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Unlike Krugman, I don't claim to have a crystal ball.
Also unlike Krugman, you fall very much into the population of posters here who indeed can't tell the market from the economy, and invariably discuss socio/economic issues in terms of how they affect the market.
It's a form of willful blinkerism that's going to lead to a lot of well-chewed glutes this year.
Also unlike Krugman, you fall very much into the population of posters here who indeed can't tell the market from the economy, and invariably discuss socio/economic issues in terms of how they affect the market.
It's a form of willful blinkerism that's going to lead to a lot of well-chewed glutes this year.
Actually, aside from my skepticism about Paul Krugman, you don't know a thing about my economic beliefs.
I'm just pointing out that people who quote Paul Krugman are credulous dupes who choose to ignore his miserable track record.
Not all parts of the country are being impacted as heavily by the virus, or the unemployment situation. Not one business that I frequent has closed permanently. Most are still operating in some limited fashion, and a few are actually finding ways to thrive (delivery, take out, new business models). Others are just waiting to be allowed to reopen the same as before. Once things are given the go ahead to start opening back up, people who were laid off will find work again, and many will be called back to their old jobs. People who've been cooped up will want to eat out, shop, recreate en masse, again. The pent-up demand will cause a surge in business. I just don't have the feeling that all this economic collapse doom and gloom stuff will happen. Call me crazy, but it's been like pushing the "pause button" on the economy. It will take several months to a year to get it all up and running again, once the "go button" is pressed, but I think we will pull out of this much faster than most realize or predict. Hang on, stay the course, don't get yourself in a lather. This too shall pass, and it will happen sooner than most of you here seem to want to believe.
Well that is good to hear, and I hope it stays that way for you and your area.
But I don't see the same thing being so positive for other states like mine (CA) that have shut down now for going on 7 weeks. The small businesses and restaurants I don't see most of them coming back.
It's easy to say when your area(and again I hope it stays that way) isn't as impacted.
With 30 million Americans now out of work, there aren't going be anything close to new jobs created.
We thought 2008 was bad, where you had what 300 people apply for one job.
I think too much damage has been done in most of the country. The GD was 12 years before the US made a complete recovery.
I would like to add that we were in an expansion that started in June 2009. We have never gone that long before without a recession and were way overdue for one. That is what the people who think we will bounce right back must be forgetting. My personal opinion is this is going to be the worst crash in the United State's history, worse than the great depression, but that is just me.
I think it depends on the "second wave"
If there is one, and it's significant... Multiyear depression.
If we "get back to it" by June and that's it.... Sure it'll suck for some, but others will go on a spending spree to "make up" for the last couple months.
I would like to add that we were in an expansion that started in June 2009. We have never gone that long before without a recession and were way overdue for one. That is what the people who think we will bounce right back must be forgetting. My personal opinion is this is going to be the worst crash in the United State's history, worse than the great depression, but that is just me.
I don't know if I agree with that. It's certainly going to be sharp, but I don't think it's going to last a decade. That's because the Great Depression was not due to the crash on Wall Street, but instead resulted from the boneheaded government measures that followed.
14 months after the crash of 29, the unemployment rate was at 8.7%. Not good, but not catastrophic. But beginning in 1930, there were a number of government measures and unforced errors that were outright stupid. The Hawley Smoot Tariff Act hurt international trade deeply. The Federal Reserve reduced the money supply by a third. And Federal taxes were jacked up to stratospheric levels. The top income tax rate went from 25% to 63%, but income taxes rose across the board. The combination of these measures not only eliminated all incentive to invest and rebuild, but kept liquidity out of a market that needed it desperately. And Roosevelt came along and doubled down on the measures that Hoover undertook. In fact, Henry Morgenthau, FDR's Treasury Secretary, credited Hoover with providing the new administration with the foundation for the New Deal.
The other thing I'd offer is a theory I've read a lot. Namely that the reason the recession cycle has become so prolonged over the past several decades is because supply chain has become so much more efficient, reducing excess inventory and costs. Of course, with the wholesale disruption of supply chain from China in the months to come, it will be interesting to see how well companies will be able to limit the damage by shifting production elsewhere.
A lot of financial talking heads are predicting that eventually, the Fed will do a "reset" and cancel all of its US Treasury obligations. By that time, the Fed could be holding over $20 trillion in treasury notes. I could involve a period of "monetization" of US debt held outside the Fed, where the Fed buys up a huge chunk of US treasuries on the open market (requiring a change in the current law). I'm guessing this will be something that first world nations do in concert to prevent currency valuation disruptions. It may be something that the US does in response to a EURO debt crisis rather than a dollar crisis, or vice versa. That will be how the "debt crisis" likely ends... just cancel most of it!
I suspect that would bring down the entire US banking sector. Maybe it's time for the banks to go away. It would certainly put an end to capitalism.
if the economy is continuously propped up by massive gov't spending, sure it'll look respectable....but eventually that massive spending has to stop, right?
I used to hear people whining in the 2008-2016 period about all the spending, now I hear nothing about our national debt.....used to hear stuff like "We're going to end up being bankrupt like Greece".....
Many are in denial, and let's be honest most Americans are clueless and very self involved. They don't pay attention, don't question anything, and as we see don't put anything aside in regards to savings. And it's not because they're all living paycheck to paycheck...they live beyond their means.
Everyone for the most part has been inside, believing the "we're all in this together" nonsense. Once the dust settles and they start to see the reality and it impacts them directly the rude awakening will hit them right in the face.
Your mention of your drive downtown was an excellent comment. Restaurants and small businesses for the most part are done.
I live in LA, store windows in the San Fernando Valley on Ventura Blvd which has some high end stores put plywood over their windows weeks ago.....I wonder why, nervous about the civil unrest due to people losing their jobs, not being able to get through to unemployment, apply and 4 weeks later no check.
The boarding of windows is happening in other major cities, again I wonder why. They're worried about civil unrest.
It took the US 12 years to make a full recovery from the GD, it wasn't until 1941 when the US entered WW2.
Anyone who thinks you just bounce back from this is clueless as to how economics work, and should try educating themselves, they certainly have the time now to do so.
Maybe this is my small town/rural/Appalachian perspective, but we're not seeing much of this here.
TN gave restaurants a chance to reopen about a week ago. Almost none of the chain restaurants have opted to reopen locally. Many local restaurants are reopening, and most have quite a few patrons.
I went out to dinner Wednesday night - local "American" restaurant, about half full, but that was the first day and it was cold and raining. That same restaurant had a line by 6:30 Friday evening. I went to a brewery/restaurant in another city yesterday for dinner that was virtually full. I stopped by a beer garden after that which was nearly full. A book store I went to was very busy.
I haven't seen a single store around here boarded up. Most are on Facebook chomping at the bit to reopen if they haven't done so already, and expect to. While a lot of places haven't opened up quite yet, many places that weren't had signs out for the next week or so.
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