/library/Columns/y2017/KleinBoudreaux...

Haha yeah I think I've probably predicted collapse annually since like 2010. So either you can safely ignore me, or we're due for a 12x apocalypse.

> for an idea of how things may go. Look to the 2000 (Tech Bubble Burst) recession.

Agree. In aftermath of the .com implosion it took about 4 years for hiring to come back to a more normal pace. It was a good time to go back to school to do a Masters degree.

> I have family that works for Intel, and they say that Intel tends to actually increase hiring in bear markets.

Having worked for Intel and knowing folks still there, it's very much a mixed bag. I hear there are areas where headcount is frozen. But there are other areas where Gelsinger is investing heavily that are very eager to hire - in this case that doesn't have much to do with a looming recession (or not), it's that they find themselves behind in a lot of areas and they're spending to try to catch up.

>It was a good time to go back to school to do a Masters degree.

Why? You mean because people couldn't find a job so they went back to school instead?

Yes, exactly. That's is what I did. I did pick up some contract work while doing my Masters back then, but the pickings were pretty sparse in my non-silicon valley area. Usually 3 to 6 month contracts with breaks between which allowed me to focus on the schooling. There were a couple of years there in the early 2000s where I only worked about 3 months. I was fortunate to have savings built up during the booming 90s to enable me to get by during bad times in the early 2000s.

> Look to the 2000 (Tech Bubble Burst) recession. In that one, the bottom dropped out of the tech market. Web designers were especially hard hit.

I wonder if it's gonna be mobile app designers/devs this time round?

Might be. I don't particularly care, for myself (I'm done with the rat race), but there's a whole ton of folks that have the job description that may have a hard time of it.

It seems that a lot of software, these days, is "full stack" (SaaS) stuff. The app is really just the frontend. If the frontends get clobbered, the backends are just behind. Basic "food chain" stuff.

UPDATED TO ADD:

I took a peek at your HN profile, and it sounds like you have a background after my own heart (monkeying with hardware).

That's a fairly serious skillset, and not for the faint of heart. I'd say that you may have a better chance than many.

How about mobile game devs?

First against the wall i'm afraid.

Reply on news.ycombinator.com